TV18-2008-2009.Pdf

NETWORK18 MEDIA & INVESTMENTS LIMITED BOARD OF DIRECTORS MR. G.K. ARORA CHAIRMAN MR. RAGHAV BAHL MANAGING DIRECTOR MR. MANOJ MOHANKA DIRECTOR MR. SANJAY RAY CHAUDHURI DIRECTOR MS. VANDANA MALIK DIRECTOR MS. SUBHASH BAHL DIRECTOR

AUDITORS G.S. AHUJA & ASSOCIATES CHARTERED ACCOUNTANTS

CHIEF FINANCIAL OFFICER MR. R.D.S. BAWA

MANAGER-CORPORATE AFFAIRS & COMPANY SECRETARY MS. SHILPA AGGARWAL

BANKERS INDIAN OVERSEAS BANK PUNJAB NATIONAL BANK Yes Bank LTD.

REGISTERED OFFICE 601, 6TH FLOOR, COMMERCIAL TOWER, CONTENTS Page No. HOTEL LE-MERIDIEN, Notice 2 RAISINA ROAD, Directors’ Report 3 NEW DELHI-110 001. Corporate Governance Report 15 Auditors’ Report 23 CORPORATE OFFICE Balance Sheet 24 Express Trade Tower Profit & Loss Account 25 Plot No. 15 & 16, Sector 16A, Cash Flow 26 Noida, U.P. -201 301. Schedules 27 Consolidated Network18 Auditors’ Report 49 REGISTRAR & Balance Sheet 50 SHARE TRANSFER AGENT Profit & Loss Account 51 ALANKIT ASSIGNMENTS LTD. Cash Flow 52 2E/21, JHANDEWALAN EXTN. Schedules 53 NEW DELHI -110 055. Details of subsidiaries Companies 109

1 NETWORK18 MEDIA & INVESTMENTS LIMITED NOTICE

Notice is hereby given that the 14th Annual General Meeting of the 5. Members desirous of making a nomination in respect of their members of NETWORK18 MEDIA & INVESTMENTS LIMITED shareholding in the Company, as permitted under Section (Formerly known as NETWORK 18 FINCAP LIMITED) will be held on 109A of the Companies Act, 1956, are requested to write to the Friday, August 28, 2009 at 11.30 A.M. at M.P.C.U Shah Auditorium, Company’s Registrar. Mahatma Gandhi Sanskritik Kendra, 2 Raj Nivas Marg, Shree Delhi 6. The Registers of Members will be closed from Monday, August Gujarati Samaj Marg, Civil Lines, Delhi – 110 054 to transact the 24, 2009 to Friday, August 28, 2009, both days inclusive. The following business: transfer Books of the Company will also remain closed for the aforesaid period AS ORDINARY BUSINESS 7. All documents referred to in the accompanying notice are 1. To receive, consider and adopt the audited Balance Sheet as at available for inspection at the Registered Office of the Company March 31, 2009 and the Profit and Loss Account of the Company during working hours between 10.00 A.M. to 1.00 P.M. except for the year ended March 31, 2009, together with the Report of holidays up to the date of Annual General Meeting. the Directors and the Auditors thereon. 8. Members are requested to send all the correspondence 2. To appoint a Director in place of Mr. Manoj Mohanka who retires concerning registration of transfer, transmission, subdivision, by rotation and being eligible, offers himself for re-appointment. consolidation of shares or any other share related matters and / 3. To appoint M/s G.S. Ahuja & Associates, Chartered Accountants or change in address to Company’s Registrar and Share Trasfer as Statutory Auditors of the Company to hold office from the Agent, M/s. Alankit Assignments Limited, at 2E/21, Jhandewalan conclusion of this meeting until the conclusion of next Annual Extension, New Delhi- 110 055 General Meeting and to fix their remuneration. 9. The details of the Stock Exchanges, on which the securities of the Company are listed, are given separately in this Annual By order of the Board Report. For NETWORK 18 MEDIA & INVESTMENTS LIMITED 10. Any query related to the accounts may be sent at the Registered Sd/- Office of the Company at least 10 days before the date of the Annual General Meeting. Place: Noida Shilpa Aggarwal Date: June 30, 2009 Manager- Corporate Affairs 11. Members who hold shares in physical form in multiple folios in & Company Secretary identical names or joint accounts in the same order of names NOTES are requested to send the share certificates to the Company’s 1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE Registrar and Transfer Agents, M/s Alankit Assignments Limited, MEETING IS ENTITLED TO APPOINT A PROXY AND THE for consolidation into a single folio. PROXY NEED NOT BE A MEMBER OF THE COMPANY. A 12. The members may please note that the Ordinary and Special blank Proxy Form is enclosed with this notice and if intended Resolutions sent through notice dated June 12, 2008 and to be used, the form duly completed should be deposited at the December 26, 2008 to all the members for voting through Postal Registered Office of the Company not less than forty-eight hours Ballot have been passed on July 23, 2008 and February 11, 2009 before the commencement of the Annual General Meeting. respectively by requisite majority. Relevant details in this regard 2. Members/ Proxy are requested to bring a copy of this notice are disclosed in the Corporate Governance Report forming part as no copies will be made available at the meeting. Under no of the Directors Report. circumstances, photocopies of the admission slip will be allowed 13. Relevant details, in terms of Clause 49 of the Listing Agreement, for admission to the Auditorium. Those members who do not in respect of Director retiring by rotation and proposed to be re- receive copies of Annual Report can collect their copies from the appointed is disclosed in the Corporate Governance Report. Registered Office of the Company. 3. Members/ proxies should bring the attendance slips duly filled in By order of the Board for attending the meeting. For NETWORK 18 MEDIA & INVESTMENTS LIMITED 4. Corporate Members are requested to send a duly certified copy of the Board resolution/ Power of Attorney authorising their Sd/- representative to attend and vote at the Annual General Meeting, Place: Noida Shilpa Aggarwal pursuant to Section 187 of the Companies Act, 1956. Date: June 30, 2009 Manager- Corporate Affairs & Company Secretary

2 NETWORK18 MEDIA & INVESTMENTS LIMITED

Directors DIRECTORS’ REPORT In terms of Article 90 of Articles of Association of the Company Mr. Manoj Mohanka, retire by rotation and being eligible, offer himself for Dear Shareholders reappointment at the ensuing Annual General Meeting. th Your Directors have pleasure in presenting the 14 Annual Report Brief resume of Mr. Manoj Mohanka is provided in the Report on together with the Audited Accounts of Network18 Media & Invest- Corporate Governance forming part of Annual Report. ments Limited (hereinafter referred to as “Company” or “Network18”) for the Financial Year ended March 31, 2009. Subsidiaries A statement of your Company’s interest in its Subsidiary Companies Financial Results is attached as Annexure – III to the Directors’ Report in terms of the The key financial figures on standalone basis of your Company for provisions of Section 212 of the Companies Act, 1956. the year ended March 31, 2009 are as follows: (Rs. in lakhs) The Company has applied to the Central Government u/s 212(8) of Particulars Year ended Year ended the Companies Act, 1956 for obtaining exemption for not attaching the March 31, 2009 March 31, 2008 Balance Sheet of Subsidiary Companies alongwith the Balance Sheet of the Company and the same is awaited. In case, the approval of the Profit/ (Loss) before interest 3706.85 7042.06 Central Governemnt u/s 212(8) is received by the Company prior to the and depreciation dispatch of the Annual Report to the Shareholders, the same will be Interest 5091.74 2581.89 availed. Depreciation 275.78 18.09 Directors’ Responsibility Statement Net operating profit before tax (1660.67) 4442.07 Pursuant to the provision of Section 217 (2AA) of the Companies Provision for taxes/deffered 159.27 14.93 Act, 1956 as amended, your Directors confirm: taxes i) that in the preparation of the annual accounts for the financial year ended March 31, 2009, the applicable Accounting Standards Extraordinary item NIL NIL have been followed; Net profit/ (loss) after tax (1819.93) 4427.15 ii) that the Directors have selected such accounting policies and Year under Review applied them consistently and made judgements and estimates During the year under review, the Company has achieved a turnover that are reasonable and prudent so as to give a true and fair of Rs 9720.32 lakhs and EBDIT is Rs. 3706.85 lakhs. view of the state of affairs of the Company at the end of the Audited Consolidated Financial Statements for the year ended March financial year and of profit or loss of the Company for the year 31, 2009 also form a part of this Annual Report. under review; iii) that the Directors have taken proper and sufficient care for Dividend maintenance of adequate accounting records in accordance In view of the loss for the financial year 2008-09, the Board of Direc- with the provisions of the Companies Act, 1956 for safeguarding tors of your Company has decided not to recommend payment of the assets of the Company and for preventing and detecting dividend for the year under review. irregularities; Deposits iv) that the Directors have prepared the accounts for the financial The Company has not accepted any deposits from public during the year ended March 31, 2009 on a ‘going concern’ basis. year under review. Auditors & Auditors Report Change in Capital Structure The Auditors of the Company M/s G S Ahuja & Associates, Chartered The Company’s shares are listed on the National Stock Exchange Accountants, hold office till the conclusion of the ensuing Annual (NSE) and Bombay Stock Exchange (BSE) and are actively traded. General Meeting and are eligible for re-appointment. In the year under review, 204, 53, 359 Equity Shares were issued The Company has received a letter from them to the effect that their pursuant to the exercise of options by employees, conversion of reappointment , if made, would be within the prescribed limits under Partly Convertible Cumulative Preference Shares and conversion section 224 (1B) of the Companies Act, 1956 and that they are not of warrants. Consequently paid up capital has increased from Rs. disqualified for such reappointment within the meaning of Section 25,74,11,275 to Rs. 35,96,78,070/- 226 of the said Act. Employee Stock Option Plan Your Board has duly examined the Report issued by the Statutory Human Resource is the key to the success of any organization. The Auditors of the Company on the Accounts for the financial year end- Company has always valued its human resources and had tried to ed March 31, 2009. adopt the best HR practices. During the year ended March 31, 2009, The Management explanation to the Auditor’s comments as given in the Company, in beneficial interest of its employees has revised the Auditor’s Report is given hereinbelow- the vesting schedule and exercise price in respect of the 408,194 options, granted earlier and has granted 295,000 new options under EXPLANATION TO AUDITORS’COMMENTS: the ESOP schemes of the Company. During the year 120,198 Reply to qualification given by the Auditors in the Auditors’ options were exercised by the employees after vesting. Accordingly, Report: the Company made the allotment of 120,198 equity shares in three Auditors’ qualification: Refer para 4.(i) of the Auditors’ Report tranches against the options exercised by the employees. Management’s reply: The Company has already undertaken fund The Particulars of options issued under the said Plan as required raising activities post closure of the financial year, due to which the by SEBI (Employee Stock Option Scheme and Employee Stock company is now complying with the NOF requirements. Further the Purchase Scheme) Guidelines, 1999 are appended as ‘Annexure-C’ company is in the process of applying to Reserve Bank of India to and form part of this report. seek exemption from complying with the capital adequacy and Corporate Governance concentration of investments norms. Corporate Governance is about commitment to values and about Auditors’ qualification: Refer para 4(ii) of the Auditors’ Report ethical business conduct. It stems from the culture and mindset of a Management’s reply: The shareholders of the company have management, hence measures of Corporate Governance should be already approved the payment of remuneration to the Managing more by self-discipline than by legislation and regulation. Director of the Company. However, due to the losses made during Your Company strives for excellence with the objective of enhancing the current year the payment made to Managing Director results in shareholders’ value and protecting the interest of shareholders. excess of Schedule XIII and therefore the Company is in the process At Network18 we ensure the practice of the Principles of Good of applying to the Central Government for getting the necessary Corporate Governance. Decisions are based on a set of principles approval. influenced by the values, context and culture of the organization. All Auditors’ qualification: Refer para 20 of the Auditors’ Report functions of the Company are discharged in a professionally sound, Management’s reply: This is self explanatory. competent and transparent manner. Particulars of Employees The detailed Corporate Governance Report of the Company in In terms of the Provisions of Section 217(2A) of the Companies pursuance of Clause 49 of the Listing Agreement forms part of Act, 1956 read with the Companies (Particulars of Employees) the Annual Report of the Company. Rules,1975, as amended, the name and other particulars of the

3 NETWORK18 MEDIA & INVESTMENTS LIMITED employees are required to be set out in the Annexure to the b) Research and Development Directors Report. However, as per the provisions of Section 219(1) The Company continuously makes efforts towards research and (b) (iv) of the said Act, the Annual Report excluding the aforesaid developmental activities wherby it can improve the quality and information is being sent to all the Members of the Company and productivity of its programmes. others entitled to receive the annual report of the Company. c) Foreign Exchange Earnings and Outgo Members who are interested in obtaining such particulars may write The foreign exchange earnings and expenditure appear in to the Company at its Corporate Office. Schedule No.14 in the Notes to the Accounts. ‘GROUP’ AS DEFINED UNDER MONOPOLIES AND Acknowledgement RESTRICTIVE TRADE RACTICES ACT, 1956 Your Directors thank the investors, shareholders, business associates and the bankers and lenders viz. YES Bank, Punjab National Pursuant to intimation received from Promoter(s) the names of Corporate(s) entities consisting the ‘Group’ as defined under the Bank, Indian Overseas Bank, IL & FS Limited, Cholamandalam DBS Monopolies and Restrictive Trade Practices Act, 1969 for the Finance Limited and Kotak Mahindra Prime Limited for the purpose of the SEBI (Substantial Acquisition of Shares and continued support in your Company’s growth. Your Directors place Takeover) Regulations, 1997 is disclosed in ‘Annexure A’ of this on record their deep appreciation of the high motivation and Report. dedication of employees at all levels in contributing to the improved performance of your Company during the year. Conservation of Energy, Technology Absorption and Foreign Exchange and Earnings and Outgo For and on behalf of the Board Pursuant to Section 217(1)(e) of the Companies Act, 1956 read with Place: Noida Sd/- the Companies (Disclosures of Particulars in the report of the Board Date: June 30, 2009 Chairman of Directors) Rules, 1988 the following information is provided- a) Conservation of Energy Your Compay is not an energy intensive unit, however regular efforts are made to conserve the energy.

Annexure-A Persons constituting Group coming within the definition of ‘group’ as defined in the Monopolies and Restrictive Trade Practice Act, 1969 include the following:

Name of the Company S. No. Name of the Company 1 American Devices India Private Limited 41 Network18 Group Senior Welfare Professional Trust 2 BK Media Mauritus Private Limited, Mauritius 42 Network18 Publications Limited 3 BK Communications Limited, Mauritius 43 RB Holdings Private Limited 4 BK Capital Limited, Mauritius 44 RRK Holdings Private Limited 5 BK Ventures Limited, Mauritius 45 RB Software Private Limited 6 BK Finhold Private Limited 46 RB Investments Private Limited 7 BK Holdings Limited, Mauritius . 47 RB Softech Private Limited 8 BK Network Limited, Mauritius 48 RRB Holdings Private Limited 9 Big Tree Entertainment Private Limited 49 RB Finhold Private Limited 10 BK Media Private Limited 50 RRK Finhold Private Limited 11 Care Websites Private Limited 51 RRB Investments Private Limited 12 Capital 18 Limited, Cayman Islands 52 RRB Fincap Private Limited 13 Capital 18 Limited, Mauritius 53 RRB Media Private Limited 14 Capital 18 Acquisition Corporation, Cayman Islands 54 RRK Media Private Limited 15 Capital 18 Advisors Limited, Mauritius 55 RRK Finvest Private Limited 16 Cepha Imaging Private Limited 56 RVT Media Private Limited 17 Colosceum Media Private Limited 57 RVT Fincap Private Limited 18 Digital18 Media Private Limited 58 RVT Finhold Private Limited 19 E-18 Limited, Cyprus 59 RVT Softech Private Limited 20 e-Eighteen.com Limited 60 RVT Investments Private Limited 21 Greycells18 Media Limited 61 RVT Holdings Private Limited 22 Global Broadcast Employees Welfare Trust 62 Setpro18 Distribution Limited 23 IBN18 Trust 63 SGA News Limited 24 iNews.com Limited 64 Stargaze Entertainment Private Limited 25 ibn18 broadcast Limited 65 Software Services LC 26 IBN18 Media & Software Limited (formerly known as 66 Tangerine Digital Entertainment Private Limited Jagran TV Private Limited) 67 Television Eighteen India Limited 27 I-Ven Interactive Limited 68 TV18 HSN Holdings Limited, Cyprus 28 Infomedia 18 Limited 69 TV18 Home Shopping Network Limited 29 Keyman Financial Services Private Limited 70 Television Eighteen Mauritius Limited, Mauritius 30 Kishore Securities Private Limited Television Eighteen Media and Investments Limited, 71 31 Keyword Group Ltd, UK Mauritius 32 Keyword Publishing Services Ltd, UK 72 Television Eighteen Commoditiescontrol.com Limited 33 Keyword Typesetting Services Ltd, UK 73 TV18 UK Limited, UK 34 MobileNxT online Private Limited 74 TV18 Employees Welfare Trust 35 Moneycontrol Dot Com India Limited 75 VT Holdings Private Limited 36 Namono Investments Limited, Cyprus 76 VT Investments Private Limited 37 Network18 India Holdings Private Limited 77 VT Softech Private Limited 38 Network18 Holdings Limited, Cayman Islands 78 VT Media Private Limited 39 NewsWire18 Limited 79 Web18 Software Services Limited 40 Network18 Employees Welfare Trust 80 Web18 Holdings Limited, Cayman Islands 81 Wespro Digital Private Limited

4 NETWORK18 MEDIA & INVESTMENTS LIMITED Annexure to Director’s Report Statement pursuant to section 212 of the Companies Act, 1956

1 Name of the Television ibn18 Broadcast Setpro18 Network18 TV18 HSN TV18 Home Subsidiary Eighteen India Limited Distribution Holdings Limited, Holdings Shopping Limited Limited Cayman Islands Limited, Network Cyprus Limited

2 Financial year of 31.03.2009 31.03.2009 31.03.2009 31.03.2009 31.03.2009 31.03.2009 the subsidiary ended on

3 Shares of the subsidiary held by the company on the above date a) No. of Shares 53,959,106 47,724,140 Equity 33,000 Eq- 1,500,000 Equity 36,222,500 Equity 790,449 Equity and face value Equity share of shares of Rs. 2 uity Shares of shares of USD 1 each shares of USD shares of Rs 10 Rs 5 each each Rs.10 each 0.04 each* each*

b) Holding compa- 44.96% 26.64% 66.00% 99.99% 68.11% 100.00% nies interest 4 Net aggregate amount of Profit/ Loss of the subsidiary so far as they concern members of the Holding company: (in Rs.) (i) Dealt with in the Holding Company’s accounts: a) For the financial NIL NIL NIL NIL NIL NIL year of the subsidiary b) For the Previous NIL NIL NIL NIL NIL Financial years 173,426,821 since it become Holding Company’s Subsidiary (ii) Not dealt with in the Holding Company’s accounts: a) For the financial (41,006,532) year of the 97,545,549 (339,601,190) 19,879,518 (27,929,549) (336,066,817) subsidiary b) For the Previous (83,607) Financial years 58,444,357 (193,648,821) 28,938,107 (19,537,068) (288,934,876) since it become Holding Company’s Subsidiary 5 Material changes in subsidiary between the end of its financial year and the financial year of the holding company a)Fixed Assets N.A. N.A. N.A. N.A. N.A. N.A. b)Investments N.A. N.A. N.A. N.A. N.A. N.A. made c)Money lent by N.A. N.A. N.A. N.A. N.A. N.A. subsidiary d)Money borrowed N.A. N.A. N.A. N.A. N.A. N.A. by the subsidiary for any purpose other than that of meeting current liabilities

5 NETWORK18 MEDIA & INVESTMENTS LIMITED

Annexure to Director’s Report Statement pursuant to section 212 of the Companies Act, 1956

1 Name of the network18 Television Television Capital 18 Colosceum Stargaze Subsidiary India Holdings Eighteen Eighteen Media and Limited (Capital Media Private Entertainment Private Limited Mauritius Ltd. Investments Ltd. 18), Mauritius Limited Private (TEML), Mauritius (TEML II), Mauritius Limited

2 Financial year of the 31.03.2009 31.03.2009 31.03.2009 31.03.2009 31.03.2009 31.03.2009 subsidiary ended on

3 Shares of the subsidiary held by the company on the above date a) No. of Shares 10,000 Equity 12,295,000 Equity 1,00,001 Equity 1 Equity Shares 11,00,000 80,000 Equity and face value Shares of Rs Shares of USD 1/- Shares of USD 1/- of USD 1/- each* Equity Shares Shares of Rs. 10/- each each* each* of Rs. 10/- 10/- each* each* b)Holding companies 100.00% 100.00% 100.00% 100.00% 100.00% 89.00% interest 4 Net aggregate amount of Profit/Loss of the subsidiary so far as they concern members of the Holding company:(in Rs.) (i) Dealt with in the Holding Company’s accounts: a) For the financial NIL NIL NIL NIL NIL NIL year of the subsidiary b) For the Previous NIL NIL NIL NIL NIL NIL Financial years since it become Holding Company’s Subsidiary (ii) Not dealt with in the Holding Company’s accounts: a) For the financial 62,434,052 5,971,537 (1,886,209) 29,716,016 year of the subsidiary (357,797,696) 5,535,483 b) For the Previous 415,622,325 4,290,820 (1,352,247) - 1,104,968 Financial years (5,395,010) since it become Holding Company’s Subsidiary 5 Material changes in subsidiary between the end of its financial year and the financial year of the holding company a)Fixed Assets N.A. N.A. N.A. N.A. N.A. N.A. b)Investments N.A. N.A. N.A. N.A. N.A. N.A. made c)Money lent by sub- N.A. N.A. N.A. N.A. N.A. N.A. sidiary d) Money borrowed N.A. N.A. N.A. N.A. N.A. N.A. by the subsidiary for any purpose other than that of meeting current liabilities

6 NETWORK18 MEDIA & INVESTMENTS LIMITED Annexure to Director’s Report Statement pursuant to section 212 of the Companies Act, 1956

1 Name of the Capital 18 BK Holdings Namono Web 18 Holdings E-18 Limited Television Eigh- Subsidiary Acquisition Limited, Investments Ltd. (Web 18), (E-18), teen Commoditi- Corporation, Mauritius Limited Cayman Islands Cyprus escontrol.com Ltd. Cayman Islands (TV18CC)

2 Financial year of the 31.03.2009 31.03.2009 31.03.2009 31.03.2009 31.03.2009 31.03.2009 subsidiary ended on

3 Shares of the subsidiary held by the company on the above date

a) No. of Shares and 16,90,501 Equity 5000 Equity 1 Equity 64,654,579 Equity 3,899 317,140 Equity face value Shares of USD Shares of shares of shares of USD Equity shares shares of Rs. 10/- 0.0001 each* USD 1/- each* USD 1/- each* 0.00374 each* of USD 1/- each* each* b)Holding companies 98.00% 100.00% 100.00% 67.57% 100.00% 80.00% interest 4 Net aggregate amount of Profit/Loss of the subsidiary so far as they concern members of the Holding company:(in Rs.) (i) Dealt with in the Holding Company’s accounts: a) For the financial year NIL NIL NIL NIL NIL NIL of the subsidiary b) For the Previous NIL NIL NIL NIL NIL NIL Financial years since it become Holding Company’s Subsidiary

(ii) Not dealt with in the Holding Company’s accounts: a) For the financial year (254,775) (102,994,480) (1,022,467) (42,650,097) 140,435,734) (94,321,350) of the subsidiary b) For the Previous (167,181) (308,958) (431,288) (3,955,888) (17,399,964) (73,589,784) Financial years since it become Holding Company’s Subsidiary 5 Material changes in subsidiary between the end of its financial year and the financial year of the holding company a) Fixed Assets N/A N/A N/A NIL NIL NIL b)Investments N/A N/A N/A NIL NIL NIL made c)Money lent by sub- N/A N/A N/A NIL NIL NIL sidiary d) Money borrowed N/A N/A N/A NIL NIL NIL by the subsidiary for any purpose other than that of meeting current liabilities

7 NETWORK18 MEDIA & INVESTMENTS LIMITED

Annexure to Director’s Report Statement pursuant to section 212 of the Companies Act, 1956 1 Name of the Sub- e-Eighteen.com Money Control Web 18 Software Big Tree Enter- Care Websites TV18 UK sidiary Ltd. (e-Eighteen) Dot Com India Services Ltd. tainment Pvt. Ltd. Pvt. Ltd. Limited, UK Ltd. 2 Financial year of 31.03.2009 31.03.2009 31.03.2009 31.03.2009 31.03.2009 31.03.2009 the subsidiary ended on

3 Shares of the subsidiary held by the company on the above date a) No. of Shares 4,968,894 Equity 500,000 Equity 242,502 Equity 11,129 Equity 450,000 Equity 1 Equity share and face value shares of Rs. 10/- share of Rs. 1/- shares of Rs. 10/- shares of Rs. 10/- shares of Rs. of GBP 1/- each* each* each* each* 10/- each* each* b)Holding 91.95% 100.00% 100.00% 60.00% 90.00% 100.00% companies interest 4 Net aggregate amount of Profit/ Loss of the subsidiary so far as they concern members of the Holding company:(in Rs.) (i) Dealt with in the Holding Company’s accounts: a) For the financial NIL NIL NIL NIL NIL NIL year of the subsidiary b) For the Previ- NIL NIL NIL NIL NIL NIL ous Financial years since it become Holding Company’s Subsidiary (ii) Not dealt with in the Holding Company’s accounts: a) For the financial (40,476,202) 133,363 (926,822,128) (57,860,128) (9,053,719) 4,379,720 year of the subsidiary b) For the Previous (53,598,311) 645,347 (372,008,125) (29,815,898) (5,214,724) (2,496,815) Financial years since it become Holding Company’s Subsidiary 5 Material changes in subsidiary between the end of its financial year and the financial year of the holding company a)Fixed Assets NIL NIL NIL NIL NIL N/A b)Investments NIL NIL NIL NIL NIL N/A made c)Money lent by NIL NIL NIL NIL NIL N/A subsidiary d)Money borrowed NIL NIL NIL NIL NIL N/A by the subsidiary for any purpose other than that of meeting current liabilities

8 NETWORK18 MEDIA & INVESTMENTS LIMITED

Annexure to Director’s Report Statement pursuant to section 212 of the Companies Act, 1956 1 Name of the Sub- NewsWire 18 RVT Investments iNews.com.Ltd. I-Ven Interac- Infomedia 18 American sidiary Limited Pvt. Ltd. tive Limited Limited Devices India Private Limited 2 Financial year 31.03.2009 31.03.2009 31.03.2009 31.03.2009 31.03.2009 31.03.2009 of the subsidiary ended on 3 Shares of the subsidiary held by the company on the above date a) No. of Shares 2,678,894 Equity 10,000 Equity 5,949,000 Equity 8,227,466 Eq- 1,23,38,112 4,70,002 Equity and face value Shares of Rs. 10/- Shares of Rs. 10/- Shares of Rs. 10/- uity Shares of Equity Shares of Shares of Rs. each* each* each* Rs. 10/- each* Rs. 10/- each* 10/- each* b) Holding com- 77.50% 100.00% 99.15% 63.98% 62.05% 100% panies interest 4 Net aggregate amount of Profit/ Loss of the subsidiary so far as they concern members of the Holding company:(in Rs.) (i) Dealt with in the Holding Company’s accounts: a) For the financial NIL NIL NIL NIL NIL NIL year of the subsidiary b) For the Previous NIL NIL NIL NIL NIL NIL Financial years since it become Holding Company’s Subsidiary (ii) Not dealt with in the Holding Company’s accounts: a) For the financial (316,037,496) (894,218) 3,608,736 (2,473,683) (400,140,066) (16,411,421) year of the subsidiary b) For the Previous (211,418,368) (350,494) 3,650,866 - - - Financial years since it become Holding Company’s Subsidiary 5 Material changes in subsidiary between the end of its financial year and the financial year of the holding company a)Fixed Assets ------b)Investments ------made c)Money lent by ------subsidiary d)Money borrowed ------by the subsidiary for any purpose other than that of meeting current liabilities

9 NETWORK18 MEDIA & INVESTMENTS LIMITED

Annexure to Director’s Report Statement pursuant to section 212 of the Companies Act, 1956 1 Name of the Cepha Imag- Keyword Keyword Pub- Keyword Software RVT Media Ibn18 Media Subsidiary ing Private Group Ltd lishing Services Typesetting Services LC Private & Software Limited Ltd Services Ltd Limited Limited

2 Financial year of the 31.03.2009 31.03.2009 31.03.2009 31.03.2009 31.03.2009 31.03.2009 31.03.2009 subsidiary ended on 3 Shares of the subsidiary held by the company on the above date

a) No. of Shares and 8125 Equity 1000 Equity 100 Equity 3 Equity Not Applicable 10,000 Eq- 1,34,58,950 face value Shares of Rs. Shares of Shares of GBP 1 Shares of uity shares Equity shares 100 each* GBP 1 each* each* GBP 1 each* of Rs. 10/- of Rs. 10/- each* each* b) Holding companies 51% 100% 100% 100% 100.00% 100.00% 100.00% interest 4 Net aggregate amount of Profit/Loss of the subsidiary so far as they concern members of the Hold- ing company:(in Rs.)

(i) Dealt with in the Holding Company’s accounts: a) For the financial NIL NIL NIL NIL NIL NIL NIL year of the subsidiary b) For the Previous NIL NIL NIL NIL NIL NIL NIL Financial years since it become Holding Company’s Subsid- iary (ii) Not dealt with in the Holding Compa- ny’s accounts: a) For the financial (34,252,140) (16,935,472) - 18,032,396 (11,630) (1,82,913) (1,82,913) year of the subsidiary b) For the Previous - - - - (30,497) 7,823 7,823 Financial years since it become Holding Company’s Subsid- iary 5 Material changes in subsidiary between the end of its financial year and the financial year of the holding company a)Fixed Assets - - - - N.A. N.A. N.A. b)Investments made - - - - N.A. N.A. N.A. c)Money lent by sub- - - - - N.A. N.A. N.A. sidiary d)Money borrowed - - - - N.A. N.A. N.A. by the subsidiary for any purpose other than that of meeting current liabilities

Note: *Shareholding in these Companies are through its Subsidiaries ** Loss for E18 Limited, Cyprus includes diminution in investments in subsidiaries and joint ventures amount USD 2,309,708 (INR 106,039,612)

10 NETWORK18 MEDIA & INVESTMENTS LIMITED

Annexure-C Information regarding the Employees Stock Option Schemes/ Employees Stock Purchase Plan as on March 31, 2009 in terms of Regulation 12 and 19 of SEBI (Employees Stock Option and Employees Stock Purchase Scheme) Guidelines, 1999 (a) Options granted/ Shares issued Name of Scheme No. of shares granted/ shares issued Network18 Employee Stock Option Plan 2007 295,000 Network18 Employee Stock Option Plan 2004 * 213,000 Network18 Senior Employee Stock Option Plan 2004 * 143,994 Network18 Employee Stock Option Plan 2005 * 51,200 (b) Pricing Formula Name of Scheme Pricing Network18 Employee Stock Option Plan 2007 295,000 Rs. 30 Network18 Employee Stock Option Plan 2004 * 213,000 Rs. 20 Network18 Senior Employee Stock Option Plan 2004 * 90,662 RS. 10 Network18 Senior Employee Stock Option Plan 2004 * 53,332 Rs. 20 Network18 Employee Stock Option Plan 2005 * 51,200 Rs. 20 (c) Options vested during the year 268,875 (d) Options exercised during the year 120,198 (e) Total no. of shares arising as a result of exercise of options 120,198 (f) Options lapsed during the year 71,600 (g) Variation in terms of options As mentioned below (h) Money realised by exercise of options (Rs. in lakhs) 37.24 (I) Total no. of options in force 2,054,936 (j) (i) Options shares granted to key managerial persons Name of key managerial persons Present designation No. of options granted/ shares issued RDS Bawa Chief Financial Officer 200,000 Farhad Wadia CEO - E18 50,000 (ii) Employees who have been granted 5% or more , of the options during the year Name of employee Present Designation No. of options granted RDS Bawa Chief Financial Officer 200,000 Farhad Wadia CEO - E18 50,000 (iii) None of the employees were granted options during the year, equal to or exceeding 1% of the issued capital of the Company at the time of grant’ (k) (i) Basic Earnings per share (3.14) (ii) Diluted Earnings per share (3.10) (l) Computation of employee compensation cost and effect on profit and EPS (i) Mathod of calculation of employee compensation cost The company had considered the intrinsic value of the options granted for calculation of the employee compensation (ii) Difference between the employee compensation cost so The employee compensation cost would have increased by computed at (i) above and the employee compensation cost Rs. 108.74 lakhs to P&L accouint if the company had used fair value of the Options (in Rs. lakhs) (iii) The impact of this difference on the profits and EPS of the Company Profit after tax (Rs. in lakhs) (1,819.94) Less: Additional employee compensation cost based on fair value (Rs. in lakhs) 108.74 Adjusted Profit after Tax (Rs. in lakhs) (1,928.68) Adjusted Basic EPS (3.33) Adjusted Diluted EPS (3.26) (m) Weighted average exercise price and fair value of the stock options granted at a price below market price Total Options granted 703,194 Weighted average exercise price (in Rs.) Rs.22.91 Weighted average fair value (in Rs.) Rs.60.75 (n) Description of the method and significant assumptions used The company has adopted the black scholes option pricing model during the year to estimate the fair value of the options, including for valuation of the options. Several assumption has been used by the following weighted average information the fair value of the options.The main assuptions used are as under Risk free rate of interest (in %) 5.67% Expected life of the options from the date of grant (in Years) 3.85 Expected volatility (in %) 61.53% Dividend yield (in %) 1.54% * The options have been re-granted at a lower exercise price against the options cancelled by the Company with the consent of the employees to whom such options were granted. The Company has made the following variations in the ESOP Scheme with the approval of shareholders vide postal ballot dated December 26, 2008 on Februray 11, 2009: 1. Network18 Media & Investments Limited Employee Stock Option The Exercise Price in respect of the Options granted under this Plan shall be Plan 2005 (ESOP 2005) decided by the Compensation Committee, provided however, that the Exercise Network18 Media & Investments Limited Price shall not be less than the par value of the Shares of the Company and shall Senior Employee Stock Option Plan 2004 (Sr. ESOP 2004) not be more than the price prescribed under Chapter XIII of SEBI (Disclosure Network18 Media & Investments Limited Employees and Investor Protection) Guidelines, 2000. The relevant date will be the date of Stock Option Plan 2004 (ESOP 2004) Grant. Options granted under this plan shall vest with the Grantees within such period not exceeding 10 years as may be determined by the Compensation Committee in this behalf. However there shall be a minimum period of 1 year between the Grant of Options and the Vesting of Options. 2. Network18 Employees Stock Option Scheme 2007 Number of Stock Options was increased from 2,542,438 to 1,00,00,000 The issue of shares on exercise by way of transfer of shares by Network18 Employees Welfare Trust may be made in any permissible manner including acquisition of shares from secondary market or subscription of shares from the Company.

11 NETWORK18 MEDIA & INVESTMENTS LIMITED MANAGEMENT DISCUSSION AND ANALYSIS REPORT

INDUSTRY STATUS tion of media consumption in cities apart from the large metros The Indian entertainment and media industry, as a whole, has been and the gradual increase in income & awareness levels in Tier estimated to be approximately INR 584 billion as on 2008.According 2 & Tier 3 cities. From the launch of regional newspapers to city to industry reviews and reports this sector has shown a growth of specific channels to special shows, this trend is spurring growth 12% during 2008 and forecast a CAGR of 12.5% over the next 5 in multiple ways. years. The growth in media & entertainment has primarily been aid- • Convergence – Another key trend is the convergence & multi- ed by India’s rapid economic growth amongst other factors. India’s platform presence of media services in the country. Over the gross domestic product grew by 8.7% in fiscal 2008 (Source: Eco- past years, consumers as well as content providers have en- nomic Survey 2007-2008, RBI). In the last four years 2005-2008, the sured that the same content is increasingly deployed across plat- industry recorded a cumulative growth of 15% on an overall basis. forms, from television to online to mobile and beyond. Whether Socio Media Reach (%) its e-papers or online streaming of shows or mobile based appli- Economic Press Televi- C&S Radio Cinema Inter- cations, the convergence of content across the key “screens” is a Classification sion Television net huge phenomenon in the industry. Considering the growth in In- dia’s telecom & IT markets especially mobile & wireless markets A1 93 96 85 37 30 31 (Over 400 mn wireless subscribers), this wave of convergence is A2 88 94 78 31 25 19 bound to get strengthened. B1, B2 78 90 68 24 19 8 • Other key enablers – Apart from the above, there are other im- C 66 85 60 23 18 4 portant factors such as gradual de-regulation in industry policies, D 50 76 49 21 17 1 easier availability of institutional capital for funding growth and the opening up of global markets for Indian media content that E1, E2 27 62 37 16 15 1 have facilitated growth. (Source: FICCI-KPMG Report & IRS 2006, Round 1) The above figures represent percentage reach of each medium in THE RISE OF THE “CONGLOMERATE” the respective Socio Economic Classification (SEC) in urban India. Another key trend with respect to how the industry has been organized is the rise of the “media conglomerate” in India. Due to traditional benefits of size & scale from the diffusion of capital risk to INDUSTRY GROWTH – FUNDAMENTAL DRIVERS The Indian media & entertainment industry has benefited from some cross-leveraging of audiences & promotional opportunities to man- fundamental growth drivers, which have facilitated its double digit aging volatility in consumption patterns, media owners are realizing growth in the past decade. They are categorized and summarized the importance of presence across the value chain and in that sense as follows: have large conglomerate forms, as opposed to stand alone operations which may not be able to withstand environmental exigencies • Evolving socio-economic environment in India – Due to or intense competitive pressures. the powerful synthesis of 2 key factors, India has emerged as a growth engine for discretionary consumption products & ser- NETWORK18 OPERATONS vices, especially media & entertainment. One is the favorable (Divisions & Subsidiaries operated independent of listed group demographic composition of the nation, commonly termed as subsidiaries, TV18 & IBN18) the “Demographic dividend”, which essentially means that a large proportion of the country’s populace is young and in the I. E18 (A DIVISION OF NETWORK18) working age group, thus allowing for greater future consumption E18 is the events division of NETWORK18. E18 is fast establishing upside. Second, since liberalization, the country has witnessed itself as a reputed player in the events & activation space. rapid economic growth which has corresponded with the influx of foreign capital and brands as well as stronger integration with the II. SPORT18 (A DIVISION OF NETWORK18) global socio-economic environment. This has led to the emer- SPORT18 is the sports management division of Network18. gence of an ever increasing large consuming class, with rising SPORT18 is focused on emerging growth opportunities within the disposable incomes, which is globally aware and acquisitive in business of sports in India including but not limited to rights man- nature. agement and representation, licensing & advisory and sponsorship • Digitization – This is the process of converting analog informa- marketing. tion into digital formats. This has been a huge trend in the global media industry especially in TV, music and films and now it’s III. CAPITAL18 MEDIA ADVISORS (A DIVISION OF NETWORK18) becoming evident within India as well. From an enhanced con- Capital18 Media Advisors is in the business of providing investment suming experience for the end-user to greater addressability & advisory and consultancy services to clients in media and other sec- monetization potential for the content provider, digitization can tors. Capital18 Media Advisors provide services to its clients in and be a great value creator across the value chain. Many digital outside India such as searching investment targets, valuation and platforms, ranging from digital cable, DTH, IPTV to digitization of due diligence of investment, advising on structuring investments and films, print and online sales of music have come into existence. on transactions related to consultancy and advisory services. DTH is leading the digitization wave in the nation, with roughly 10 million subscribers by the end of 2008. IV. HOMESHOP18 (A SUBSIDIARY OF NETWORK18) The business objective of Homeshop18 is to participate in and lever- • Narrowcasting – Over the past years, the media industry has age the fast expanding retail opportunity by building a robust and witnessed the emergence of niche plays. – Highly focused chan- scalable virtual retail business. It has launched a credible home nels, shows & formats which seek to segment audiences and shopping network that provides not just the “best in class” products deliver unique offerings accordingly. This has inturn allowed ad- and services to consumers but also assists them in taking “well vertisers to reach out to their consumers more effectively. informed purchases decisions”. A virtual retail service that on one • Regionalization – This is one of the most significant growth driv- hand enables the consumers to take well informed purchase deci- ers for the industry. From providing regional versions or feeds sions through specially developed infotainment led TV content, and of national media brands to launching local content driven titles at the same time provides an on ground logistics foot print and a and channels, regionalization and localization have been grow- web enabled fulfillment mechanism that will deliver quality, value and ing rapidly across media. This has been caused by the percola- convenience to his doorstep.

12 NETWORK18 MEDIA & INVESTMENTS LIMITED

NETWORK18 AND ITS AFFILIATES Network18 Media & Investments Limited

The Indian Film Company (Affiliates)

TV18 (Listed Subsidiary) HomeShop18 (Subsidiary) Setpro18 (Subsidiary) Television Capital 18 Media Advisors CNBC-TV18 (Division) ibn18 (Listed Subsidiary) CNBC Awaaz E18 (Division) Television Sports18 (Division) Infomedia 18 (Listed Subsidiary of TV18) CNN-IBN Business Publications IBN7 Printing IBN Lokmat (joint venture Publishing BPO with Lokmat Group) Yellow Pages Viacom18 (50:50 JV with Viacom) Special Interest Magazines Colors Web18 (Subsidiary of TV18) MTV Content Sites Nickelodeon Moneycontrol.com VH1 Ibnlive.com Studio18 Commoditiescontrol.com Buzz18.com Compareindia.com Cricketnext.com Indiaearnings.com Easymf.com Josh18.com In.com Tech2.com Biztech2.com Indiwo.com Transaction Sites Yatra.com Bookmyshow.com Subscription Poweryourtrade.com Jobstreet.com Newswire18 (subsidiary of TV18) Real-time Data and News Terminal NETWORK18 – DIVISIONAL & SUBSIDIARY BUSINESS OVERVIEW Steel, HSBC Bank, ICICI Bank, IBM, Samsung, PepsiCo etc. (Please refer to Director’s Reports of TV18 & IBN18 for details on Product Expansion brands directly operated within) E18 continued to expand its competency through new properties this E18 year. Some significant additions to its annual pipeline included: E18 is the events division of NETWORK18. E18 is fast establishing itself as a reputed full service player in the events & activation space • Infrastructure Excellence Awards and has a robust pipeline of events across verticals. The company is E18 initiated The Essar Steel Infrastructure Excellence Awards in unique in the event management space as it spans the entire gamut - association with CNBC-TV18 to recognize and felicitate companies from entertainment to business events, from customized single-spon- for excellence in the field of Infrastructure development. Engaging sor to large format multi-sponsor Events. Moreover, E18 cross-sells the entire Infrastructure community was an objective achieved Network18 media platforms to magnify reach and communicate the through diverse platforms like Network Forums, Conclave and the message to a larger audience. In the past year, E18’s revenue model Awards. has essentially been driven from three sources. These are sponsor- • ships of proprietary event properties, management & execution of IT Enabling Green properties from other network18 brands and the corporate segment. E18 organized the IT Enabling Green Conference, a platform for providers of environment friendly IT solutions to connect with manufacturing Key highlights for FY 2008-2009: companies and share ideas on the latest technology developments. Revenue Growth & Client base • Jethro Tull & Anoushka Shankar - Live in Concert E18 delivered robust revenue performance in the last year, multiply- E18 organized the Jethro Tull & Anoushka Shankar - Live in ing revenue levels immensely. Major progress was also made in cli- concert titled ‘A night with the Piper and the Princess’ which brought ent growth, from 29 to 66 corporates, with a wide portfolio of clientele together these two legendary artists on a common platform for the from the following sectors: first time with performances in Mumbai, Delhi, Bangalore, Kolkatta • Automotives and Hyderabad. Touching base with over 7 publications, 5 radio • Beverages channels, 6 television channels and a robust outdoor campaign, • BFSI Jethro Tull & Anoushka Shankar live in India reached out to almost • Consumer Durables 15,000 people on ground and over a million viewers all over India. • FMCG • Healthcare & Pharma HOMESHOP 18 • IT & Technology The business objective of Homeshop18 is to participate in and lever- • Manufacturing age the fast expanding retail opportunity by building a robust and • Media & Entertainment scalable virtual retail business. It’s in process of building a credible • Real Estate home shopping network that not just provides the “best in class” • Telecom products and services to consumers but also assists them in taking • Transportation “well informed purchases decisions”. A virtual retail service that on In 2008-09, E18 acquired new clients such as Bombardier, Essar one hand will enable the consumers to take well informed purchase decisions through specially developed infotainment led TV content, 13 NETWORK18 MEDIA & INVESTMENTS LIMITED

and at the same time an on ground logistics foot print and a web itself in the highly challenging & cluttered sports management enabled fulfillment mechanism that will deliver quality, value and business with some early significant moves. convenience to his doorstep. Recently, it launched India’s First 24 • A large part of growth came from marquee properties such as hour Home Shopping Channel. the marketing & broadcasting rights of the Professional Golf Tour Key highlights for FY 2008-09 of India (PGTI), horse racing rights from Royal Western India Performance Turf Club (RWITC) and the broadcast rights for the benchmark city marathons in Mumbai, Delhi and Bangalore. • Sales: HomeShop18 witnessed strong performance despite gloomy economic scenario. There was robust growth across • Sport18 was instrumental in creating value for these benchmark important parameters like Sales, Orders, Viewership and CRM sports properties by attracting “best fit” sponsorships such as – Customer Base. The repeat customer base has already Aircel for PGTI amongst others. reached a healthy 20% which indicates good service delivery. BUSINESS STRATEGY & FUTURE PLANS • Viewership, Content & Promotions: The HomeShop18 TV Network18 has emerged as the leading multi platform, multi integrated channel strengthened itself greatly during this period. It pro- media entity in the Country. As a result of the robust growth evident duced a rich variety of content including value oriented shows; within its holdings, both organic as well as acquisitive, Network18 celebrity shows like “Beautiful Hamesha” featuring Maher Bha- is well positioned for further progress. Network 18 will focus on sin and “Chef Ka Tadka” featuring Sanjeev Kapoor; apart from capitalizing on opportunities from a platform or media perspective category shows and segment specific shows. Being a transac- as well as developing diversified content offerings. The business tion focused channel in a highly price sensitive market, Ho- strategy for the group can be encapsulated as follows: meShop18 found strong viewership performance through its • Capitalizing on the existing potential of traditional media- promotional offers such a “Diwali Dhamaal”, “50% value back” As is evident both from a macro economic viewpoint as well as and “ Year End Maha sale”, and its value oriented shows such in terms of growth rates, traditional media in India especially as “Weekend loot” and “Bachat Time”. television, filmed entertainment, print and so on are far from reaching saturation levels. The share of advertising, largely the Viewership mainstay of traditional media, when compared to GDP is still reasonably low in India compared to global levels. Moreover, 5000 4550 traditional media has been posting healthy growth in recent 4500 years and estimates for the next few years are also quite 4000 3350 strong. Clearly the growth potential within traditional media 3500 continues to be highly encouraging with rising consumer 3000 sentiment, sustained economic growth and increasing media 2500 2500 usage.Network18 through its existing holdings and new forays, 1963 2000 across the traditional media spectrum, will continue to sustain 1500 its organic growth momentum. The attempt will be to closely 1000 map evolving consumer preferences and needs, and ensure 500 existence across the chain. 0 • Building on strengths in new & addressable media- Q1 Q2 Q3 Q4 Network18 through its online and mobile offerings, has been a leader in the new media space in India. New media has already HomeShop18 Repeat Customers shown early signs of being a major growth opportunity and the group intends to strengthen its existing presence continually. Network18 will also capitalize on newer and addressable plays such as DTH, Internet Protocol Television (PTV), Video n 0.2 Mn Demand (VOD) etc and other “addressable” platforms in order to be well positioned for garnering the subscription upside on Unique customers account of its leader brands & loyal consumer base. Repeat customers • Developing diversified content offerings & leader brands- As a Group, Network18, through its holdings, has created 0.8 Mn and sustained leader brands across the news, information, transaction and entertainment content space. The group, with its recent forays and going forward will continue to deliver ‘best in class’ content offering within these domains. Providing the highest quality content & services that fulfill the wide ranging and ever evolving consuming preferences & user needs in the most convenient & affordable manner will be key to all content Orders & GSV executed (FY09) strategies for the group. • Exploit content & platform synergies- Network18 would 300000 continue to focus on unleashing existing and emerging synergies across the group, thus unlocking value and creating 250000 new opportunities in the process. The underlying theme of growth initiatives would be to exploit untapped market gaps 200000 in the Indian consumer and business media spectrum, strengthen the value proposition to existing consumers of the 150000 Orders group, agglomerate audiences in a more meaningful manner for advertisers and partners and encourage users to move up GSV executed 100000 the value chain through the various services being offered by the group. 50000 • Geographical expansion & Innovation – Network18 will 0 focus on making new inroads into global markets for its Q1 Q2 Q3 Q4 content, through syndication and rights distribution for its properties, shows and films. Considering the growing global SPORT18 is the sports management division of Network18, demand for Indian content and the strong NRI diaspora established in July 2008.SPORT18 is focused on emerging growth presence, the focus will also be to maximize value creation in opportunities within the business of sports in India including but these markets through innovative deals with leading providers not limited to rights management and representation, licensing & and distributors. Regional forays within the nation will also be advisory and sponsorship marketing. an area for consideration in the times to come. In all cases, the endeavor will be to constantly innovate and keep abreast with Key Highlights for FY 2008-2009 the fast evolving nature of consumer tastes • Since launch, SPORT18 has managed to carve a niche for 14 NETWORK18 MEDIA & INVESTMENTS LIMITED

CORPORATE GOVERNANCE REPORT COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE

Corporate Governance is about commitment to values and ethical business conduct. This includes its corporate and other structures, its culture, policies and the manner in which it deals with various stakeholders. Accordingly, timely and accurate disclosure of information regarding the financial situation, performance, ownership and governance of the Company is an important part of corporate governance. We believe that sound corporate governance is critical to enhance and retain investor trust. Your Company always seeks to ensure that we attain our performance rules with integrity. Our corporate governance philosophy is based on the following principles: 1. Primary responsibility of a good corporate entity is maximizing shareholder value 2. Be transparent and maintain a high degree of disclosures level. 3. Sound system of risk management and internal control 4. Principles of integrity, transparency, disclosure, accountability and fairness, 5. Upholding the highest standards of professionalism 6. Management is the trustee of the shareholders capital and not the owner. The Company complies with all statutory and regulatory requirements on corporate governance and has constituted the requisite committees to look into issues of financial reporting, investor grievance and executive remuneration. This attitude of Network18 has strengthened the bond of trust with its stakeholders including the society at large. This part, along with the chapters on Management Discussion and Analysis and Additional Shareholders Information, reports Network18 compliance with clause 49 and highlights the additional initiatives taken in line with international best practices.

BOARD OF DIRECTORS (A) Composition of the Board The current policy is to have an appropriate mix of executive and independent directors to maintain independence of the Board, and to separate the Board functions of governance and management. The Board of Directors of Network 18 Media & Investments Limited consists of six members out of which one is Managing Director, who is a Promoter Director and the remaining five are Non–Executive Directors, including two Independent Directors. The Chairman of the Board of Directors is a Non–Executive Independent Director. The Board believes that the current size is appropriate based on the company’s present circumstances. The Board periodically evaluates the need for increasing or decreasing its size. The details of the composition of the Board during the financial year 2008-09 and their attendance at the Board meetings held during the aforesaid year is given in the following table: Name Executive / No. of outside No. of Chairmanships / Attended last Non-executive / Directorships Memberships of other AGM Independent Held* Board Committees** Chairman- Membership ship Mr. G. K. Arora Non-executive – Chair- 13 1 7 No man, Independent Mr. Raghav Bahl Executive / Managing 12 1 - Yes Director Ms. Vandana Malik Non-executive 6 - - No Mr. Sanjay Ray Chaudhuri Non-executive 11 - 4 Yes Mr. Manoj Mohanka Non-executive, 6 3 3 Yes Independent Ms. Subhash Bahl Non-executive 1 - - No

*For the purpose of considering outside Directorships all the Public Limited Companies, whether listed or not has been considered. Private Limited Companies including the subsidiaries of Public Limited companies, Foreign Companies and their Indian/ foreign subsidiaries and Companies under Section 25 of the Companies Act, 1956 have not been included. **For the purpose of considering the total number of Memberships/ Chairmanships of committee only Audit Committees and Shareholders’/ Investor Grievance Committees of all Public Limited Companies have been considered. None of the Directors is a Member / Chairman in more than 10 / 5 committees of the Board of Directors across all companies in which they are the Directors. Appointment or Re-appointment of Directors Mr. Manoj Mohanka, Director is retiring by rotation and being eligible, has offered himself for re-appointment. Brief profiles of the aforesaid director is given hereunder Mr. Manoj Mohanka, 45, is a B. Com (Hons.) from St.Xavier’s College and also hold a Master’s degree from the Michael Smurfit Graduate School of Business. Mr. Mohanka is also a Chevening Scholar from the London School of Economics. He has held various positions in industry forums including President, Calcutta Chamber of Commerce, Co-Chairman, Economic Affairs Committee of FICCI (ER), Committee Member, Indo-Italian Chamber of Commerce, Board of Governors, Eastern Institute of Management, Chairman, Young Presidents Organisation, Kolkata. Mr. Manoj Mohanka specialises in areas such as finance, accounts, audit, control, management and marketing and has over two decades of Indian and global experience. He has been a guest lecturer at V. G. School of Management, Indian Institute of Technology, Kharagpur and has published articles on Double Taxation Agreement Treaties. Mr. Manoj Mohanka has over 20 years of experience and has made significant contribution in the growth of the company in respect of fields such as finance, accounts, control, management. Other Directorship/Committee membership Name of Director Other Directorship Other Committee Membership Name of Company Position Name of Company Committee Position Mr. Manoj Mohanka 3D Technopack Ltd Director Ibn18 Broadcast Audit Committee Chairman Limited Ibn18 Broadcast Limited Chairman Television Eighteen Audit Committee Chairman India Limited India Carbons Limited Director Television Eighteen Investor Grievance Chairman India Limited Committee 15 NETWORK18 MEDIA & INVESTMENTS LIMITED

Infomedia18 Limited Director Infomedia18 Limited Audit Committee Member Television Eighteen India Limited Director Titagarh Wagons Investor Grievance Member Limited Committee Titagarh Wagons Limited Director Titagarh Wagons Audit Committee Member Limited Foreign Companies Television Eighteen Mauritius Limited Director Artevea Digital Limited Director Note: Only the membership/ chairmanship of Audit Committee and Investor Grievance Committee are shown. Board Meetings During the financial year ended on March 31, 2009, Six Board Meetings were held. The Agenda and other relevant papers were circulated well in time. Board meetings held during 2008 – 2009 and Attendance of Directors Date No. of Directors present Total Strength of BoD 29/04/2008 5 6 31/07/2008 5 5 31/10/2008 5 6 11/12/2008 6 6 30/01/2009 6 6 02/03/2009 6 6

BOARD COMMITTEES AUDIT COMMITTEE The Primary objective of the audit committee of Network18 Media & Investments Limited (the Company) is to monitor and provide effective supervision of the management’s financial reporting process with a view to ensure accurate, timely and proper disclosures and transparency, integrity and quality of financial reporting. The Audit Committee is constituted in accordance with the provisions of Clause 49 of the Listing Agreement and Section 292A of the Com- panies Act, 1956. (a) Terms of reference The Committee deals with various aspects of financial statements, adequacy of internal controls, various audit reports, compliance with accounting standards, Company’s financial & risk management policies besides monitoring the utilization of funds raised through Rights Issue. It reports to the Board of Directors about its findings & recommendations pertaining to above matters. The committee overseas the work carried out in the financial reporting process by the management, the internal auditors and the independent auditor, and notes the processes and safeguards employed by each. (b) Composition The Audit Committee shall comprises of three Directors, two being Independent Non-Executive Directors and one is Non-Executive Direc- tor. All the members of the Committee are financially literate. Mr. Manoj Mohanka is a financial expert. The Company Secretary acts as the Secretary to the Committee. The Composition of the Audit Committee are as under: Name Executive / Non-executive / Independent Position held Mr. Manoj Mohanka Non – Executive, Independent Chairman Mr. G. K. Arora Non – Executive, Independent Member Mr. Sanjay Ray Chaudhuri Non-Executive Member (c) Meetings & Attendance During the year, the Committee met four times and the maximum time gap between any two audit committee meetings during the year was less than four months. Minutes of the Audit Committee meetings were placed before and discussed by the Board. Audit Committee Meetings held during 2008 – 2009 and Attendance of Directors Date No. of Directors present Total Strength of Audit Committee 29/04/2008 3 3 31/07/2008 3 3 31/10/2008 2 3 30/01/2009 3 3 d) Review of information by the Audit Committee 1. Management discussion and analysis of financial condition and results of operations 2. Management letters/letters of internal control weaknesses issued by the Statutory Auditors 3. Internal audit reports relating to internal control weaknesses 4. The appointment, removal and terms of remuneration of the Internal Auditor 5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval 6. Statement of significant related party transactions (as defined by the Audit Committee) submitted by management REMUNERATION COMMITTEE (a) Composition Our Remuneration Committee consists entirely of the Non–Executive Directors, including two Independent Directors. Name Executive / Non-executive / Independent Position held Mr. Manoj Mohanka Non-executive, Independent Chairman Mr. G.K Arora Non-executive, Independent Member Mr. Sanjay Ray Chaudhuri Non-executive Member

16 NETWORK18 MEDIA & INVESTMENTS LIMITED

(b) Terms of reference, power & role of Committee The Committee deliberates on the remuneration policy of the Directors including granting options/ equity shares under various Employees Stock Option/ Purchase Plans of the Company. The purpose of the remuneration committee of the Board of Directors shall be to discharge the Boards responsibilities relating to compensation of the Company’s executive directors and senior management. The Committee has overall responsibility for approving and evaluating the executive directors and senior management compensation plans, policies and programs. (c) Meetings & Attendance Two Remuneration committee meetings were held during the year ended March 31, 2009. Date No. of Directors present Total Strength of Audit Committee 31/07/2008 3 3 11/02/2009 3 3 Details of the remuneration/sitting fee paid to the Directors Sitting fee paid to the Executive Director & Non-Executive Directors, for 2008-2009 are as detailed below: Name Business Relationship Relationship with other Remuneration Sitting Fee Total with Company, if any Directors (Rs.) (Rs.) (Rs.) Mr. Raghav Bahl - Son of Ms. Subhash Bahl and 10,558,000 - 10,558,000 brother of Ms. Vandana Malik Mr. G. K. Arora - - - 155,000 155,000

Mr. Sanjay Ray Chaudhuri - - - 175,000 175,000

Ms. Subhash Bahl - Mother of Mr. Raghav Bahl & - 40,000 40,000 Ms. Vandana Malik Mr. Manoj Mohanka - - - 115,000 115,000 Ms. Vandana Malik - Sister of Mr. Raghav Bahl & - 60,000 60,000 daughter of Ms. Subhash Bahl The Company has no policy of advancing any loans to Directors. It has not paid, so far, any commission on profits to any Director of the Company. There were no other pecuniary relationships or transactions of the Non-Executive Directors vis-à-vis the Company apart from receiving Sitting fee for attending Board Meetings and Committee Meetings. Shares and Options held by Non-Executive Directors Mr. Sanjay Ray Chaudhuri, Non-Executive director, hold 700,000 options of the Company under Network18 Employees Stock Option Plan C 2007, which were allotted last year. SHAREHOLDERS/INVESTORS’ GRIEVANCE COMMITTEE (a) Composition The Shareholders/Investors’ Grievance Committee is constituted in accordance with the provisions of Clause 49 of the Listing Agreement. The Committee comprises of three Non–Executive Directors including two Independent Directors. The details of the Committee are: Name Executive / Non-executive / Independent Position held Mr. Manoj Mohanka Non-executive, Independent Chairman Mr. G K Arora Non-executive, Independent Member Mr. Sanjay Ray Chaudhuri Non-executive Member (b) Terms of reference, powers & role of the Committee The Committee specifically looks into the redressal of shareholders / investors’ complaints. (c) Number of Committee meetings & attendance Four investor grievance committee meetings were held during the year under review. Investor Grievance Committee Meetings held during 2008 – 2009 and Attendance of Directors Date No. of Directors present Total Strength 29/04/2008 3 3 31/07/2008 3 3 31/10/2008 2 3 29/01/2009 3 3 (d) Name and Designation of Compliance Officer Shilpa Aggarwal Manager- Corporate Affairs & Company Secretary Ph (+91120) 4341818 Fax: (+91120) 4324110 e-mail: [email protected] (e) Investor Grievance Committee report for the year ended March 31, 2009 The Committee expresses satisfaction with the Company’s performance in dealing investor grievances. The Company received 151 correspondences from the shareholders during the year, out of which 112 requests were for change of address, dematerialization, re-materialization etc. The rest of the 39 correspondence were in the nature of complaints which were redressed / attended to the satisfaction of the shareholders. Further, the Company has created an E-mail ID [email protected] exclusively for the purpose of registering complaints by investors. Besides above mentioned committees, the Company has following working committees of the Board: 1. Share Transfer Committee 2. Rights Issue Committee 3. Finance Committee 4. Sub Committee 5. Allotment Committee 6. Postal Ballot Committee 17 NETWORK18 MEDIA & INVESTMENTS LIMITED

GENERAL BODY MEETINGS Forthcoming Annual General Meeting Time 11.30 A.M. Venue M.P.C.U Shah Auditorium, Mahatma Gandhi Sanskritik Kendra, 2 Raj Nivas Marg, Shree Delhi Gujarati Samaj Marg, Civil Lines, Delhi – 110 054 Day and date Friday August 28, 2009 Details of last three Annual General Meetings Year Venue Date Time Any special resolution 2006 B-2 Kailash Apartments Lala Lajpat Rai Marg, September 4, 2006 10 A.M Alteration in the Memorandum New Delhi of Association of the Company consequent to alteration in Object Clause 2007 Kamani Auditorium, 1, Copemicus Marg , New September 7, 2007 2.30 NO Delhi PM

2008 M.P.C.U Shah Auditorium, Mahatma Gandhi San- September 15, 2008 12:00 NO skritik Kendra, 2 Raj Nivas Marg, Shree Delhi Gu- Noon jarati Samaj Marg, Civil Lines, Delhi – 110 054

The Company during the year 2008-2009 also conducted two Extra – ordinary General Meetings on January 9, 2009 and March 31, 2009. Details of Postal Ballot conducted During the year, the company conducted two Postal Ballot in accordance with the provisions of section 192A of the Companies Act, 1956 read with the Companies (Passing of the Resolutions by Postal Ballot) Rules, 2001. Date of Completion of Name of the Scrutinizer Brief of Resolution(s) Percentage of votes cast in Postal Ballot favour of resolution July 23, 2008 Mr. Anil Bhayana, Practicing To Revise the Terms & Conditions of the 99.99% Company Secretary appointment of Managing Director of the Company, Mr. Raghav Bahl in respect of the remuneration To consider the Alteration in the Object 99.98% Clause of the Memorandum of Association of the Company

ESPP2008 for the Employees and Direc- 99.98% tors of the Company ESPP2008 for the Employees and Direc- 99.98% tors of the Subsidiary and Holding Com- panies Options in excess of 1% under ESPP 99.98% 2008

Date of Completion of Name of the Scrutinizer Brief of Resolution(s) Percentage of votes cast in Postal Ballot favour of resolution February 11, 2009 Mr. Anil Bhayana, Special Resolution under Section 81 of 99.98% Practicing Company the Companies Act, 1956 for amending Secretary the Network18 Media & Investments Ltd. Employee Stock Option Plan 2005 (ESOP 2005). Special Resolution under Section 81 of 99.98% the Companies Act, 1956 for amending the Network18 Media & Investments Ltd. Senior Employee Stock Option Plan 2004 (Sr. ESOP 2004).

Special Resolution under Section 81 of 99.98% the Companies Act, 1956 for amending the Network18 Media & Investments Ltd. Employee Stock Option Plan 2004 (ESOP 2004). Special Resolution under Section 81 of the 99.98% Companies Act, 1956 for increasing the number of options and enabling acquisition of shares from secondary market under Network18 ESOP 2007. Special Resolution under the Companies 99.98% Act, 1956 for approving the Employee Welfare Plan .

18 NETWORK18 MEDIA & INVESTMENTS LIMITED

DISCLOSURE I. Related Party Transactions None of the transactions with any of the related parties were in conflict with the interest of the Company. Attention of members is drawn to the disclosures of transactions with the related parties set out in Note No.19 of Notes on Accounts, forming part of the Annual Report. II. No penalty or strictures There have been no instance of non-compliance by the Company on any matter related to capital markets during the last three years and hence no penalties, strictures have been imposed on the Company by Stock Exchanges or SEBI or any statutory authority. III. The Company has complied with the mandatory requirements of Clause 49 of the Listing Agreement. IV. The Board reviews adoption of non-mandatory requirements of Clause 49 of the Listing Agreement by the Company from time to time. COMPLIANCE WITH OTHER MANDATORY REQUIREMENTS Management Discussion and Analysis A Management Discussion and Analysis report have been provided separately as a part of this Annual Report and includes discussions on various matters specified under Clause 49(IV)(F) of the Listing Agreement. Disclosure of Accounting Treatment In the preparation of financial statements, the Company has followed the Accounting Standards issued by the Institute of Chartered Accoun- tants of India to the extent applicable. Code of Conduct The Board has laid down a code of conduct for all Directors and Senior Management Executives of the company as required under Clause 49(d) of the Listing Agreement. This code is also posted on the website of the company www.network18online.com. All the Board Members and Senior Management Personnel’s to whom this code of conduct is applicable have affirmed compliance has been annexed in this report. Code of Conduct for Prohibition of Insider Trading The Company has also adopted the Code of Conduct for Prohibition of Insider Trading of shares of the Company as provided under ‘The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 as amended from time to time. This Code has also been posted on the website of the Company www.network18online.com Consequent to the amendment in the Insider Trading Regulations vide SEBI Notification issued on November 19th 2008, the Company has also amended its Model Code of Insider Trading on the website of the Company. Remuneration of Directors During the financial year 2008-2009, no remuneration was paid to the Non-executive Directors. Number of shares held by the Non Executive Directors as on March 31, 2009 S.No. Name of Director No. of shares 1. Mr. Sanjay Ray Chaudhuri 549322

2. Ms. Subhash Bahl 42648 3. Mr. G.K. Arora Nil 4. Mr. Manoj Mohanka 300000 5. Ms. Vandana Malik 91251 MEANS OF COMMUNICATION The Company has been sending Annual Reports, notices and other communications through post or courier modes. The Quarterly, Annual Results of the Company as per the statutory requirement under Clause 41 of the Listing Agreement with stock exchanges are generally published in the Financial Express and Jansatta. The same are also sent to the Stock Exchanges and displayed on the website of the Company www.network18online.com Official News Releases and Presentations made to Institutional Investors or to the analysts are also displayed on the websiteofthe Company. Website Network18 has its own website www.network18online.com on which it puts the quarterly and annual financial results. Besides this the Company sends the quarterly and annual financial results to the Stock Exchanges in such a form so as to enable them to put it on their own web-site. Financial Calendar: [tentative] Our tentative Calendars for declaration of results for the FY 2009 -2010 is given below: Financial Reporting for the quarter ending June 30 Last week of July succeeding the quarter ended June 30 Financial Reporting for the quarter ending September 30 Last week of October succeeding the quarter ended September 30 Financial Reporting for the quarter ending December 31 Last week of January succeeding the quarter ended December 31 Financial Reporting for the year ending March 31 Last week of April succeeding the quarter ended March 31 • Dates of Book Closure: The share transfer books and register of members of the Company shall remain closed from Monday, August 24, 2009 to Friday, August 28, 2009, both days inclusive. • Dividend Payment date: No Dividend declared during the year • Outstanding GDRs/ADRs/ and Convertible Bonds, Conversion The Company has no outstanding instruments as aforesaid as on March 31, 2009. • Listing on Stock Exchanges & Stock Code Equity Shares of the Company are listed and traded on Bombay Stock Exchange and National Stock Exchange of India Limited. Stock Exchange Scrip Code Equity Preference Shares Bombay Stock Exchange Ltd 532798 700132 National Stock Exchange of India Limited Network18 Network18 ISIN Code INE870H01013 INE870H03019

The Company has paid the listing fees to the concerned Stock Exchanges for the financial year 2009-10

19 NETWORK18 MEDIA & INVESTMENTS LIMITED

• Market Price Date: High Low Rates of Equity Shares during each month in the last financial year are as follows: Month High Low NSE BSE NSE BSE APRIL’2008 293.7 293.00 199.05 198.30 MAY’ 2008 279.8 279.40 211.5 212.10 JUNE’ 2008 219.4 222.40 150 150.30 JULY’ 2008 183.85 184.00 137.1 136.00 AUGUST’ 2008 215 214.40 165.65 173.00 SEPTEMBER’2008 211.9 210.15 131.5 132.10 OCTOBER’2008 148.8 147.90 78 77.10 NOVEMBER’2008 110 109.00 85.25 87.00 DECEMBER’2008 115.6 116.00 84.05 91.00 JANUARY’2009 122.7 122.80 86.2 85.00 FEBRUARY’2009 92.35 93.75 68.7 68.60 MARCH’2009 77.45 77.85 58.8 59.15

Comparison of the stock performances with NSE NIFTY

Stock Performances [Indexed to 100 as on April 1, 2008] 200

160

120

8 8 8 8 8 8 8 8 8 8 9 9 9 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 4 4 5 6 7 8 9 0 1 2 1 2 3 .0 .0 .0 .0 .0 .0 .0 .1 .1 .1 .0 .0 .0 1 0 1 0 1 1 0 1 0 1 1 8 1 0 3 3 3 3 3 3 3 3 3 3 2 3

NSE NETWORK 18 NSE

Comparison of the stock performances with BSE SENSEX

Stock Performances [Indexed to 100 as on April 1, 2008] 200

160

120

8 8 8 8 8 8 8 8 8 8 9 9 9 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 4 4 5 6 7 8 9 0 1 2 1 2 3 .0 .0 .0 .0 .0 .0 .0 .1 .1 .1 .0 .0 .0 1 0 1 0 1 1 0 1 0 1 1 9 1 0 3 3 3 3 3 3 3 3 3 3 2 3

BSE NETWORK18 BSE

20 NETWORK18 MEDIA & INVESTMENTS LIMITED

Address of the Registrar & Share Transfer Agent Alankit Assignment Limited 2E/21, Jhandewalan Extn. New Delhi – 110 055 Telephone: 91 11 42541234 Fax: 91 114254 1967 Email: [email protected]

Share Transfer System Share transfers in physical form are registered and returned within the stipulated time, if documents are clear in all respects. The shares of the Company are freely tradable on BSE and NSE. As on March 31, 2009 there were 79895 shares in physical form constituting 0.11% of the total shareholding of the Company. Other details are as under: • Approximate time taken for share transfer if the • Documents are clear in all respects : 21day • Total No. of shares dematerialized as on 31.03.2009 : 71855719 • Total No. of shares transferred during 2008 – 2009 : 1188 • Number of Shares pending / Rejection for Transfer as on 31.03.2009 NIL Distribution of shareholding as on March 31, 2009 S.No. Category No. of shareholders No. of shares %age 1. Indian Public 27482 10500550 14.60 2 Bodies Corporate 1105 8330158 11.58 3. FIs/ Mutual Funds/ UTI/ Banks 10 1759155 2.45 4. Indian Promoters 13 38890543 54.06 5. NRIs/ OCBs/ FIIs* 178 8946688 12.44 6. Trusts 7 3508520 4.88 TOTAL 28795 71935614 100.00

* Total foreign shareholding in number of shares and percentage shareholding is 8946688 shares and12.44%, approximately.

Graphic presentation of the Shareholding Pattern as on 31.03.2009

NRIs / Indian OCBs / FIIs Trusts Public Bodies Corporate s

FIs / MF / UTI / Banks

Indian Promoters / PAC Distribution Schedule as on 31.03.2009 S. No. No. of Shares No. of Holders % of Holders Holding Nos. % of Holding 1. 1 – 5000 27145 94.26 13558050 3.77 2. 5001 – 10000 810 2.82 5241920 1.46 3. 10001 – 20000 446 1.56 5672005 1.57 4. 20001 – 30000 146 0.50 3501270 0.97 5. 30001 – 40000 39 0.14 1358830 0.38 6. 40001 – 50000 41 0.14 1822680 0.51 7. 50001 – 100000 67 0.23 4439795 1.23 8. 1,00,001 & Above 101 0.35 324083520 90.11 TOTAL 28795 100 359,678,070 100

Registered Office Address Address for Correspondence/Corporate Office Network 18 Media & Investments Limited Network 18 Media & investments Limited (Former name Network 18 Fincap Limited) (Former name Network 18 Fincap Limited) 601, 6th Floor, Commercial Tower Express Trade Tower, Hotel Le Meridien, Raisina Road Plot No. 15-16, New Delhi – 110 001. Sector-16A, Noida, U. P. E-mail : [email protected] Phone Nos. : (0120) 434 1818 Fax No. : (0120) 432 4110 E-mail : [email protected]

21 NETWORK18 MEDIA & INVESTMENTS LIMITED

Certificate on Compliance with the conditions of Corporate Governance under Clause 49 of the Listing Agreements(s)

To the Members Network18 Media & Investments Limited 601, 6th Floor, Commercial Tower, Hotel Le Meridien, Raisina Road, New Delhi-110001 1. We have reviewed the implementation of the corporate governance procedures by Network18 Media & Investments Limited (the company) during the year ended March 31st 2009, with the relevant records and documents maintained by the company, furnished to us for our review and report on Corporate governance, as approved by the Board of Directors. 2. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of the opinion on the financial statements of the company. 3. 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. 4. On the basis of our review and according to the best of our information and according to the explanations given to us, the company has been complying with the conditions of Corporate Governance, as stipulated in the clause 49 of the Listing agreements (s) with the Stock Exchanges, as in force. For N.K.J. & Associates Company Secretaries Place: New Delhi Sd/- Date: June 30, 2009 Neelesh Kr. Jain Proprietor Membership No. FCS 5593 Certificate of Practice No. 5233

MD AND CFO CERTIFICATION We, Raghav Bahl, Managing Director and Raman Deep Singh Bawa, Chief Financial Officer, responsible for the finance function and the compliance of the Code of Conduct of the Company certify that: 1. We have reviewed financial statements and the cash flow statement for the year and to the best of our knowledge and belief: i) These statements do not contain any material untrue statement or omit any material fact or contains statements that might be misleading. ii) These statements together represent a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations. iii) There are, to the best of our knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or volatile of the Company’s Code of Conduct. 2. We accept the responsibility for establishing and maintaining internal controls and that we have evaluated the effectiveness of the internal control systems of the company and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any, of which we were aware and the steps we have taken or propose to take to rectify these deficiencies 3. During the year there were no – (i) Changes in internal control. (ii) Changes in accounting policies; and (iii) Instances of fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the Company’s internal control system. For Network18 Media & Investments Limited, For Network18 Media& Investments Limited, Sd/- Sd/- Raghav Bahl Raman Deep Singh Bawa Managing Director Chief Financial Officer

Place: Noida Date : June 30, 2009

DECLARATION UNDER CLAUSE 49-I(D) OF THE LISTING AGREEMENT \Dear Members, In compliance with the provisions of Clause 49 of the Listing Agreement, the Company had laid down a “Code of Conduct” to be followed by all the Board members and senior management personnel officers which received the sanction of the Board and has been posted on the website of the Company – www.network18online.com. The Code lays down the standards of ethical and moral conduct to be followed by the officers in the course of proper discharge of their official duties and commitments. All the officers are duly bound to follow and confirm to the Code. It is hereby certified that all the members of the Board and senior management personnel have confirmed to and complied with the “Code of Conduct” during the financial year 2008-2009 and there has been no instances of violation of the Code.

For Network18 Media & Investments Limited

Sd/- Place: Noida Raghav Bahl Date: June 30, 2009 Managing Director

22 NETWORK18 MEDIA & INVESTMENTS LIMITED AUDITORS’ REPORT To the members of Network18 Media & Investments Limited 2. The fixed assets have been physically verified by the management 1. We have audited the attached Balance Sheet of Network18 Media during the period and no material discrepancies were noticed . & Investments Limited as at March 31,2009 and the Profit & Loss 3. A substantial part of fixed assets have not been disposed off during Account for the year ended on that date and the Cash Flow Statement the year. for the year ended on that date both annexed hereto . These financial 4. The company’s business as at the year end does not generate statements are the responsibility of the Company’s management .Our tangible inventories. Para 4(ii)(b) and 4 (ii) (c) are therefore not responsibility is to express an opinion on these financial statements applicable to the company. based on our audit. 5. The company had granted unsecured loans of Rs 281.7 millions to 2. We conducted our audit in accordance with auditing standards 2 companies covered in the Register maintained under Section 301 generally accepted in India. Those standards require that we plan of the Act. The rate of interest on these loans and the other terms and perform the audit to obtain reasonable assurance about whether and conditions are not prima facie, prejudicial to the interest of the the financial statements are free of material misstatement. An company. No repayment terms are specified for the loans but the audit includes examining, on a test check, evidence supporting the borrowers have repaid all sums except a sum of Rs 30.3 million as amounts and disclosures in the financial statements. An audit also at year end. includes assessing the accounting principles used and significant 6. The company has not taken any loans, from a company listed in the estimates made by the management, as well as evaluating the overall Register maintained under Section 301 of the Act . financial statement presentation. We believe that our audit provides a 7 There is an internal control procedure commensurate with the size reasonable basis for our opinion. of the company and the nature of its business for the purchase of 3. As required by the Companies (Auditor’s Report) Order, 2003,issued Fixed Assets and for the sale of services. The company’s operations by the Company Law Board in terms of Section 227(4A) of the do not generate any inventory. During the course of our audit , we Companies Act,1956 ,we annex hereto a statement on the matters have not observed any continuing failure to correct weaknesses in specified in paragraph 4 of the said Order, to the extent applicable to the internal control system. the company. 8. The particulars of all contract or arrangements referred to in Section 4. (i) Attention is invited to Note 27 of Schedule 14 , regarding 301 of the Act , have been entered in the Register required to be non compliance with capital adequacy and concentration of maintained under that section . Transactions made in pursuance investments norms forming part of the Non Banking ( Non Deposit of such arrangements have been made at prices which are, prima Accepting or Holding) Companies Prudential Norms (Reserve facie, reasonable having regard to the prevailing market prices at Bank) Directions ,2007 issued by the Reserve Bank of India. the relevant time. (ii) The company has paid a remuneration of Rs 11.46 millions to its 9. The company has not accepted deposits from the public during the Managing Director, which in view of losses, needs to be approved period. by the Central Government. 10. The company has an internal audit system commensurate with its We are unable to comment on the adjustments and impact, if any, size and the nature of its business. on the financial statements in respect of the non compliance. 11. Maintenance of cost records has not been prescribed by the Central 5. Further to our comments in the annexure referred to in Paragraph 4 Government under Section 209(1) (d) of the Companies Act,1956, above ,we report that for any of the products of the Company. a. we have obtained all the information and explanations which, 12. The company has been generally been regular in depositing to the best of our knowledge and belief, were necessary for our undisputed statutory dues on account of Income tax, Provident Fund, audit. Service Tax and Employees State Insurance dues .The company’s b. in our opinion, proper books of account have been kept as current operations do not require it to deposit any amounts towards required by law , so far as appears from our examination of the Investor Education and Protection Fund, Wealth Taxes , Sales books. Taxes, Customs Duty , Excise and such cess(s).There are no c. the Balance Sheet ,Profit and Loss Account and Cash Flow undisputed sums payable towards Income tax ,Provident Fund, Statement dealt with by this report are in agreement with the Service Tax and Employees State Insurance dues , which were books of account. outstanding at the year end for a period of more than six months d. in our opinion ,the Balance Sheet , Profit & Loss Account and from the date they became payable. Cash Flow Statement dealt with by this report are in compliance 13. The company’s losses as at March 31,2009 do not exceed 50% with the mandatory Accounting Standards referred to in sub of its Net Worth . The company has incurred cash losses in the section 3(c) of Section 211 of the Companies Act,1956. year under review and but did incur cash losses in the immediately e. In our opinion and to the best of our information and according preceding financial year. to the explanations given to us , the said accounts read together 14. The company has not defaulted in repayment of dues to a financial with the significant accounting policies and notes thereon,subject institution or bank or debenture holders. to our comments in Para 4 above, give the information as required 15. No loans/ advances have been granted on the basis of security of by The Companies Act,1956, in the manner so required and give pledge of shares, debentures and other securities . a true and fair view in conformity with the accounting principles 16. The company’s activities do not require compliance with any special generally accepted in India: statute applicable to chit fund companies. i) in the case of the Balance Sheet, of the state of affairs of the 17. In respect of dealings or trading in shares and securities the Company as at March 31,2009 ,and company has maintained proper records of the transactions and ii) in the case of the Profit and Loss account, of the loss for the contracts and timely entries have been made . All shares / securities year ended on that date, and have been held by the company in its own name . iii) in the case of the Cash Flow statement ,of the cash flows of 18. The company has given guarantees for loans taken by others from the Company for the year ended on that date Financial Institutions / Banks , the terms of which are prima facie , 6. On the basis of written representations received from the Directors, not prejudicial to the company’s interest . as on March 31,2009 and taken on record by the Board of Directors, 19. Term Loans were used for the purpose they were obtained . we report that none of the Directors is disqualified as on that date from 20. Loans of Rs 700 millions raised as Short term loans were used for being appointed as a Director in terms of clause (g) of sub-section (1) Long term investments. of Section 274 of the Companies Act,1956. 21. The company has not made a preferential allotment Equity Shares For G S Ahuja & Associates to any party listed in the Register maintained u/s 301 of the Chartered Accountants Companies Act. 22. The company has created security in respect of debentures Noida G S Ahuja issued. June 30, 2009 Proprietor, 23. The management has disclosed the end use of money raised Membership No. 87732 through rights issue and the same has been verified. ANNEXURE 24. No fraud on or by the company has been noticed or reported during Annexure referred to in Para 3 of our Report of even date, to the members the year . of Network18 Media & Investments Limited As required by the Companies (Auditor’s Report) Order, 2003 on the basis of For G S Ahuja & Associates such checks as we considered appropriate, and, according to the information Chartered Accountants and explanations given to us, we report that :- 1. The company has maintained proper records showing full particulars Noida G S Ahuja including quantitative details and situation of fixed assets. June 30, 2009 Proprietor, Membership No. 87732

23 NETWORK18 MEDIA & INVESTMENTS LIMITED BALANCE SHEET AS AT MARCH 31, 2009 As at As at Schedule 31.03.2009 31.03.2008 (Rs.) (Rs.) SOURCES OF FUNDS Shareholders’ Funds Share Capital 1 1,902,940,920 257,411,275 Application Money Received (Note 4 d) 598,473 - Stock Options Outstanding 2 206,137,246 148,360,858 Reserves and Surplus 3 4,233,535,733 3,486,838,147 Secured Loans 4 1,274,689,145 4,062,364,842 Unsecured Loans ( Note 6 c ) 1,143,750,000 - 8,761,651,517 7,954,975,122 APPLICATION OF FUNDS Fixed Assets Gross Block 5 74,883,669 19,278,976 Less:Depreciation 28,639,084 1,033,269 Net Block 46,244,585 18,245,707 Capital Work In Progress - 16,951,554 46,244,585 35,197,261 Investments 6 7,025,910,315 5,966,851,976 Current Assets ,Loans and Advances 7 Sundry Debtors 56,706,158 7,738,151 Cash and Bank balances 264,615,209 122,633,558 Loans and Advances 1,677,679,863 1,919,684,220 1,999,001,230 2,050,055,929 Less: Current Liabilities and Provisions 8 Current Liabilities 372,470,176 148,803,596 Provisions 77,577,098 45,093,546 450,047,274 193,897,142 Net Current Assets 1,548,953,956 1,856,158,787 Miscellaneous Expenditure (Note 9) - 96,767,098 Profit and Loss Account 140,542,661 - 8,761,651,517 7,954,975,122 Notes forming part of accounts 14

The above schedules form an integral part of accounts As per our report of even date attached

For G S Ahuja & Associates For and on behalf of the Board Chartered Accountants

G S Ahuja Raghav Bahl Sanjay Ray Chaudhuri Proprietor Managing Director Director

June 30, 2009 R D S Bawa Shilpa Aggarwal Noida Chief Financial Officer Manager Corporate Affairs & Company Secretary

24 NETWORK18 MEDIA & INVESTMENTS LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009 Schedule Year ended Year ended 31.03.2009 31.03.2008 (Rs.) (Rs.)

INCOME Income from Operations 9 945,034,706 1,424,076,511 Other Income 10 26,996,897 10,172,991 972,031,603 1,434,249,502

EXPENDITURE Production, administrative and other costs 11 473,269,298 528,881,316 Personnel expenses 12 67,789,204 87,207,843 Stock option charge out 60,288,006 113,954,421 Interest and financial charges 13 509,174,440 258,189,207 Depreciation 5 27,577,915 1,809,217 1,138,098,863 990,042,004 Profit(Loss) before tax (166,067,260) 444,207,498 Provision for MAT (Previous year Net of MAT credit) 12,500,000 Fringe Benefit Tax 3,426,681 1,492,801 Profit (Loss) for the year (181,993,941) 442,714,697 Profit(Loss) brought forward 53,542,134 (180,337,025) Appropriations Prior Period adjustments ( Note 34) (12,090,854) - Transfer to Reserve u/s 45IC of the RBI Act (Note 5) - (88,542,939) Interim Dividend - (64,355,837) Tax on interim dividend - (10,936,762) Transfer to General Reserve - (45,000,000) Carried to Balance Sheet (140,542,661) 53,542,134

Earning per equity share (See note 10) (Face Value of Rs. 5 per share, previous year Rs. 5 per share) Basic (3.14) 8.63 Diluted (3.10) 8.46 Notes forming part of accounts 14

The above schedules form an integral part of accounts As per our report of even date attached

For G S Ahuja & Associates For and on behalf of the Board Chartered Accountants

G S Ahuja Raghav Bahl Sanjay Ray Chaudhuri Proprietor Managing Director Director

June 30, 2009 R D S Bawa Shilpa Aggarwal Noida Chief Financial Officer Manager Corporate Affairs & Company Secretary

25 NETWORK18 MEDIA & INVESTMENTS LIMITED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2009 Particulars Schedule Year ended Year ended 31.03.2009 31.03.2008 (Rs.) (Rs.)

A CASH FLOW FROM OPERATING ACTIVITES (see note below) Profit before tax (166,067,260) 444,207,498 Adjustment for: Depreciation 27,577,915 1,809,217 Stock option chargeout 60,288,006 113,954,421 Interest and financial charges 509,174,440 258,189,207 (Profit) Loss on transfer of film business - (6,952,243) Loss on sale of fixed assets 220,901 115,714 Provision for doubtful debts written off - 2,004 Provision for debts doubtful of recovery - 29,877,819 Foreign exchange loss/(gain) 76,329 (76,868) Prior period adjustment (12,090,854) - Operating profit before working capital changes 419,179,477 841,126,769 Adjustment for: Decrease (Increase) in Current Assets (1,012,963,650) (3,393,950,821) Increase(Decrease) in Current Liablities 253,562,185 98,849,072 Net cash flow from (Used in) operating activities (340,221,988) (2,453,974,980) Income Tax ( including FBT) (15,926,681) (1,492,801) Net cash flow from operating activities (356,148,669) (2,455,467,781) B CASH FLOW FROM INVESTMENT ACTIVITES Purchase of fixed assets (66,557,954) (38,054,692) Consideration received on transfer of films business - 17,689,500 Sale of fixed assets 105,999 323,495 Share Application Money paid to Subsidiary 1,206,000,000 1,800,000,000 Investments - In subsidiaries ( Net of sales) (993,729,557) (1,697,122,723) - In Mutual funds (Net) (170,406,610) 166,460,227 Sale of other investments 100,250,005 (908,060,005) Proceeds from Debenture redemption 4,827,823 1,316,679 Net cash from /(used in) investing activities 80,489,706 (657,447,519) C CASH FLOW FROM FINANCING ACTIVITIES Share application money received (pending allotment) 598,473 - Securities Premium on issue of equity shares 917,508,340 24,967,698 Interest and Financial charges (509,174,440) (258,189,207) Dividend paid (including tax) - (75,292,599) Proceeds from issue of PCCPs 1,543,262,850 - Proceeds from issue of Equity shares 102,266,795 - Expenses on Right issue (20,501,522) (28,414,098) Increase (Decrease) in loans (Net of repayments) (1,643,925,697) 3,424,736,124 Net cash flow from (used in) financing activities 390,034,799 3,087,807,918 Net increase(decrease) in cash and cash equivalents 14,181,651 (25,107,382) Cash and cash equivalents as at the beginning of the year 122,633,558 147,740,940 Cash and cash equivalents as at the end of the year 264,615,209 122,633,558 Note : Investment income is considered as operating income Notes forming part of accounts 14

26 NETWORK18 MEDIA & INVESTMENTS LIMITED Schedules forming part of the Accounts As at As at 31.03.2009 31.03.2008 (Rs.) (Rs.) SCHEDULE 1 : SHARE CAPITAL AUTHORISED 110,000,000 (110,000,000) Equity Shares of Rs 5/- each 550,000,000 550,000,000 1,100,000 (1,100,000) Preference Shares of Rs 100/- each 110,000,000 110,000,000 12,000,000 (12,000,000) Preference Shares of Rs 200/- each 2,400,000,000 2,400,000,000 3,060,000,000 3,060,000,000 ISSUED, SUBSCRIBED AND PAID UP 71,935,614 (Previous year 51,482,255) Equity shares of Rs. 5/- each fully paid up 359,678,070 257,411,275 10,272,355 5% Partly Convertible Cumulative Preference shares of Rs. 150/- each, fully paid up (Note 4 ) 1,540,853,250 - 24,096 5% Partly Convertible Cumulative Preference Shares of Rs. 150/- each, Rs 100 paid up (Note 4 ) 2,409,600 - Total 1,902,940,920 257,411,275 SCHEDULE 2: STOCK OPTIONS OUTSTANDING Opening Balance 148,360,858 69,401,538 Stock Options Outstanding 162,910,691 221,311,877 Less: Deferred Compensation (105,134,303) (142,352,557) Carried to Balance Sheet 206,137,246 148,360,858 SCHEDULE 3 : RESRVES AND SURPLUS Securities Premium Balance brought forward 3,299,525,483 3,242,656,984 Add : Premium on issue of Equity Shares 917,508,340 56,868,499 Less: Right issue expenses written off ( Note 9 ) 117,268,620 - 4,099,765,203 3,299,525,483 General Reserve Opening Balance 45,000,000 - Transfer from Profit and Loss account - 45,000,000 45,000,000 45,000,000 Reserve u/s 45IC of the RBI Act Balance brought forward 88,770,530 227,591 Add :Transfer from Profit and Loss account ( Note 5 ) - 88,542,939 88,770,530 88,770,530 Profit and Loss account - 53,542,134 4,233,535,733 3,486,838,147 SCHEDULE 4 : SECURED LOANS Debentures - 500,000,000 Loans from Banks Term Loans - 1,150,000,000 Vehicle Loans ( Note 6 a ) 4,689,145 4,164,842 Other Loans (Note 6 b) 1,270,000,000 2,408,200,000 1,274,689,145 4,062,364,842 Schedule 5 : Fixed Assets Amount (Rs) G r o s s B l o c k D e p r e c i a t i o n N e t B l o c k As at Additions Acquisition Deletions As at As at For the Dep on Adjust- As at As at As at Particulars 1.4.2008 31.03.2009 1.4.2008 year Acquisition ments 31.03.2009 31.03.2009 31.03.08 Free Hold Land - 609,980 - - 609,980 - - - - - 609,980 - Vehicles 6,189,761 3,224,555 - - 9,414,316 191,440 853,940 - - 1,045,380 8,368,936 5,998,321 Plant & Machinery 4,307,385 274,398 65,430 188,536 4,458,677 104,397 443,272 5,229 14,512 538,386 3,920,291 4,202,988 Computer Hardware 1,922,034 2,326,542 268,850 - 4,517,426 162,803 630,675 46,760 - 840,238 3,677,188 1,759,231 Computer Software 5,642,311 2,649,053 - - 8,291,364 564,457 6,339,351 - - 6,903,808 1,387,556 5,077,854 Furniture 1,217,485 138,804 30,167 163,306 1,223,150 10,172 83,664 853 10,430 84,259 1,138,891 1,207,313 Leasehold Improvements (See Note) - 46,368,756 - - 46,368,756 - 19,227,013 - - 19,227,013 27,141,743 - TOTAL 19,278,976 55,592,088 364,447 351,842 74,883,669 1,033,269 27,577,915 52,842 24,942 28,639,084 46,244,585 18,245,707 Capital work in progress 16,951,554 - - 16,951,554 ------16,951,554 Total 36,230,530 55,592,088 364,447 17,303,396 74,883,669 1,033,269 27,577,915 52,842 24,942 28,639,084 46,244,585 35,197,261 Previous year 11,371,170 38,054,692 - 13,195,332 36,230,530 1,242,918 1,809,217 - 2,018,866 1,033,268 35,197,261 10,128,252 * Include Rs. 17,234,338/- Pertaining to impairment of assets at leased premises.

27 NETWORK18 MEDIA & INVESTMENTS LIMITED Schedules forming part of the Accounts As at As at 31.03.2009 31.03.2008 (Rs.) (Rs.) SCHEDULE 6 : INVESTMENTS Quoted: Non Trade : Long Term : At Cost In subsidiary companies 53,959,106 Equity Shares of Rs 5/- each in Television Eighteen India Limited 2,973,396,855 2,662,660,468 (Previous year 53,509,106 ) ( Note 7 a) 47,724,140 Equity Shares of Rs 2/- each in ibn18 Broadcast Limited 213,932,170 197,000,000 (Previous year 52,055,140 Equity Shares of Rs 2/- each) ( Note 7 b ) Nil (Previous year 67,522 Debentures of Rs 71.50) Non Convertible part of Zero - 4,827,823 Coupon Secured Partly Convertible Debentures in Television Eighteen India Limited In other companies 10,000,000 (10,000,000) Ordinary Shares of no Par value in The Indian Film 807,810,000 807,810,000 Company Limited, Guernsey. ( Note 7 c) Current : In Mutual funds 3,680,177.83 (Previous year 4,083,412 ) units of Rs. 10 each in Birla Sunlife 50,520,290 40,869,240 Mutual Fund ( Note 7 d) Nil (Previous year 89,226 )units of Rs. 1000 each in Standard Chartered Mutual Fund - 89,244,440 15,579,818.53 (Previous year Nil) Units of Rs.10 each in LIC Liquid Fund Mutual Fund 250,000,000 - Aggregate of Quoted Investments 4,295,659,315 3,802,411,971 Aggregate Market Value of quoted investments 7,766,317,609 28,916,118,142 Unquoted : Non Trade : Long term In subsidiary companies 1,500,000 (Previous year 1,500,000 ) Equity Shares of USD 1/- each fully paid up in Network 18 Holdings Limited, Cayman Islands (Note 7 e) 67,890,000 67,890,000 33,000 (Previous year 33,000) Equity Shares of Rs 10/- each fully paid up in Setpro18 Distribution Limited 50,000,000 50,000,000 10,000 (Previous year 10,000) Equity shares of Rs 10/- each in Network 18 India Holdings Pvt Ltd (Note 7 f) 100,000 100,000 2,827,000 (Previous year 2,827,000) 0.01% Redeemable Non Cumulative Non Convertible Preference Shares of Rs 10/- each in Network 18 India Holdings Private Limited (Note 7 g) 1,696,200,000 1,696,200,000 6,644,000 (Previous year Nil) 0.01% Redeemable Non Cumulative Non Convertible 666,061,000 - Preference Shares of Rs 10/- each in Network 18 India Holdings Private Limited ( Note 7 h ) In other companies Nil (Previous year 240,000) 15% Cumulative Redeemable Convertible Preference Shares of Rs 10/-each in VT Holdings Private Limited - 100,250,005 2,500,000, ( Previous year 2,500,000 ) 8% Cumulative Redeemable Non Convertible 250,000,000 250,000,000 Preference Shares of 100/- each in BK Media Pvt. Ltd. (Note 7 i) 2,730,251,000 2,164,440,005 7,025,910,315 5,966,851,976

SCHEDULE 7 : CURRENT ASSETS , LOANS AND ADVANCES Sundry debtors (Unsecured, Considered Good) Debts outstanding for a period more than 6 months 3,987,360 - Other debts 52,718,798 7,738,151 56,706,158 7,738,151 Cash and bank balances Cash on hand 70,479 140,819 Balance with scheduled banks : - in current accounts 39,544,730 122,492,739 - in Fixed Deposits ( Note 10) 225,000,000 - 264,615,209 122,633,558 Loans & advances (Unsecured, considered good) Share application Money Paid (Note 8) 1,206,000,000 1,800,000,000 Advances due from company under the same management / Subsidiaries ( 1) 132,598,300 18,640,433 Amount due from entities under significant influence - 2,409,349 Service tax input credit 18,054,296 7,484,776 Security and other deposits 13,413,004 13,276,000 Advances recoverable in cash or in kind or for value to be received - Prepaid income tax ( net of provision for tax Nil, previous year Nil) 114,249,983 9,258,900 - MAT credit entitlement 40,000,000 40,000,000 - Advances to Vendors/ Service providers 50,979,302 18,308,030 - Interest Accrued but not due on Fixed Deposits 2,279,933 - - Other advances 100,105,045 10,306,732 1,677,679,863 1,919,684,220

28 NETWORK18 MEDIA & INVESTMENTS LIMITED Schedules forming part of the Accounts As at As at 31.03.2009 31.03.2008 (Rs.) (Rs.)

(1) includes amounts due from Moneycontrol Dot Com India Ltd 24,208 - IBN18 Trust (L&A) 9,870 - Televison Eighteen Commodities control.com Limited 1,036,470 96,295 E Eighteen.Com Limited 5,438,917 - Web 18 Software Services Ltd. 7,266,582 288,886 Newswire18 India P Ltd (Drs) 9,460,631 98,528 IBN18 Broadcast Limited 59,529,365 11,411,110 Tv18 Home Shopping Network Limited 1,432,065 510,367 Tangerine Digital Entertainment Private Limited 197,055 197,055 Care Websites Pvt Ltd 25,615 - Stargaze Entertainment Pvt Ltd 50,193 - Colesceum Media Pvt. Ltd - 747,767 Capital 18 Media Advisors 2,801,023 - Viacom 18 Media Pvt. Ltd. 33,240,012 2,409,349 Web chuttney Sudio Pvt. Ltd. 98,528 98,528 Greycells 18 Media Private Limited - 197,055 The India International Film Advisors Private Limited 1,282,499 295,584 Infomedia India Limited 10,102,809 - Big Tree Entertainment Pvt. Ltd. 9,203 197,055 Studio 18 UK, USA 593,256 766,462 SCHEDULE 8 : CURRENT LIABILITIES AND PROVISIONS Current liabilities Book Overdraft from a Bank - 13,344,566 Dues to Micro & Small enterprises - - Sundry creditors 106,064,957 49,713,668 Interest accured but not due 3,946 - Statutory liabilities 15,005,463 23,580,263 Unclaimed Dividend 206,438 - Advances from customers 22,018,020 575,589 Due to companies under the same management / Subsidiaries ( 2) 229,171,352 61,589,510 372,470,176 148,803,596 Provisions Provision for retirement benefits 14,581,635 5,051,166 Provision for Taxes 62,995,463 40,042,380 77,577,098 45,093,546 450,047,274 193,897,142 (2) Includes amounts due to Sga News Ltd 418,361 - RVT Holdings Pvt Ltd 21,736 - B K Media Mauritius P Ltd. 163,559 163,559 Setpro 18 Distribution Limited 224,096 - The Indian Film company 5,261,859 4,755,773 IBN18 Broadcast Limited - 28,637,039 TV Eighteen India Limited 223,081,741 28,033,140

SCHEDULE 9 : INCOME FROM OPERATIONS Income from Films - 347,334,319 Income from Event Business 234,400,144 53,860,455 Income from Investments 706,678,307 1,022,881,737 Income from Management Services 3,956,255 - 945,034,706 1,424,076,511 SCHEDULE 10 : OTHER INCOME Misc. Income 15,100 3,220,748 Excess provision written back (Note 29 b ) 26,981,797 - Surplus on transfer of assets of film business - 6,952,243 26,996,897 10,172,991

29 NETWORK18 MEDIA & INVESTMENTS LIMITED Schedules forming part of the Accounts As at As at 31.03.2009 31.03.2008 (Rs.) (Rs.)

SCHEDULE 11: PRODUCTION, ADMINISTRATIVE AND OTHER COSTS Prints and Publicity - 20,237,722 Equipment Hire 16,903,944 - Cost of film /music rights - 322,087,639 Content and franchise expenses 19,068,125 - Media professional fees 17,777,055 6,239,133 Other production expenses 12,584,740 1,690,229 Rent 32,608,216 5,183,378 Electricity expenses 2,309,275 1,214,182 Insurance 1,259,890 1,540,578 Travelling and conveyance 25,964,584 13,339,128 Vehicle running and maintenance 6,756,099 2,816,175 Communication expenses 4,865,972 2,801,016 Advertisement Expenses 36,712,448 45,678,972 Event Expenses 77,679,661 24,093,513 Commission 7,125,000 - Business Promotion 2,272,601 11,424,981 Entertainment Expenses 1,450,540 354,666 Conference & Meeting 1,004,889 76,353 Brand Building Expenses 82,595,945 - Repairs and maintenance - Plant & machinery 859,741 251,322 - Others 3,889,392 3,513,185 Legal and professional expenses 96,055,119 20,955,914 Directors sitting fees 536,000 - Loss on sale / disposal of assets 220,901 115,714 Goodwill on acquistion of business (Note 29 a ) 15,193,730 - Balances written off - 2,004 Provision for amount doubtful of recovery (Note 29 b ) - 28,577,819 Miscellaneous expenses 7,499,102 15,387,693 Loss on exchange rate fluctuation 76,329 - Provision for doubtful debts - 1,300,000 473,269,298 528,881,316

SCHEDULE 12 : PERSONNEL EXPENSES Salaries and other staff benefits (Including stock options) 43,932,175 71,354,829 Contribution to provident fund 7,620,475 3,081,227 Staff welfare expenses 6,932,855 7,720,621 Retirement benefits 9,303,699 5,051,166 67,789,204 87,207,843

SCHEDULE 13 : INTEREST AND FINANCIAL CHARGES Interest on: -Term loans 489,645,170 204,674,150 -Others 2,624,730 14,603,382 Financial charges 16,904,540 38,911,675 509,174,440 258,189,207

30 NETWORK18 MEDIA & INVESTMENTS LIMITED Schedule 14 : Notes forming part of accounts 1. Background / Business a. The company was incorporated as SGA Finance and Management Services Private Limited in 1996. The name was changed to Network 18 Fincap Private Limited in April 2006. The company was converted into a Public Company on October 20, 2006. The name was further changed to Network18 Media & Investments Limited on December 1, 2007. b. The company is registered with the Reserve Bank of India as a Non Banking Finance Company and by virtue of its asset size, is classified as a ‘Systemically Important Non Banking Financial Company ’. c. The company, as at March 31, 2009, (i) jointly with Network 18 India Holdings Private Limited holds 49.21% of the issued capital of TV 18 and (ii) jointly with RVT Investments Private Ltd and Network 18 India Holdings Private Limited holds 49.79% of the issued capital of ibn18 Broadcast Limited (ibn18) . The company also controls the composition of the Board of Directors of both TV 18 and ibn18. d. During the year under review, the company has taken over the business of Investment Advisory services of Capital 18 Media Advisors Private Limited alongwith its contracts , employees etc. e. During the year under review, the company was engaged in the business of Investments, Event and Sports Management and Investment / Management advisory services . 2. Significant Accounting Policies The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles (GAAP) in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules’ 2006 to the extent applicable and in accordance with the provisions of the Companies Act’ 1956 as adopted consistently by the Company. The significant accounting policies adopted in presentation of accounts are: a. Revenue Recognition (i) Dividends on investments are accounted for when the right to receive dividend is established. (ii) Revenue from sponsorships / management contracts is recognised on accrual basis in accordance with contractual arrangements Revenue from sale of entry tickets is recognised on receipt basis. (iii) Profit / Loss on sale of investments are computed on the basis of average cost on date of disposal of investments. b. Fixed Assets Fixed Assets are stated at their original cost of acquisition and installation less depreciation. All direct expenses attributable to acquisition and installation of assets are capitalised. c. Depreciation Depreciation on all assets other than improvement to leasehold properties and computer software is charged on straight line basis over the estimated useful lives using rates prescribed by Schedule XIV of the Companies Act, 1956. Cost of improvements to leasehold premises is being amortised over the remaining period of lease of the premises. Computer software is depreciated over a period of 5 years. These rates are higher than those prescribed in Schedule XIV of the Companies Act, 1956. Depreciation on additions is charged proportionately from the date of acquisition/ installation. Assets costing less than Rs. 5,000 individually are fully depreciated in the year of purchase. d. Impairment of Assets The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. Recoverable amount is the higher of an asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre- tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset If such recoverable amount of the asset or the recoverable amount of the cash-generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit & Loss Account. Reversal of impairment loss is recognised as income in the Profit and Loss Account. e. Investments In accordance with The Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 read with Accounting Standard 13 issued by the Institute of Chartered Accountants of India, Long Term Investments are stated at cost less other than temporary dilution in the value of such investments. Current investments are carried at lower of cost or fair value. f. Leases (where the Company is the lessee) Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term. g. Use of Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods. h. Employee benefits i. The Company’s Employees Provident Fund scheme is a defined contribution plan. The Company’s contribution to the Employees’ Provident Fund is charged to the profit and loss account during the period in which the employee renders the related service. ii. Short term employee benefits (Medical, Leave Travel allowance, etc.) expected to be paid in exchange for the services rendered are recognised on undiscounted basis.

31 NETWORK18 MEDIA & INVESTMENTS LIMITED

iii. The Company provides for gratuity, a defined benefit retirement plan (the “Gratuity Plan”) covering eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides for a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the tenure of employment. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the projected unit credit method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation is based on the market yields on government securities as at the balance sheet date. Actuarial gains/losses are recognised immediately in the profit and loss account. The liability with respect to the Gratuity Plan is determined based on actuarial valuation done by an independent actuary at the year end and any differential between the fund amount as per the insurer and the actuarial valuation is charged to revenue. iv. Benefit comprising Long term compensated absences constitutes other long term employee benefits. The liability for compensated absence is determined using the Projected Unit Credit Method, on the basis of an actuarial valuation at the year end. Actuarial gains and losses are recognised immediately in the profit and loss account. i. Transactions in foreign exchange Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences on foreign exchange transactions settled during the year are recognised in the Profit and Loss account. Monetary items denominated in foreign currency and outstanding at the balance sheet date are translated at the exchange rate ruling on that date. j. Income Tax Income tax comprises current tax and deferred tax. Current tax is determined in accordance with the provisions of Income Tax Act, 1961. Advance taxes and provisions for current taxes are presented in the balance sheet after off setting advance taxes paid and income tax provisions. Deferred tax charge or credit is recognised on timing differences being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal, subject to consideration of prudence, in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Minimum alternate tax (MAT) paid in accordance with Income Tax Act, 1961, which gives rise to future economic benefit in the form of adjustment from income tax liability, is recognised when it is certain that the Company be able to set off the same and adjusted from the current tax charge for that year. Provision for fringe benefit tax (FBT) is made on the basis of the applicable FBT on the taxable value of eligible expenses of the Company as prescribed under the Income Tax Act, 1961 k. Earnings Per Share The company reports basic and diluted earnings per share in accordance with AS 20 on Earnings per Share. Basic earnings per equity share have been computed by dividing the Net Profit (Loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earning per share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year except where the result would be anti-dilutive. l . Accounting for Employee Share based payments Measurement and disclosure of the employee share based payment plans is done in accordance with the Guidance Note on Accounting for Employee Share-based Payments, issued by the Institute of Chartered Accountants of India (ICAI). The Company measures compensation cost relating to employee stock options using the intrinsic value method. Compensation expense is amortised on a straight line basis/graded basis over the vesting period of the stock option/award. Modifications to stock option/ award schemes are effected in line with the Guidance Note on Accounting for Employee Share-based Payments, issued by ICAI. m. Provisions and contingencies A provision is recognised when the Company has a present obligation as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and reliable estimate can be made of the amount of the obligation. A contingent liability is recognised where there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. 3. Contingent Liabilities and encumbrances on assets a. Corporate guarantees given in connection with borrowings of subsidiaries (Rs million) Name of borrowing entity Current year Previous Year ibn18 Broadcast Limited 880 620 TV 18 Home Shopping Network Limited 250 250 Newswire 18 Limited 220 220 Television Eighteen India Limited 4800 1750 Capital 18 Limited, Mauritius 2547 2000 ( INR equivalent to USD 50 million) b. Shortfall undertaking given in favour of a lender in connection with loans extended to B K Holdings Ltd., Mauritius – USD 80 million. c. Fixed Deposits of Rs 180 million are pledged in connection with loans to the company . d. Investments of the market value of Rs 902.58 million ( Rs 17,506.23 million ) are pledged in connection with loans availed by subsidiaries..

4. Share Capital a. During the year under review 120,198 (618,860) Equity Shares of Rs 5/- each were issued to Employees / Network 18 Employees

32 NETWORK18 MEDIA & INVESTMENTS LIMITED Welfare Trust pursuant to various Stock Option/ Stock award plans. b. The Board of Directors of the Company, in their meeting held on March 5,2007 approved a resolution under Section 81(1) of the Companies Act,1956 for Issue of Partly Convertible Cumulative Preference Shares of Rs 200/- each. Each PCCPS would consist of a convertible part of Rs 50/- , convertible into one equity shares at a premium of Rs 45/- per share and a non convertible part of Rs 150/- each. Each fully paid up PCCPS would also entitle the holder to a detachable warrant convertible into one Equity share within the exercise period commencing from 24 months from the date of allotment upto 48 months from the said date. The issue opened in April 2008 and the PCCPs were alloted on May 15,2008 . On payment of call money , 10,272,355 PCCPs were converted into Non Convertible part (of Rs 150/- each ) of the PCCPs and Rs 50/- each was converted into one equity shres of Rs 5/- at a premium of Rs 45/- per share. The same number of detachable warrants were issued. c. At a meeting of the warrant holders convened on January 9,2009, a resolution for early conversion of the said warrants was approved at a price of Rs 49.69 per warrant ( inclusive of premium of Rs 44.69 per share) . 10,060,806 Equity shares of Rs 5/- each were issued to eligible warrant holders on payment of the conversion money. d. Sums of Rs 598,473,received as at year end, were outstanding, pending conversion into Shares / warrants. 5. In view of losses, the company has not created any Reserve u/s 45IC of the Reserve Bank of India Act. 6. Loans a. Vehicle loans are secured by the hypothecation of vehicles financed. b. All other loans are secured by the Pledge of Investments. A loan of Rs 130 million (Previous Year Rs 250 million) is additionally secured by subservient charge over current assets. c. Unsecured Loans are from Banks .These are guaranteed by the Managing Director. d. Amounts repayable within one year: 1,797.21 million (Previous Year Rs 2,105.94 million) 7. Investments a. 12,894,000 (5,106,542) Equity Shares in Television Eighteen India Limited are pledged in connection with loans to subsidiaries (Previous year to a Director and entities under significant influence) b. 25,639,000 (23,284,730) Equity shares in Television Eighteen India Limited are pledged in connection with loans availed by the Company. c. 44,704,995 ( 50,785,500) Equity shares in ibn18 Broadcast Limited and 14,830,000 (22,020,000) Equity shares in Television Eighteen India Limited are subject to non disposal undertakings in favour of lenders in connection with loans extended to subsidiaries. d. The Indian Film Company (TIFC), was incorporated in Guernsey as a wholly owned subsidiary of the company in April 2007 and the company invested 10 million GBP as Equity in TIFC. Consequent to dilution upon listing of TIFC, on the Alternative Investment Market of the London Stock Exchange in June 2007, it has ceased to be a subsidiary of the company. The equity shares of TIFC were quoted, as at March 31, 2009 at substantially less than the issue price. However in view of TIFC’s profitability, positive Net Worth and the long term strategic interest of the Company no provision for diminution in value of the investment is considered necessary in the accounts. e. 3,680,716 (3,861,812) units of a mutual fund are pledged in connection with loans to a related party. ( Previous year: loans to a Director and a related party) f. Network 18 Holdings Limited, the company’s wholly owned subsidiary in Cayman Islands has incurred losses but has a positive Net Worth as at March 31, 2009. However, in view of the company’s long term strategic interest in the subsidiary, no provision for diminution in the value of the investment is considered necessary in the accounts. g. Network 18 India Holdings Private Limited, the company’s wholly owned subsidiary has incurred losses in the year ended March 31, 2009. However, in view of the company’s long term strategic interest in the subsidiary, no provision for diminution in the value of the investment is considered necessary. h. 2,827,000, 0.01% Redeemable Non Cumulative Non Convertible Preference Shares of Rs 10/- each, in Network 18 India Holdings Private Limited are redeemable at issue price of Rs 600/- per share at any time within 10 years from the date of allotment. i. 6,644,000, 0.01% Redeemable Non Cumulative Non Convertible Preference Shares of Rs 10/- each in Network 18 India Holdings Private Limited are redeemable at an effective annualized return of 10% on the issue price of Rs 100/- per share. These are redeemable at such time as determined by the holder or upon the expiry of the maximum period prescribed under the Companies Act,1956. In view of losses incurred by the issuer and the consequent uncertainty, the company has not recognized the effective annualized return in its books. j. The 8% Cumulative Redeemable Non Convertible Preference Shares of Rs 100 each in BK Media Pvt Ltd, an entity owned and controlled by the Managing Director of Network 18 Media and Investments Limited are (a) redeemable at the end of 5 years from the date of issue, unless otherwise agreed by the Company and the issuer company and (b) proposed to be secured either by a personal guarantee of the promoters or by way of a first charge on all assets created or acquired by the issuer company . 8. Share application money has been paid to Network 18 India Holdings Private Limited, a wholly owned Subsidiary. 9. Expenses incurred towards Rights Issue of Partly Convertible Cumulative Preference Shares, have been adjusted from Securities Premium. 10. Earnings Per Share Basic and diluted earnings per equity share have been computed by dividing the net profit (loss) after tax by the number of equity shares outstanding for the year, as below. Particulars Units Current year Previous year Net Profit (Loss) after tax Rs (a) (181,993,941) 442,714,697 Weighted Average number of Equity Shares used in computing basic earnings per share Nos. (b) 57,870,810 51,293,355 Basic Earning per share Rs (a/b) (3.14) 8.63 Shares to be issued under Stock Options (Net of forfeitures) (c) 2,054,525 1,878,466 Adjustment for number of shares that would have been issued at the fair value (d) (1,215,363) (853,847) Weighted average number of Equity shares used for computing Diluted Earning ( e) 58,709,972 52,317,974 Per Share Diluted Earning per share Rs (a/e) (3.10) 8.46

33 NETWORK18 MEDIA & INVESTMENTS LIMITED

11. Leases a) The Company has taken various office premises under operating lease agreements. These are generally non cancelable and are renewable by mutual consent on mutually agreed terms. b) Lease payments for the year: Rs 49.88 million (Rs. 4.38 million) c) The future minimum lease payments under non-cancelable operating leases are: Rs million Current year Previous Year Not later than one year 22.16 9.03 Later than one year but not later than five years 41.70 29.02 Later than five years - - d) In respect of another lease, the company’s commitments are backed by sub lease agreements. 12. Amount Due from Director or Officer Amount due from Director / officer of the company Rs Nil (Nil). The maximum amount due from a Director / Officer of the company during the period was Rs. Nil (Nil). 13. Payment to Auditors’ (net of service tax) Current Year(Rs) Previous Year (Rs) Audit Fee (including for limited reviews and for previous years ) 2,700,000 1,900,000 For reports in offer documents - 1,000,000 For other reports/certification 68,000 361,500 Reimbursement of Expenses - 15,000 Total 2,768,000 3,276,500

14. Additional Information required to be given pursuant to Part II of Schedule VI of the Companies Act, 1956 (on accrual basis) Current Year (Rs) Previous year (Rs) a. Remuneration paid to Directors Salary 7,200,000 - HRA 2,880,000 - Leave Travel allowance paid 516,400 - Contribution to Provident Fund 864,000 - Total 11,460,400 - b. Expenditure in Foreign Exchange Traveling 840,693 4,553,990 Business Promotions 4,259,271 - Other Expenses 36,170 - Artist Fees 15,780,098 21,712,759 Professional Charges 3,280,652 - Membership Fees - 329,880 Expenses of overseas representative offices - 7,086,959 Acquisition of film rights - 1,317,197 c. CIF Value Imports (Consumables) - 999,221 d. Earnings in Foreign Exchange for Film Distribution - 288,948,920 e. Dividend remitted in foreign exchange - - Number of Non Resident shareholders - 24,903 Number of Shares held on the record date - 51,482,255 Amount remitted on account of dividend (Rs) - 64,355,837 15. Details of purchase and sales of investments during the period are as follows Particulars Purchases Sales Equity Shares No. Rs No. Rs Television Eighteen India Limited 1,000,000 341,043,936 550,000 122,839,427 Ibn18 Broadcast Limited 3,40,000 34,609,330 4,671,000 486,244,067 VT Investments Pvt. Ltd. 1,000 36,000 1,000 36,000 Preference Shares VT Holdings Private Limited 480,000 245,612,500 720,000 345,862,505 network18 India Holdings Private Limited 6,644,000 666,061,000 - - Mutual Fund Units Deutsche Mutual Fund 56,587,956.92 665,537,976.88 56,587,956.92 668,231,173.93 Birla Sun Life Mutual Fund 30,599,738.14 391,543,361.03 31,002,434.05 384,460,135.55 34 NETWORK18 MEDIA & INVESTMENTS LIMITED

Standard Chartered Mutual Fund 6,453,669.69 311,271,965.60 6,542,895.39 402,576,578.17

ICICI Mutual Fund 29,827,627.45 370,000,000.00 29,827,627.45 372,906,982.81 ING Vysya Mutual Fund 102,517,413.40 1,077,843,300.95 102,517,413.40 1,081,745,537.13 Reliance Mutual Fund 57,571,741.82 606,983,526.47 57,571,741.82 608,609,392.80 Principal Mutual Fund 35,681,067.85 403,186,274.20 35,681,067.85 406,328,305.57 SBI Mutual Fund 16,490,031.71 222,000,000.00 16,490,031.71 222,950,175.72 Tata Mutual Fund 90,620,932.66 1,291,767,081.81 90,620,932.66 1,294,713,982.40 Franklin Templeton Mutual Fund 351,449.15 375,944,996.07 351,449.15 378,331,453.78 LIC Mutual Fund 15,579,818.53 250,000,000.00 - - 16. In the opinion of the Board, current assets, loans and advances have a value not less than the amount at which they are stated. 17. The company has carried out its tax computation in accordance with the mandatory standard on accounting, AS 22 – Accounting for taxes on income, referred to in Companies (Accounting Standards) Rules, 2006. In view of accumulated losses the company has not provided for deferred tax assets as there is no virtual certainty that there will be sufficient future taxable income available to realize such assets. Fringe Benefit tax on exercise of stock options (s) has been paid by the company and subsequently recovered from grantees. Conse- quently, there is no impact on the profit and loss account. 18. Figures for the previous year have been regrouped and rearranged wherever necessary to conform to the current years’ presentation. 19. Related party disclosures a. List of related parties i. Direct Subsidiaries by virtue of shareholding • Setpro18 Distribution Limited ( earlier Setpro Holdings Private Limited) • Network18 India Holdings Private Limited • Network18 Holdings Limited, Cayman Islands ii Direct Subsidiaries by virtue of Control • Television Eighteen India Limited • ibn18 Broadcast Limited iii. Subsidiary companies of Subsidiaries • Television Eighteen Mauritius Limited • TV 18 UK Limited, UK • TV18 HSN Holdings Limited, Cyprus • TV18 Home Shopping Network Limited • Web 18 Holdings Limited, Cayman Islands • E-18 Limited , Cyprus • e - Eighteen.com Limited • Money control Dot Com India Ltd • Television Eighteen Commoditiescontrol.com Limited • Web 18 Software Services Limited • RVT Investments Private Limited • iNews.com Limited • NewsWire18 Limited • Big Tree Entertainment Private Limited • BK Holdings Limited, Mauritius • Capital 18 Limited, Mauritius • Care Websites Private Limited • RVT Media Private Limited • Colosceum Media Private Limited • Stargaze Entertainment Private Limited • Namono Investments Limited • Capital 18 Acquisition Corporation, Cayman Island • Television Eighteen Media and Investment Limited • I-ven Interactive Limited • Infomedia 18 Limited • Cepha Imaging Private limited • American Devices India Private Limited • Keyword Group Limited • Keyword Typesetting Services Limited • Keyword Publishing Services Limited • Software Services LC • Jagran TV Private Limited (w.e.f. 15 May, 2009 the name changed to ibn18 Media & Software Private Limited and w.e.f 1st June, 2009 company converted in to a Public Limited Company) iv Joint Ventures of Subsidiaries • IBN Lokmat News Private Limited • Reed Infomedia India Private Limited • Jagran18 Publications Ltd. • Jobstreet.com Private Limited v, Associates of Subsidiaries • Viacom18 Media Private Limited vi. Key Management Personnel • Raghav Bahl (Also exercises control by virtue of having a substantial interest in the voting power of the Company) 35 NETWORK18 MEDIA & INVESTMENTS LIMITED

vii. Relatives of Key Management Personnel • Late Sh. P.N. Bahl • Ms .Subhash Bahl • Ms. Ritu Kapur • Ms. Vandana Malik viii. Entities over which persons listed above are able to exercise significant Influence • RB Investments Private Limited • RRB Holdings Private Limited • RVT Holdings Private Limited • RVT Fincap Private Limited • RRK Holdings Private Limited • RB Software Private Limited • RB Softech Private Limited • BK Media Private Limited • BK Media Mauritius Private Limited, Mauritius • Digital 18 Media Private Limited • VT Investments Private Limited • SGA News Limited • VT Holdings Private Limited • RVT Softech Private Limited • Greycells 18 Media Private Limited • Keyman Financial Services Private Limited • RRB Investments Private Limited • Tangerine Digital Entertainment Private Limited • RRK Finhold Private Limited • VT Softech Private Limited • Network 18 Publications Limited • RB Finhold Private Limited • RRB Fincap Private Limited • RVT Finhold Private Limited • Wespro Digital Private Limited • Film Investment Managers (Mauritius)Limited (earlier BK Enterprises Limited) • Media Venture Capital Trust II • BK Communications Limited • BK Ventures Limited • BK Capital Limited • TV 18 Senior Professionals Trust • Mobilenxt Teleservices Private Limited • Juxt Consult Research and Consulting Private Limited • Goosefish Media Venture Private Limited • Blue Slate Media Private Limited • RRK Finvest Private Limited • Web18 Securities Private Limited • Kishore Securities Private Limited • BK Finhold Private Limited • RRK Media Private Limited • Mobile NXTonline Private Limited • Webchutney Studio Private Limited • Capital18 Limited, Mauritius • Capital18 Acquisition Corporation Cayman Island • RB Holdings Private Limited • The Network18 Trust • Jagran18 Publications Limited • IFC Distribution Private Limited • India International Film Advisors Private Limited • Capital 18 Media Advisors Private Limited • RRB Media Private Limited • VT Media Private Limited Note : Related party relationships are as identified by the Company and relied upon by the Auditors b. Transactions / balances outstanding with related parties (Amount in Rs) Particulars Subsidiaries Subsidiaries of Entity Under Significant Key Management subsidiaries Influence Personnel Redemption of Debentures held in ( including Premium) Television Eighteen India Limited 4,827,823 (1,646,186) Service Income Television Eighteen India Limited 14,194,787 (947,725) ibn18 Broadcast Limited 2,313,990 (-)

36 NETWORK18 MEDIA & INVESTMENTS LIMITED

Viacom18 Media Pvt. Ltd. 6,955,909 (-) The Indian Film Company, Guernsey - (280,707,098) Web 18 Software Services Limited 431,250 (-) Dividend received from Television Eighteen India Limited 40,881,830 (69,536,382) Advances given by the company on behalf of ibn18 Broadcast Limited - (-) Interest paid to Television Eighteen India Limited 1,901,984 (2,363,544) BK Media Private Limited - (71,839) TV 18 Senior Professionals Trust - (1,328,738) Interest received from ibn18 Broadcast Limited 150,727 (263,596) TV18 Home Shopping Network Ltd 9,391,438 (-) Reimbursement of Expenses (Paid) Television Eighteen India Limited 136,346,125 (29,250,094) Television Eighteen India Limited (on - Capital account) (5,610,998) TV18 Home Shopping Network 1,245,777 Private Limited (406,025) ibn18 Broadcast Limited 21,826,889 (29,564,605) Greycells 18 Media Private Limited 119,416 (-) Network 18 Emp. Welfare Trust 11,617 (-) Viacom18 Private Limited 187,980 (-)

Reimbursement of Expenses (Received) Television Eighteen India Limited 85,892,358 (35,113,580) Capital18 Media Advisors Private 63,000 Limited (-) Care Websites Pvt. Ltd 25,764 (-) E-Eighteen.Com Limited 8,253,494 (-) Money Control Dot Com India Ltd. 38,735 (-) Ibn Lokmat News Pvt. Ltd. 79,380 (-) RVT Investments Pvt. Ltd. 63,000 (-) BK Media Mauritius Private Limited. - (3,544,328) ibn18 Broadcast Limited 77,403,530 (12,778,742) 37 NETWORK18 MEDIA & INVESTMENTS LIMITED

Setpro18 Distribution Limited 5,099,260 (-) Television Eighteen Commodities 1,482,687 control.com Limited (98,528) Newswire 18 Limited 8,351,803 (98,528) Web 18 Software services Limited 11,281,721 (295,584) Bigtree Entertainment Private Limited 8,190 (197,055) Tangerine Digital Entertainment - Private Limited (197,055) Webchutney Studio Private Limited - (98,528) Greycells 18 Media Private Limited 468,082 (197,055) TV18 Home Shopping Network 13,808,591 Limited (353,787) Viacom 18 Media Private Limited 7,749,331 (985,282) Colosceum Media Private Limited 617,946 (3,747,767) Digital 18 Media Private Limited 738,095 (-) IFC Distribution Pvt. Ltd. 203,670 (-) Indian Int Film Adv. Pvt. Ltd. 1,425,690 (-) Infomedia 18 Ltd. 10,168,442 (-) SGA News Ltd. 407,742 (-) Stargaze Entertainment Pvt. Ltd. 63,000 (-) Expenditure for Services Received TV18 Home Shopping Network 13728 Limited (-) Television Eighteen India Limited 26,808,257 (-) Ibn 18 Broadcast Limited 1,770,659 (-)

Investments purchased from Media Venture Capital Trust II 245,000,000 (100,000,000) VT Holdings Ltd (666,061,000) - Investments made in VT Holdings Pvt. Ltd. 245,612,500 (-) VT Investments Private Limited 36,000 (-) The India Film Company Ltd, - Guernsey (807,810,000) Network 18 India Holdings Private - Limited ( Equity shares ) (100,000) Network 18 India Holdings Private - Limited ( Preference shares ) (1,696,200,000) Loan Extended to TV18 Home Shopping Network 251,700,000 Limited (-)

38 NETWORK18 MEDIA & INVESTMENTS LIMITED

Ibn 18 Broadcast Limited 300,000,000 (-) Loan Returned by TV18 Home Shopping Network 251,700,000 - Limited (-) (-) Loan taken from BK Media Private Ltd. - (68,800,000) TV 18 Senior Professional Trust - (325,560,812) Loan returned to BK Media Private Ltd. - (68,800,000) TV 18 Senior Professional Trust - (325,560,812) Balances at the end of the year Amounts due to Television Eighteen India Limited 223,081,741 (28,033,140) BK Media Mauritius Private Ltd. 163,559 (163,559) ibn18 Broadcast Limited - (17,225,929) RVT Holdings Private Limited 21,736 (-) Amount due from ibn 18 Broadcast Limited ( loan ) 30,000,000 (-) ibn 18 Broadcast Limited ( for 29,529,368 expenses) (-) E.Eighteen.com Limited 5,438,917 (-) Television Eighteen Commodities 1,036,470 control.com Limited (96,295) Newswire 18 India Limited. 9,460,631 (98,528) Web 18 Software services Limited 7,266,582 (288,886) Bigtree Entertainment Private Limited - (197,055) Tangerine Digital Entertainment 197,055 Private Limited (197,055) Viacom 18 Media Private Limited - (985,282) Webchutney Studio Private Limited 98,528 (98,528) Colosceum Media Private Limited. - (747,767) Capital 18 Media Advisors Private - Limited (-) Moneycontrol.com India Ltd 24,208 (-) India International Film Advisors 1,282,500 Private Ltd. (295,584) Greycells Media Private Limited - (197,055) Network 18 India Holding Private 1,206,000,000 Limited (1,800,000,000) TV18 Home Shopping Network 1,432,065 Limited (267,770)

39 NETWORK18 MEDIA & INVESTMENTS LIMITED

Studio 18 UK Limited 89,182 (498,692) Studio 18 USA Limited 504,076 (504,076) Viacom 18 Media Private Limited. 29,036,728 (30,001,886) Setpro 18 Distributions Limited 224,096 (-) Care Websites Private Limited 25,615 (-) Infomedia18 Limited 10,102,809 (-) Corporate Guarantees given for loans availed by Capital 18 Limited , Mauritius ( INR 2,547,000,000 equivalent to USD 50 million) (2,000,000,000) BK Holdings Limited ( INR equivalent - to USD 60 million) (240,000,000) ibn18 Broadcast Limited 880,000,000 (620,000,000) News Wire 18 India Private Limited 220,000,000 (220,000,000) TV 18 Home Shopping Network 250,000,000 Private Limited (250,000,000) Television Eighteen India Limited 4,800,000,000 (1,750,000,000) Other Guarantees Shortfall undertaking given to 4,000,000,000 secure the loan of B K Holdings (4,000,000,000) Limited ( INR equivalent to USD 80 million) Investments pledged in connection with loans availed by (market value ) TV 18 Senior Professionals Trust 1,199,240,000 (1,672,272,679) Capital 18 Limited , Mauritius - (4,599,777,000) network18 India Holdings Private 235,480,000 Limited (199,904,250) BK Holdings Limited, Mauritius - (6,812,874,825) Television Eighteen Mauritius Limited 728,000,000 (4,116,840,000) Raghav Bahl - (104,594,294)

20. Employee Stock Option / Stock Purchase / Stock Awards Plans a. The Company’s Employee Stock Option Plans (ESOPs) framed in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which have been approved by the Board of Directors and the Shareholders are listed below . Schemes listed at serial (i) to (viii) were established as mirror schemes of the then existing ESOP schemes in Television Eighteen India Limited, in terms of the Scheme of Arrangement. The Network 18 Employees Stock Option Plan 2002 (ESOP 2002) The Network 18 Employees Stock Purchase Plan 2003 (ESPP 2003) The Network 18 Employees Stock Option Plan 2004 (ESOP 2004) The Network 18 Senior Employees Stock Option Plan 2004 (Senior ESOP 2004) The Network 18 Employees Stock Option Plan 2005 (ESOP 2005). The Network 18 Long Term Retention Employees Stock Option Plan 2005 (Long Term Retention ESOP 2005”). The Network 18 Strategic Acquisition Employees Stock Option Plan 2005 (Strategic Acquisition ESOP 2005”) The Network 18 Stock Award Plan 2005 (Stock Awards Plan 2005) The Network 18 Employees Stock Option Plan A 2007 ( ESOP A 2007) The Network 18 Employees Stock Option Plan B 2007 ( ESOP B 2007) The Network 18 Employees Stock Option Plan C 2007 ( ESOP C 2007) The Network 18 Employees Stock Option Plan 2007 ( ESOP 2007) The Network18 Employees Stock Purchase Plan 2008 (ESPP 2008)

40 NETWORK18 MEDIA & INVESTMENTS LIMITED

b. Shareholders of the Company have authorized the Compensation Committee to alter terms of selected ESOP Schemes in view of the volatile market conditions and consequent to schemes being unattractive. The compensation committee has therefore modified terms of vesting / exercise price in respect of Schemes listed at (iii), (iv) and (v) c. Salient terms of the ESOP schemes of the company, in force , are: Particulars ESOP 2002 ESOP 2004 Senior ESOP 2004 a. Year of establishment 2006-07 2006-07 2006-07 b. Total Number of options to be vested 322,380 573,600 600,000 c. No. of options to be vested in respect - 213,000 143,994 of which terms have been changed d. Exercise price in respect of vested Rs. 5 value on grant a.In respect of grants in lieu a. in respect of grants in lieu options ( terms of which have not been date of options granted in TV 18 of options granted in TV 18 modified) ESOP 2004 , at the under Senior ESOP 2004 mentioned prices (in Rs) 02.04.05- 19.86 02.04.05 - Rs 27.77 02.04.05- 53.49 02.04.05- Rs 53.49 29.06.05- 54.50 29.06.05- Rs 62.42 29.06.05- 84.67 29.06.05- Rs 84.67 06.08.05- 66.63 15.06.06- Rs 72.77 06.08.05- 95.59 15.06.06- Rs 93.99 15.06.06- 64.85 15.06.06- 93.99 b .In respect of fresh grants 20.07.06- 131.62 (i) 50% of options granted 20.07.06- 154.09 at discount of Rs. 100 to the b.In respect of fresh grants in market value on grant date; respect of (i) 50% of the op- (ii) 50% of the options tions at a discount of Rs 125/- granted at a discount of to the market price and (ii) 90% of market value on 50% of the options at 90% of grant date. the market price e. Exercise price in respect of options Rs 20/- 45,331 @Rs. 10/- regranted ( as per ‘c’ above) 26,666 @ Rs. 20/- 45,331@ Rs 10/-26,666 @ Rs. 20/- f. Vesting date in respect of grants (terms 1. 50% of the options, After three years from the 1.One third after two years of which have not been modified) after one year from dated of grant from the date of grant the date of grant. 2. Remaining two third 2. Balance 50% of after 4 years from the grant the options two years date. after from the date of grant. g. Vesting date in respect of grants at 50% on Feb 11,2010 ; 71,997 on Feb 11, 2010 ‘c’ above 50% on 11 Feb 2011 71,997 on Feb 11, 2011 h. Vesting requirements Continuation of Continuation of services and Continuation of services services and such such other conditions as may and such other conditions other conditions as be prescribed as may be prescribed may be prescribed i. Exercise period During three years During two years after the During two years after the after the vesting vesting date. vesting date. date. j. Options lapsed - 42,000 - j. Un-granted options cancelled - - - (24024)

Particulars Strategic Ac- Stock Awards Plan ESOP 2005 Long Term Retention quisition 2005 2005 ESOP 2005 a) Year of establishment 2006-07 2006-07 2006-07 2006-07 b)Total Number of options to 720,000 Such number of Stock 1,080,000 300,000 be vested awards as may be determined by the Board/ Compensation Committee c) No. of options to be vested - - 51,200 - in respect of which terms have been changed

41 NETWORK18 MEDIA & INVESTMENTS LIMITED

Particulars Strategic Ac- Stock Awards Plan ESOP 2005 Long Term Retention quisition 2005 2005 ESOP 2005 d) Exercise price in respect Rs. 31.67 Average of two weeks’ a. Rs 97.31 for old a. Rs 108.13 for old of vested options (terms high and low price of grants grants of which have not been the share from the date For fresh grants b. At b. For fresh grants at modified) of listing of shares of the discount of of 10% to a price equal to the company on the stock the market price of the market value on grant exchange with highest shares determined. date. trading volumes in that period. d) Exercise price in respect - - 20/- - of vested options (As per ‘c’ above) Vesting date ( terms of which After one year At the end of one year Options to vest equally At any time at the end have not been modified) from the date of from the date of grant over three years from of 4 years from the date grant of options. of awards the date of grant. of grant. Vesting date(As per ‘c’ - - 50% of 51,200 on Feb - above) 11, 2010 50% of 51, 200 on Feb 11, 2011 Vesting requirements C o n t i n u a t i o n Continuation of Continuation of Continuation of of services services and such other services and such other services and such other and such other conditions as may be conditions as may be conditions as may be c o n d i t i o n s prescribed prescribed prescribed as may be prescribed Exercise period During one year During one year after During one year after During one year after after vesting vesting date. vesting date. vesting date. date. Options lapsed - 16,891 29,600 - Un-granted options cancelled - - - - (480,000) (-) (164,400)

Particulars ESOP (A) 2007 ESOP (B) 2007 ESOP (C) 2007 ESOP 2007 Year in which Scheme was 2006-07 2006-07 2006-07 2007-08 established Number of Options Autho- 1,000,000 1,000,000 1,000,000 10,000,000 rised to be Granted Exercise price At discount of 25% At Rs. 5 on the Rs. 5 per option. The exercise price will be to the market price grant date. decided by the Board provided share determined that exercise price shall not be with respect to the less that the par value of the date of grant. Equity Shares of the Company and shall not be more than the price prescribed under Chapter XIII of SEBI (Disclosure and Investor Protection) Guidelines ,2000 Vesting date Options shall After a period of Equally over a period After one year from the date of vest equally over one year from of six years from the Grant. The vesting shall happen average period of the date of date of grant. in one or more tranches as may 4 years. grant. be decided by the Board Vesting requirements Continuation of Continuation of Continuation of Continuation of services and services and such services and such services and such such other conditions as may be other conditions as other conditions other conditions as prescribed may be prescribed as may be may be prescribed prescribed Exercise Period During four year During four During four years Exercise period will commence after vesting date. years after vest- after vesting date. from the vesting date and ex- ing date. tended upto the expiry period of the option as may be decided by the Board. Options lapsed - - - - Un-granted options cancelled - - - - During the year (1,000,000) (1,000,000) (3,00,000)

42 NETWORK18 MEDIA & INVESTMENTS LIMITED

Particulars ESPP 2008 ESPP 2003 Year in which Scheme was 2008-09 2006-07 established Number of Equity shares 3,000,000 28,272 Authorised to be Issued Offer price The offer price will be decided by compensation At a value equivalent to 95% of the market committee, provided that the offer price shall not be price on the date of offer of shares less than par value of Equity shares of the company and shall not be more than the price prescribed under Chapter XIII of SEBI (DIP) Guidelines 2000 Exercise period 30 days Lock in requirements Share issued under the scheme shall be subject to Share issued under the scheme shall be lock in for a minimum period of One year from the subject to lock in for a minimum period of date of allotment. One year from the date of allotment.

d. Details of options and weighted average prices Particulars ESOP 2002 ESOP 2004 SENIOR ESOP 2004 Options Weighted Options Weighted Options Weighted Average Average Average Price Price Price a) Outstanding at the beginning of the 20,010 5 327,000 69.90 450,656 65.30 year (40,020) (5) (573,600) (50.91) (517,316) (65.85) b) granted during the year ------(-) (-) (-) (-) (-) (-) c) exercised during the year - - 31,800 49.71 39,999 47.54

(20,010) (5) (246,600) (25.73) (66,660) (69.59) d) forfeited during the year ------(-) (-) (-) (-) (-) (-) e) Expired during the year - - 42,000 69.59 - - (-) (-) (-) (-) (-) (-) f) Additions pursuant to bonus Issue ------

(-) (-) (-) (-) (-) (-) g) outstanding at the end of the year 20,010 5 253,200 31.69 410,657 33.90

(20,010) (5) (327,000) (69.90) (450,656) (65.30) h) Exercisable at the end of the year ------(-) (-) (31,200) (36.68) (-) (-) i) number of equity share of Rs. 5 each fully 20,010 5 253,200 31.69 410,657 33.90 paid up to be issued on exercise of option (40,020) (5) (327,000) (69.90) (450,656) (65.30) j) weighted average share price at the date 20,010 5 31,800 49.71 39,999 47.54 of exercise (20,010) (5) (246,600) (25.73) (66,660) (69.59) k) weighted average remaining contrac- - N.A. 1.66 N.A. 1.12 N.A. tual life (years) (0.21) N.A. (0.24) N.A. (1.39) N.A.

Particulars LONG TERM RETENTION STATAGIC ACQ. ESOP 2005 ESOP 2005 ESOP 2005 Options Weighted Options Weighted Options Weighted Average Average Average Price Price Price a) Outstanding at the beginning of 300,000 348.35 - - 80,800 97.31 the year (300,000) (348.35) (240,000) (31.67) (146,400) (97.31)

b) granted during the year ------(-) (-) (-) (-) (-) (-)

43 NETWORK18 MEDIA & INVESTMENTS LIMITED

c) exercised during the year ------(-) (-) (240,000) (31.67) (65,600) (97.31) d) forfeited during the year ------

(-) (-) (-) (-) (-) (-) e) Expired during the year - - - - 29,600 97.31 (-) (-) (-) (-) (-) (-) f) Additions pursuant to bonus Is------sue (-) (-) (-) (-) (-) (-) g) outstanding at the end of the 300,000 348.35 - - 51,200 20.00 year (300,000) (348.35) (-) (-) (80,800) (97.31) h) Exercisable at the end of the ------year (-) (-) (-) (-) (-) (-) i) number of equity share of Rs. 300,000 348.35 - - 51,200 20.00 5 each fully paid up to be (300,000) (348.35) (-) (-) (80,800) (97.31) Issued on exercise of option j) weighted average share price at ------the date of exercise (-) (-) (240,000) (31.67) (-) (-) k) weighted average remaining 2.62 N.A. - N.A. 2 N.A. contractual life (years) (3.62) N.A. (1.26) N.A. (0.57) N.A.

Particulars ESOP(C ) 2007 ESOP 2007

Options Weighted Options Weighted

Average Average Price Price a) Outstanding at the beginning of the year 700,000 5 - -

(-) (-) (-) (-) b) granted during the year - - 295,000 30 (700,000) (-) (-) (-) c) exercised during the year - - - - (-) (-) (-) (-) d) forfeited during the year - - - - (-) (-) (-) (-) e) Expired during the year - - - - (-) (-) (-) (-) f) Additions pursuant to bonus - - - - Issue (-) (-) (-) (-) g) outstanding at the end of the year 700,000 5 295,000 30 (700,000) (5) (-) (-) h) Exercisable at the end of the year - - - - (-) (-) (-) (-) i) number of equity share of 700,000 5 295,000 30 Rs. 5 each fully paid up to be Issued on exercise of option (700,000) (5) - (-) j) weighted average share price at the date of exercise - - - - (-) (-) (-) (-) k) weighted average remaining contractual life (years) 3.98 N.A. 4 N.A.

(4.99) N.A. (-) N.A.

44 NETWORK18 MEDIA & INVESTMENTS LIMITED

Particulars 31-03-2009 31-03-2008 (Rs) (Rs) a. Net Profit as reported (181,993,941) 442,714,697 i. Add: Stock based employee compensation expense debited to 60,288,008 112,721,705 Profit and Loss account ii. Less: Stock based employee compensation expense based on 71,162,275 136,403,185 fair value b. Difference between (i) and (ii) 10,874,267 23,681,480 c. Adjusted pro forma profit (192,868,208) 419,033,217 d. Difference between (a) and (c) 10,874,267 23,681,480 e. Basic earnings per share as reported (3.14) 8.63 f. Pro forma basic earnings per share (3.33) 8.17 g. Diluted earnings per share as reported (3.10) 8.46 h. Pro forma diluted earnings per share (3.26) 8.01 21. Reconciliation between Fair Value of ESOPs granted and the charge determined as per the Intrinsic Method as adopted by the company and as required by the Guidance Note on Accounting for share based payments issued by the Institute of Chartered Accountants of India is as under : (a) Pro forma Accounting for Stock Option Grants The Company applies the intrinsic value-based method of accounting for determining compensation cost for its stock-based compensation plans. Had the compensation cost been determined using the fair value approach, the Company’s net income and basic and diluted earnings per share as reported would have reduced to the pro forma amounts as indicated: (b) The fair value of the options granted during the year ended March 31, 2009 , calculated by an external valuer, was estimated on the date of grant using the Black-Scholes model with the following significant assumptions

Particulars Year ended Year ended 31 March, 2009 31 March, 2008 a. Risk free interest rates (in %) 5.67 8.15 b. Expected life (in years) 3.85 7.50 c. Volatility (in %) 61.53 29.14 d. Dividend yield (in %) 1.54 0.38 The volatility of the options is based on the historical volatility of the share price since the Company’s equity shares are publicly traded and has been calculated on the basis of the share price and trading volume data. (c) Details of weighted average exercise price and fair value of the stock options granted at price below market price: Particulars Current Year Previous year a. Total options granted 703,180 700,000 b. Weighted average exercise price (in Rs.) 80.95 332.45 c. Weighted average fair value (in Rs.) 60.75 320.49 22. In respect of the disposal / write off of company’s erstwhile investments in SGA Media Inc, USA, the company is yet to seek approval of the Reserve Bank of India. 23. Disclosures as per Micro, Medium and Small Enterprises Development Act, 2006 (MSMED) Based on the information available with the Company, the balance due to micro and small enterprises as defined under the MSMED Act, 2006 is Rs. Nil (Previous year Rs. Nil) and no interest has been paid or is payable under the terms of the MSMED Act, 2006 24. Utilisation of Rights Issue proceeds The Company has utilized an aggregate sum of Rs 1,542.356 millions towards the stated purposes, from the proceeds of the the Rights Issue of Partly Convertible Cumulative Preference Shares of Rs 200/- each . The Unutilised funds are deployed in Mutual Funds / Bank Fixed Deposits . 25. Contracts remaining to be executed on capital account: Rs 4.71 million (net of advances) (Rs. 8.03 million previous year) 26. Figures in (brackets) refer to the corresponding figures in the accounts for the year ended March 31, 2008. 27. Compliance with Reserve Bank of India Guidelines a. Implementation of the Scheme of Arrangement between SGA News Limited, the Company and Television Eighteen India Limited which was approved by the Hon’ble Delhi High Court, has substantially determined the size and pattern of the company’s investments and resulted in non compliance of certain guidelines applicable to NBFCs, inter alia , Net Owned Funds and CRAR . The company has initiated steps to regularize the above b. The Company’s current activities do not require any provisioning in accordance with the above guidelines. c. Additional disclosures as required by NBFC guidelines as applicable only to the Company : i. CRAR Items Current Year Previous year i) CRAR(%) (9.01%) (44.03%) ii) CRAR – Tier 1 Capital (%) (26.08%) (44.03%) iii) CRAR – Tier II Capital (%) 17.06% -

45 NETWORK18 MEDIA & INVESTMENTS LIMITED ii. Exposure to Real Estate Sector : Rs Nil iii. Maturity pattern of certain assets and liabilities Liabilities Assets Borrowings Other borrow- Borrowings Market borrow- Advances (1) Investments from Banks ings from NBFCs ings (2) 1 day to 30/31 days - - - - - 30.05 Over one month to two ------months Over two months to 1.93 21.50 - - 3.00 - three months Over three months to 6.93 10.50 - - - - six months Over six months to one 103.86 22.00 13.00 - - - year Over one year to three 2.08 60.00 - - - - years Over three years to 5 0.04 - - - - 25.00 years Over 5 years - - - - - 647.54 Total 114.84 114.00 13.00 - 3.00 702.59 Note 1 : Includes advances in the nature of loans 2 : Does not include Share Application monies given 28. a. The excess of Business Consideration paid over the Net Assets acquired from Capital 18 Media Advisors Pvt Ltd has been recognized as Goodwill and , on a conservative assessment been impaired . b. Other Income includes write back of amounts provided for in the previous year on final settlement with Viacom 18 Media Private Limited. 29. Employee Benefits a. Defined Benefit Plans:- The present value of defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried at each balance sheet date. The reconciliation of opening and closing balances of the present value of the defined obligation for the continuing businesses as at : Particulars Year ended Year ended 31-Mar-2009 31-Mar-2008 Gratuity Compensated Gratuity Compensated Benefits Absences Benefits Absences

Obligation at the year beginning (A) 22,91,476 27,59,690 1,47,218 3,45,570 Adjustment for increase in opening provision for retirement benefits (B)** - - - - Current service cost (C)* 16,59,379 27,19,108 6,45,882 7,91,193 Interest cost (D) 1,61,945 1,93,732 11,777 27,646 Actuarial loss/(gain) (E) 13,13,710 35,34,721 14,86,599 15,95,281 Benefits paid (F) - (52,126) - -

Fair Value of Assets - - - - Obligation at the year end (A+B+C+D+E-F) 54,26,510 91,55,125 22,91,476 27,59,690

* includes expenses / liabilities relating to Capital 18 ( See note 1 (d) ) b. Cost for the year Particulars Year ended Year ended 31-Mar-09 31-Mar-08 Gratuity Benefits Compensated Gratuity Benefits Compensated Absence Absence Current service cost (A) 16,59,379 27,19,108 645,882 791,193 Interest cost (B) 1,61,945 1,93,732 11,777 27,646 Actuarial loss/(gain) (C) 13,13,710 35,34,721 1,486,599 1,595,281 Net cost (A+B+C) 31,35,034 64,47,561 2,144,258 2,414,120 c. Actuarial assumptions used:- Discount Rate 7% 7% 8% 8% Expected Salary Escalation Rate 6% 6% 6% 6% Mortality Table LIC(1994-96) duly Modified LIC(1994-96) duly LIC(1994-96) duly LIC(1994-96) duly Modified Modified Modified 46 NETWORK18 MEDIA & INVESTMENTS LIMITED

Retirement Age 60 Yrs 60 Yrs 60 Yrs 60 Yrs Withdrawal Rates Percentage Age Percentage Age 3 Upto 30 Year 3 Upto 30 Year 2 Upto 44 Year 2 Upto 44 Year 1 Above 44 year 1 Above 44 year

30. Information required by the Accounting Standard on Segment Reporting, for the year under review, is as below: Income / Expenditure Investment Film business Events & Sports Others Services Total activities Managment (Rs) Revenues 706,678,307 - 234,400,144 3,965,255 945,034,706 (1,023,966,580) (347,334,319) (62,871,735) (-) (1,434,172,634) Expenses 132,223,684 - 248,786,886 5,745,030 434,489,180 (-) (425,179,677) (190,832,614) (-) (616,089,159) Segment result 526,721,043 - -14,386,742 -1,788,775 510,545,526 (1,023,966,580) (77,845,358) (-127,960,879) (-) (818,160,343) Less: Interest & Financial Charges 509,174,440 (258,189,207) Less: Other unallocable expenses 179,529,200 (115,763,638) Profit (Loss) before taxes (178,158,114) (444,207,498) Income tax (Net of MAT Credit and 15,926,681 including FBT) (1,492,801) Profit (Loss) for the period (194,084,795) (442,714,697) Assets / Liabilities* Segment Assets 8,231,910,315 - 105,682,813 283,515,728 8,621,108,856 (5,966,851,976) (-) (2,143,714,927) (-) (8,110,566,903) Segment Liabilities 2,418,439,145 - 103,723,764 6,098,945,947 8,621,108,856 (4,062,364,842) (-) (404,820,206) (-) (8,110,566,903) Capital expenditure - - 2,085,958 2,085,958 (-) (-) (1,904,754) (1,904,754) Depreciation - - (-) 630,585 630,585 (-) (186,014) (186,014) Other Non cash expenses** - - - 26,947,330 (-) (273,217) (-) (273,217) ** other than Stock Option Charge out 31. Amounts due / to from Debtors / Creditors are subject to confirmation. 32. Income from Investments includes: Current Year (Rs) Previous Year (Rs) Dividend from Subsidiary 40,881,830 69,536,382 Profit on sale of Long Term Investments 561,098,785 919,307,975 Profit on sale of Current investments 25,181,843 3,178,000

33. Foreign Currency Exposure and Derivative Contract The Company’s foreign currency exposure not hedged by a derivative instrument or otherwise as on 31 March, 2009 is as follows: Currency Amount payable Rupee equivalent (Rs.) GBP ( Expenses payable) 15,066 1,097,724 GBP ( Advance refundable) 63,018 5,261,859 34. Prior period adjustments The components of prior period adjustments are as follows: Particulars Year ended Year ended 31.03.2009 31.03.2008

(Rs.) (Rs.) Interest short provided for 5,972,630 - Expenses short provided 7,009,182 - Write backs (890,958) - Total 12,090,854 - For and on behalf of the board Raghav Bahl Sanjay Ray Chaudhuri Managing Director Director June 30,2009 R D S Bawa Shilpa Aggarwal Noida Chief Financial Officer Manager Corporate Affairs & Company Secretary 47 NETWORK18 MEDIA & INVESTMENTS LIMITED (Currency : Indian Rupees in Thousand) Additional Information pursuant to Part IV of Schedule VI to the Companies Act, 1956, of India Balance Sheet Abstract & Company’s General Business Profile :

I. Registration Details : Registration No. 0 7 6 4 1 9 State code 5 5

Balance sheet Date : 3 1 0 3 2 0 0 9

II. Capital raised during the year

Public Issue Right Issue N I L 1 0 1 6 6 6 Bonus Issue Private Placement N I L N I L

Others 6 0 1

III. Position of Mobilisation and Deployment of Funds

Total Liabilities (including Shareholders’ Funds) Total Assets 8 7 6 1 6 5 1 8 7 6 1 6 5 1 Sources of Funds Paid up Capital Reserves & Surplus 1 9 0 2 9 4 0 4 0 9 2 9 9 3 Secured Loan Unsecured Loan 1 2 7 4 6 8 9 1 1 4 3 7 5 0 Deferred Tax Liability N I L Application of Funds Net Fixed Assets Investment 4 6 2 4 4 7 0 2 5 9 1 0 Net Current Assets Misc Expenditure 1 5 4 8 9 5 3 N I L

IV. Performance of Company Turnover (including Other Income) Total Expenditure 9 7 2 0 3 1 1 1 3 8 0 9 8

(Please tick approriate box + for Positive, -for Loss) Profit/Loss Before Tax Profit/Loss After Tax + — + — 1 7 8 1 5 8 1 9 4 0 8 4

(Please tick approriate box + for Positive, -for Loss)

Earning per Share (in Rs.)-Annualised Dividend Rate % + — 3 . 1 4 N I L (Please tick approriate box + for Positive, -for Negative) V. Generic names of Principal Products/Services of Company The Company is engaged in investments & media business for which no item code has been prescribed. For and on behalf of the board Raghav Bahl Sanjay Ray Chaudhuri Managing Director Director Noida R D S Bawa Shilpa Aggarwal June 30,2009 Chief Financial Officer Manager Corporate Affairs & Company Secretary

48 NETWORK18 MEDIA & INVESTMENTS LIMITED AUDITORS’ REPORT sidiary of TV18, and those of network18 India Holdings To the members of Network18 Media & Investments Limited Private Limited have reported that these companies are 1. We have audited the attached Consolidated Balance Sheet of carrying on the business of investment and hence are Non Network18 Media & Investments Limited (‘the Company’) and its Banking Financial Institutions as defined under Section 45 subsidiaries , associates and joint ventures ( collectively called –I of the Reserve Bank of India Act, 1934, which ,inter alia, the ‘Network 18 Group’) as at March 31,2009 , the Consolidated requires, registration with the Reserve Bank of India for the Profit & Loss Account and the Consolidated Cash Flow state- continuance of such activities. Both the said companies ment for the year ended on that date , both annexed hereto. are yet to apply for registration with the Reserve Bank of These financial statements are the responsibility of the Compa- India. ny’s management and have been prepared by the management (iv) Note no.10M of Schedule 17 to the financial statements on the basis of separate financial statements and other financial wherein it is indicated that TV18 has entered into trans- information regarding components of the group . .Our respon- actions of income and expenditure aggregating to Rs sibility is to express an opinion on these financial statements 43,110,175/- and Rs 5,446,366/- respectively during the based on our audit and representations made by the manage- current year with Companies listed in the register main- ment during audit. tained under Section 301 of the Companies Act,1956. 2. We conducted our audit in accordance with auditing standards TV18 has made an application to the Central Government generally accepted in India. Those standards require that we for the approval of these and similar transactions entered plan and perform the audit to obtain reasonable assurance about into in the previous year for which an approval as per the whether the financial statements are free of material misstate- requirements of Section 297 of the Companies Act,1956 is ment. An audit includes examining, on a test check, evidence yet to be received. supporting the amounts and disclosures in the financial state- (v) Note 4 of Schedule 17 regarding the ‘as is’ consolidation of ments. An audit also includes assessing the accounting prin- Network 18 Holdings Limited, Cayman Islands and TV18 ciples used and significant estimates made by the management, HSN Holdings Limited, Cyprus, accounts of which are pre- as well as evaluating the overall financial statement presenta- pared as per IFRS as European Union. tion. We believe that our audit provides a reasonable basis for our opinion. 6. We report that the Consolidated Financial Statements have been prepared by the Company’s management in accordance with the 3. We did not audit the financial statements of certain subsidiaries, requirements of Accounting Standard 21 on Consolidated Finan- whose standalone/consolidated financial statements reflect total cial Statements, Accounting Standard 23 on Accounting for In- assets of Rs 23,089 millions, total revenues of Rs 8,615 million vestments in Associates in Consolidated Financial Statements and net cash inflows of Rs 134 millions for the year ended on that and Accounting Standard 27 on Financial reporting of interests date. These financial statements have been audited by other au- in Joint Ventures prescribed by the Central Government under ditors whose reports have been furnished to us, and our opinion Section 211(3C) of the Companies Act,1956 and other recog- on the consolidated financial statements is based solely on the nized accounting practices and policies. reports of other auditors. 7. Subject to our comments in Para 5 above , the impact of which 4. As stated in Note 10 O of Schedule 17 in the case of an as- on the financial statements is not ascertainable ,based on our sociate of TV18, investment in which was disposed off during audit and on consideration of reports of other auditors on the the year, share of loss of Rs 13.66 million, as considered in the separate financial statements and on the other financial informa- consolidated financial statements of the TV 18 , and therefore tion of the components, and to the best of our information and incorporated in these financial statements, is based on manage- according to the explanations given to us, we are of the opinion ment’s estimate and is therefore unaudited. Another subsidiary that the attached consolidated financial statements give a true which had not commenced operations had been disposed off and fair view in conformity with the accounting principles gener- during the year and based on the unaudited financial statements ally accepted in India: there was no impact on the consolidated financial statements of such disposal. i) in the case of the Consolidated Balance Sheet, of the state of affairs of the Network 18 Group as at March 5. Attention is invited to 31,2009,and (i) Note no.29 of Schedule 17, regarding non compliance with ii) in the case of the Consolidated Profit and Loss account, capital adequacy and concentration of investments norms of the loss for the year ended on that date, and forming part of the Non Banking ( Non Deposit Accepting or Holding) Companies Prudential Norms ( Reserve Bank) iii) in the case of the Consolidated Cash Flow statement ,of Directions ,2007 issued by the Reserve Bank of India, in the cash flows of the Company for the year ended on that the case of the Network 18 Media & Investments Limited. date (ii) Note no. 25 regarding payment of managerial remuneration of Rs 11.46 million in the case of Network 18 Media For G S Ahuja & Associates & Investments Limited and Rs 3.74 millions in the case of Chartered Accountants Infomedia18 Limited. The remuneration paid is subject to approval of the Central Government. G S Ahuja Noida Proprietor, (iii) The Auditors of I-Ven Interactive Limited ( I-Ven) , a sub- June 30, 2009 Membership No. 87732

49 NETWORK18 MEDIA & INVESTMENTS LIMITED Consolidated Balance Sheet as at March 31, 2009 Schedule 31.03.2009 31.03.2008 (Rs.) (Rs.) SOURCES OF FUNDS Shareholders’ Funds Share capital 1 1,902,940,920 257,411,275 Application Money Pending for Allotment 598,473 - Employees Stock Options Outstanding 2 384,112,906 236,483,745 Reserves and surplus 3 3,322,774,381 3,864,246,992 Loan Funds Secured loans 4 5,705,108,387 6,618,580,976 Unsecured loans 5 8,142,533,965 4,218,011,164 Deferred Tax Liablity 36,552,673 34,817,293 Minority Interest 3,608,607,576 4,155,913,493 23,103,229,281 19,385,464,938 APPLICATION OF FUNDS Fixed Assets Gross block 6 5,695,548,035 3,192,705,986 Less: Depreciation 2,694,680,119 989,514,237 Net block 3,000,867,916 2,203,191,749 Capital work in progress 6,875,435 143,076,207 3,007,743,351 2,346,267,956 Goodwill (On Consolidation) 6,281,564,703 3,544,977,363 Investments 7 7,669,842,841 8,664,391,081 Deferred Tax Assets 8 142,918,341 19,719,479 Current Assets, Loans & Advances Inventories 87,221,075 6,222,216 Sundry debtors 2,470,525,990 2,554,391,714 Unbilled Revenue 42,591,800 - Cash & bank balances 2,707,887,306 2,053,918,586 Loans & advances 3,296,756,829 2,137,415,870 8,604,983,000 6,751,948,386 Less: Current Liablities and Provisions 9 Current Liabilities 4,332,301,549 2,595,476,437 Provisions 315,311,249 218,094,082 Net Current Assets 3,957,370,202 3,938,377,867 Miscellaneous Expenditure (Note) (To the extent not written off or adjusted) 10 121,616,929 126,857,024 Profit & Loss Account 11 1,922,172,914 744,874,168 23,103,229,281 19,385,464,938 Notes forming part of the accounts 17

The above schedules form an integral part of accounts As per our report of even date attached For G S Ahuja & Associates For and on behalf of the Board Chartered Accountants G S Ahuja Raghav Bahl Sanjay Ray Chaudhuri Proprietor Managing Director Director

June 30, 2009 R D S Bawa Shilpa Aggarwal Noida Chief Financial Officer Manager Corporate Affairs & Company Secretary 50 NETWORK18 MEDIA & INVESTMENTS LIMITED Consolidated Profit & Loss account for the period ended March 31, 2009 Schedule 31.03.2009 31.03.2008 (Rs.) (Rs.) INCOME Income from operations 12 7,602,000,425 6,477,037,689 Other income 13 1,358,993,599 438,477,409 8,960,994,024 6,915,515,098 EXPENDITURE Production, administrative and other costs 14 6,588,363,321 3,488,322,146 Personnel expenses 15 3,022,877,732 1,790,611,234 Interest and financial charges 16 1,852,088,524 894,682,209 Interest for acquisition of long term investment (Note) 98,659,085 57,219,593 Depreciation 6 715,452,076 405,103,938 12,277,440,738 6,635,939,120 Profit/(Loss) before tax (3,316,446,714) 279,575,978 Less: Prior period adjustment 29,068,408 26,061,428 Profit/(Loss) before tax after prior period adjustment (3,345,515,122) 253,514,550 Provision for taxes (32,242,535) 236,600,063 Profit/(Loss) after tax (3,313,272,587) 16,914,487 Minority Interest in Current Profits (1,648,714,081) (181,458,867) Share in profits / losses of associate (154,228,772) (153,116,938) Profit/(Loss) after tax after minority interest (1,818,787,278) 45,256,416 APPROPRIATIONS Transferred to general reserve - 60,568,794 Proposed dividend - 178,216,020 Short provision of earlier year’s proposed dividend and tax thereon 64,050 - Tax on proposed / interim dividend - 50,480,564 Transfer to reserve u/s 45IC - 88,542,939 Balance carried to reserves and surplus (1,818,851,328) (332,551,901) Earning per equity share ( Note ) (Face Value of Rs. 5 per share) Basic (31.43) 0.88 Diluted (30.98) 0.87 Notes to accounts 17

For G S Ahuja & Associates For and on behalf of the Board Chartered Accountants G S Ahuja Raghav Bahl Sanjay Ray Chaudhuri Proprietor Managing Director Director

June 30, 2009 R D S Bawa Shilpa Aggarwal Noida Chief Financial Officer Manager Corporate Affairs & Company Secretary

51 NETWORK18 MEDIA & INVESTMENTS LIMITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 March, 2009 PARTICULARS Period Ended Year Ended 31.03.2009 31.03.2008 (Rs.) (Rs.) A CASH FLOW STATEMENT OPERATING ACTIVITES Profit before tax (3,345,515,122) 253,514,550 Adjustment for: Depreciation 715,452,076 410,409,890 Employee stock compensation expenses 141,148,540 303,285,143 Diminiution in the value of investment - 3,263,359 Written off in the value of Investments 2,055,000 - Interest and other financial Expenses 1,852,088,524 894,682,209 Interest for acquisition of long term investment 98,659,085 57,219,593 Bad debts written off/ provision for doubtful debts 703,659,264 138,465,176 Loss on sale of fixed assets 660,604 539,346 Profit/(loss) on sale of business - (6,952,243) Interest income (161,313,846) (126,934,896) Dividend on current investments (116,383,799) (226,799,898) Share in surplus of venture capital trust - long term investment (578,000,000) - Profit on sale of current investments (85,006,243) (55,060,027) Loss on exchange rate fluctuation (net) 278,287,326 27,641,716 Dividend from units in venture capital trust (Long Term Investment) (95,000,000) - Excess provisions written back (72,500,716) (9,828,514) Prior period adjustments (29,068,408) (26,061,428) Operating profit before working capital changes (690,777,715) 1,637,383,976 Adjustment for: Decrease/(Increase) in current assets (884,298,491) (1,087,394,557) Increase/(Decrease) in current liabilities 1,088,611,448 3,158,894,384 Net cash flow/ (Used in) operating activities (486,464,758) 3,708,883,803 Tax on operational income (including fringe benefit tax) 32,242,535 (315,286,619) Prior period adjustments 29,068,408 26,061,428 Net cash flow from operating activities (425,153,815) 3,419,658,612 B CASH FLOW FROM INVESTMENT ACTIVITES Share application money shares (519,644,321) - Share application money units (50,000) - Purchase of fixed assets (including capital advances) (1,444,391,881) (1,196,140,027) Sale of assets/claim received 66,803,806 30,180,341 Sale of long term investments 8,500,000 100,000 Investments purchased - in affiliate/ joint venture (1,960,173,586) (1,675,501,835) - Venture capital trust (1,877,800,000) (604,000,000) - Mutual funds and others (net) 4,906,973,069 (3,396,927,598) Acquisition of minority interest in subsidiary (2,736,587,340) (2,274,652,758) Foreign exchange translation adjustment (arising on consolidation) 81,141,652 (18,354,603) Interest received 161,313,846 126,934,896 Dividend received on current investments 116,383,799 226,799,898 Share in surplus of venture capital trust - long term investment 578,000,000 - Dividend from units in venture capital trust (Long Term Investment) 95,000,000 - Net cash from/ Used in) investing activities (2,524,530,956) (8,781,561,686) C CASH FLOW FROM FINANCING ACTIVITIES Dividend paid (including dividend distrubution tax) - (228,696,584) Interest paid (1,852,088,524) (894,682,209) Proceeds from issue of equity shares 102,266,795 59,962,799 Proceeds from issue of Preference shares 1,543,262,850 - Proceeds from Security premium on Equity 891,982,675 - Share Application Money repaid 598,473 - Redemption of Zero coupon secured partly convertible debentures - (11,776,204) Interest for acquisition of long term investment (98,659,085) (57,219,593) Issue of Debentures - 500,000,000 Increase / (Decrease) in loans 3,011,050,212 5,698,758,632 Other Misc. Expenses 5,240,095 - Expenses on Proposed Right issue - (30,886,900) Net cash flow from/ used in financing activities 3,603,653,491 5,035,459,940 Net increase/ (decrease) in cash and cash equivalents 653,968,720 (326,443,134) Cash and cash equivalents as at the beginning of the year 2,053,918,586 2,380,361,720 Cash and cash equivalents as at the end of the year 2,707,887,306 2,053,918,586

As per our report of even date attached For G S Ahuja & Associates For and on behalf of the Board Chartered Accountants G S Ahuja Raghav Bahl Sanjay Ray Chaudhuri Proprietor Managing Director Director June 30, 2009 R D S Bawa Shilpa Aggarwal Noida Chief Financial Officer Manager Corporate Affairs & Company Secretary 52 NETWORK18 MEDIA & INVESTMENTS LIMITED Schedules to Consolidated Balance Sheet March 31, 2009 March 31, 2008 (Rs.) (Rs.) SCHEDULE 1 : SHARE CAPITAL AUTHORISED: 110,000,000 Equity Shares of Rs 5/- each ( Previous year 110,000,000 of Rs 5/- each) 550,000,000 550,000,000 11,00,000 ( Previous year 11,00,000) 5% Non cumulative Redeemable Preference Shares of Rs 100 each 110,000,000 110,000,000 12,000,000 (Previous year 12,000,000) 5% Non Cumulative Redeemable Preference Shares of Rs 200 each 2,400,000,000 2,400,000,000 3,060,000,000 3,060,000,000 ISSUED, SUBSCRIBED AND PAID UP: 71,935,614 (Previous year 51,411,255) Equity shares of Rs. 5 each fully paid up 359,678,070 257,411,275 10,272,355 5% Partly Convertible Cumulative Preference shares of Rs. 150/- each (fully paid up) 1,540,853,250 - 24,096 5% Partly Convertible Cumulative Preference Shares of Rs. 150/- each, Rs 100 paid up (Partly paid up) 2,409,600 - 1,902,940,920 257,411,275 SCHEDULE 2 : EMPLOYEE STOCK OPTIONS OUTSTANDING Employee stock options outstanding 586,814,373 596,350,252 Less: Deferred employee compensation 202,701,467 359,866,507 Closing Balance 384,112,906 236,483,745 SCHEDULE 3 : RESERVES AND SURPLUS Securities premium Opening balance 3,299,525,483 3,242,656,984 Add: Share Premium on conversion of Prefernce shares 188,004,617 - Add:Adjustment on account of change in % of subsidiary 122,791,241 - Add: Amounts received pursuant to issue of equity shares 1,475,249,701 56,868,499 Less: QIP Expenses 15,288,289 - Less: Merger expenses 18,398,760 - Less Investment written off on court order 602,126,655 - Less: Utilization of IPO proceeds 659,525,644 - Less: IPO Expenses 117,268,620 - Closing balance 3,672,963,074 3,299,525,483 General reserve Opening balance 69,167,058 8,598,264 Add: Transfer from Debenture redembtion reserve (12,984,320) 45,000,000 Add: Share in General Reserve of Subsidiaries - 15,568,794 Closing balance 56,182,738 69,167,058 Debenture redemption reserve Opening balance (12,984,320) 16,140,851 Add: Transfer from profit and loss account - 47,473,169 Less: Transfer to General reserve (12,984,320) 76,598,340 Closing balance - (12,984,320) Capital Reserve (565,400,928) 430,650,926 Reserve u/s 451C of RBI act 88,770,530 88,770,530 Exchange translation reserve 70,258,967 (10,882,685) 3,322,774,381 3,864,246,992 SCHEDULE 4 : SECURED LOANS Zero coupon secured partly convertible debentures - 59,203,716 Premium payable on redemption of debentures - 16,012,362 Debentures - 500,000,000 Cash credit 1,320,934,101 759,025,623 Term loans 3,297,981,751 4,723,692,759 Other loans 15,298,004 - Interest accrued but not due 2,902,636 - Working Capital Loan 82,891,944 135,840,631 Loans from Others 985,099,951 424,805,885 5,705,108,387 6,618,580,976

SCHEDULE 5 : UNSECURED LOANS Term Loans 4,344,259,500 3,344,650,000 Public deposits 950,330,693 318,672,492 Commercial paper loan 2,250,000,000 250,000,000 Other Loans 597,943,772 304,688,672 8,142,533,965 4,218,011,164

53 NETWORK18 MEDIA & INVESTMENTS LIMITED - - - As at 31.3.08 216,200 25,585,116 57,273,523 10,196,543 38,823,171 38,823,171 16,770,900 38,325,528 38,325,528 Amount (Rs) 143,076,206 143,076,206 101,810,350 101,810,350 109,814,457 109,814,457 124,215,213 259,013,220 259,013,220 2,346,267,956 2,203,191,750 2,203,191,750 1,584,305,262 1,421,147,529 1,421,147,529

As at N e t B l o c k 31.3.09 6,875,435 9,222,868 1,246,180 1,123,872 39,190,618 78,207,496 63,420,907 5 9,647,015 18,569,606 16,084,626 114,454,392 166,882,000 137,668,660 334,036,674 3,007,743,350 3,000,867,915 2,346,267,956 1,961,113,001 - -

Total 749,253 5,172,289 3,941,796 42,287,310 35,812,818 11,275,554 48,530,444 32,660,676 Depreciation 989,514,237 118,507,335 255,353,317 116,925,741 199,522,380 2,694,680,120 2,694,680,120 1,823,941,207

------6,305,330 2,381,612 Impairment 20,010,941 20,010,941 17,629,329

------789,619 140,707 (695,764) 6,305,330 6,104,212 9,024,821 65,417,430 65,417,430 59,473,254 11,234,687 (2,738,717) Adjustments

(17,915,389)

- - Up to 19,074 973,675 236,473 31.03.09 2,430,602 9,102,513 1,466,742 30,026,307 47,044,762 62,633,207 17,741,124 32,009,933

700,712,287 700,712,287 410,409,889 389,739,605 107,288,270 Depreciation D e p r c i a t o n ------Merger Addition 813,462 730,179 on A/c of

4,935,816 6,642,071 64,146,667 30,547,307 14,891,072 75,676,596 13,708,793 Acquisition / 837,768,122 1,049,860,085 1,049,860,085

- - - - As At 1.4.08 8,708,824 1,242,916 2,475,054 53,547,184 10,301,879 24,287,956 14,771,303 20,473,899 87,550,138 Depreciation 989,514,237 585,409,678 989,514,237 127,877,679 638,277,405

Total Block Gross 6,875,435 1,246,180 1,873,125 20,498,422 75,003,436 23,741,895 20,026,422 92,307,691 209,169,310 196,714,831 369,807,709 111,951,351 254,594,401 533,559,054 5,702,423,470 3,335,782,193 5,695,548,035 3,785,054,208

------Sales / 520,000 240,400 8,444,000 65,981,013 13,364,820 12,770,202 84,621,778 12,920,640 Adjustments 343,949,010 132,881,840 211,067,170

- - - r o s B l c k G Addition 780,468 609,980 1,007,267 74,226,399 69,646,029 18,952,435 45,337,841 12,772,623 16,363,900 20,897,949 929,683,666 582,055,106 161,260,068 1,232,048,266 1,003,910,065 - - - - Merger Addition 640,000 420,000 on A/c of 1,873,125 23,741,895 21,000,000 95,301,839 60,532,957 17,857,649 35,119,519 34,179,628 Acquisition / 187,817,665 1,706,680,223 1,706,040,223 1,228,195,946

- - As At 1.4.08 216,200 20,498,422 26,828,032 81,561,479 19,245,954 53,594,474 58,799,427 143,076,206 118,523,281 177,762,397 229,688,029 346,563,358 3,335,782,194 2,169,714,941 3,192,705,987 2,059,424,934

Includes Rs. 3,500 (Previous year Rs.Nil) being the face value of shares in co-operative housing societies. Depreciation for the year includes Rs. 20,010,941 (Previous year Rs. Nil) pertaining to impairment of assets held at leased offices, which are being vacated as part of a restructuring exercise in a subsidiary and adjustments of Rs. Rs. of adjustments and subsidiary a in exercise restructuring a of part as vacated being are which offices, leased at held assets of impairment to pertaining Nil) Rs. year expenses. Opening balance of gross block and accumulated depreciation includes amount Rs. 238,295 20,495 respectively Mobi leN X T Online Private Limited which was disposed off during the year. (Previous pre-operative to 20,010,941 Rs. transfer to Additions to fixed assets include foreign exchange translation d ifference of Rs. 78,916,180 (Previous year Rs 8,689,706). includes year pertaining the for 5,305,950) Rs. Depreciation year (Previous 5,271,152 Represents assets and accumlated depreciation of I-Ven Interactive Limited its subsidiaries joint venture acquired duri ng the year. Adjustments related to accumulated depreciation include foreign exchange translation difference of Rs. 28,566,263 (Previous yea r 3,478,464).

angible Assets: Total Previous Year Capital Work in Progress Total Note: a) Ownership Flats Intangible Assets: Brand Goodwill News Archives Software Building

S chedule 6 : F ixed A ssets as on 31.3.2009 Particulars Computers b) c) d) e) f)

Electric Installation Vehicles Plant & Machinery Leasehold Improvements Furniture & Fixture Freehold land T Leasehold Land

54 NETWORK18 MEDIA & INVESTMENTS LIMITED SCHEDULES TO CONSOLIDATED BALANCE SHEET March 31, 2009 March 31, 2008 (Rs.) (Rs.) SCHEDULE 7 : INVESTMENTS Investment - At Cost, Not Trade. A. Quoted - Long Term 592,885 (previous year 592,885) equity shares Rs. 4 each fully paid up of KSL and Industries Limited 149,999,905 149,999,905 500,000 (previous year Nil) equity shares of Rs. 2 each fully paid up in Provouge (India) Limited 110,000,000 - 275,000 ( Previous Year 275,000) equity shares of Rs. 10 each fully paid up in Refex Refrigerants Limited 55,000,000 55,000,000 (Previous year 10,000,000) Ordinary Shares of No par value each in The Indian film Co. Ltd., Guernsey 807,810,000 807,810,000 Nil (Previous year 5,000,000) convertible Equity Warrants of Rs 10 each partly paid up in Infomedia India Limited (see note 10) - 118,500,000 Aggregate of Quoted - Long Term Investments 1,122,809,905 1,131,309,905 B. Quoted - Short Term in mutual funds Nil (Previous year 28,444,348) units of Rs. 10 each in ABN Amro Mutual Fund - 291,517,435 3,680,178 (Previous year 4,083,412 ) units of Rs. 10 each in Birla Sunlife Mutual Fund 50,520,290 40,869,240 15,579,818.53 (Previoius year Nil) Units of Rs.10 each in LIC Liquid Fund Mutual Fund 250,000,000 - Nil (Previous year 89,226) units of Rs. 10 each in Standard Chartered Bank Mutual Funds - 89,244,440 Nil (Previous year 50,420,128) units of Rs. 10 each in Birla Mutual Fund - 534,214,464 Nil (Previous year 5,785,219) units of Rs. 10 each in Chola Mutual Fund - 57,852,539 528,104 (Previous year 5,089,081) units of Rs. 10 each in DSP Merrill Lynch Mutual Fund 5,297,519 49,122,063 67,228 (Previous year 308,322) units of Rs. 1,000 each in DSP Merrill Lynch Mutual Fund 75,122,515 308,439,045 Nil (Previous year 15,265,939) units of Rs. 10 each in DWS Mutual Fund - 152,957,077 53,223.418 (Previous year Nil) units of Rs. 16.080/- each in DWS Mutual Fund 855,814 - 2,870,896 (Previous year Nil) units of Rs. 10 each in SBI Mutual Fund 55,962,692 - Nil (Previous year 27,566,430) units of Rs. 10 each in Fidelity Mutual Fund - 275,666,983 Nil (Previous year 3,943,488) units of Rs. 10 each in HSBC Mutual Fund - 39,469,142 Nil (Previous year 59,660,647) units of Rs. 10 each in ING Vysya Mutual Fund - 596,968,760 1,487,608 (previous year 10,112,826) Units of JM Money Manager Super Plus Plan - Growth 17,433,280 101,026,819 3,539,503 (Previous year 5,750,000) Units of Kotak Liquid (Institutional Premium) - Growth 60,879,808 69,322,062 Nil (Previous year 21,213,598) units of Rs. 10 each in Optimix Mutual Fund - 212,772,513 Nil (Previous year 9,688,990) units of Rs. 10 each in LIC Liquid Fund - 106,386,093 Nil (Previous year 27,073,224) units of Rs. 10 each in Principal Mutual Fund - 271,191,236 98,536 (Previous year 127,690,135) units of Rs. 10 each in Prudential ICICI Mutual Fund 1,591,105 1,346,846,294 Nil (Previous year 10,720,090) units of Rs. 10 each in Reliance Mutual Fund - 107,900,059 6,324,488 (Previous year Nil) units of Rs. 1,000 each in Religare Mutual Fund 75,600,000 - Nil (Prvious year 146,417) units of Rs. 1,000 each in Reliance Mutual Fund - 146,601,384 Nil (Previous year 16,689,472) units of Rs. 10 each in Standard Chartered Mutual Fund - 167,011,747 5,107,369 (Previous year 24,873,140) units of Rs. 10 each in ‘Sundaram BNP Paribas Mutual Fund 94,000,000 248,950,204 Nil ( Previous year 3,611,439) Units of Rs. 10.09 in DWS Mutual Fund - 36,450,357 3,364 ( Previous year 198,792) units of Rs. 1,000 each in Tata Mutual Fund 5,335,790 221,557,185 NIL (Previous year 56,717 ) units of Rs. 1,000 each in UTI Mutual Fund - 56,728,498 1,445,231 (Previous year Nil)units of Rs. 10 each in ‘Taurus Liquid Plus Fund 14,500,000 - Aggregate of Quoted - Short Term Investments 707,098,813 5,529,065,639 (Aggregate Market Value Rs. 990,501,502 (Previous year 5,733,342,098) C. Unquoted (Equity shares) a. Other companies Nil (Previous year 500) Equity Shares of New India Co-op. Bank Limited of Rs. 10 each fully paid. - 5,000 898,500 (Previous year 898,500) Equity Shares of Rs. 10 each fully ‘paid up in Delhi Stock Exchange Association Limited 62,895,000 62,895,000 Nil (Previous year 301,876) Equity Shares of Rs.10 each fully ‘paid up in MobileNxt Teleservices Private Limited - 131,651,138 5,000 Equity Shares (Previous year 5,000) at USD 1( approx Rs.51) each fully paid up in BK Holding 254,750 199,850 1,270,580 (Previous year Nil) convertible, cumulative, redeemable ‘ preference shares of INR 10/- each of Ambit Capital Private Limited 33,442,510 - Nil ( Previous year 25,000) Equity Shares of Rs. 10 each fully paid up in Jagran 18 Publication Limited - 250,000 Nil Equity Shares (Previous year 141,176) of Rs. 10 each fully paid up in Ambit Capital Private Limited - 7,081,413 1 Equity Share (Previous year 1) at USD 1(approx Rs.48) each fully paid up in Capital 18 Limited, Mauritius 51 40 437,459 (Previous year 1,500,015) Series C Preference Shares of USD 0.0001 [approx Rs. 0.0051 (Previous year Rs.0.0044 )] each fully paid up Yatra Online Inc. 65,863,043 22,147,500 975,700 (Previous year : 975,700) Series B Preference shares of USD 0.0001 each ‘ [approx Rs. 0.0051 (Previous year Rs.0.0044 )] each of Yatra Online Inc. 63,687,500 54,487,500 24,818 Units (Previous year 6,040) of Rs. 100,000 each in Media Venture Capital Trust-II (MVCT) 2,481,800,000 604,000,000 250,000 (Previous year 250,000) Convertible Warrants of Rs. 10 each partly paid up in Bhagwati Banquets and Hotels Limited - 2,050,000 2,500,000 (Previous year 2,500,000) 8% Cumulative Redeemable Non Convertible Preference Shares of Rs.100 each in BK Media Pvt Ltd 250,000,000 250,000,000 Nil (previous year 86,485) Equity Shares of B.K. Fincap Private Limited of Rs. 10 each fully paid up - 556,498,091

55 NETWORK18 MEDIA & INVESTMENTS LIMITED SCHEDULES TO CONSOLIDATED BALANCE SHEET March 31, 2009 March 31, 2008 (Rs.) (Rs.) 2,700,000 (Previous year : Nil) ordinary shares of USD 0.0001 (approx Rs. 0.0051) each of Yatra Online Inc. 113,465,650 - 15,511,361 (Previous year Nil) equity share of Viacom18 Private Limited 2,350,605,119 - Nil (previous year 1,347,241) Equity Shares of Jagran TV Private Limited of Rs. 10 each fully paid up - 200,500,000 Nil (previous year 4,500,000) Share Warrants of Series “A” of Viacom18 Media Private Limited of Rs. 1 each fully paid up - 4,500,000 4,500,000 (previous year 4,500,000) Share Warrants of Series “B” of Viacom18 Media Private Limited of Rs. 1 each fully paid up 4,500,000 4,500,000 3,000,000 (previous year 3,000,000) Share Warrants of Series “C” of Viacom18 Media Private Limited of Rs. 1 each fully paid up 3,000,000 3,000,000 6 years National Savings Certificates 5,500 - 3,192 (Previous year Nil) equity shares of Rs. 10 each fully paid up in Skorydove Systems Private Limited 60,000,000 - 83,763 (Previous year NIL) equity shares of Rs. 10 each fully paid up in ‘Ensemble Infrastructure India Limited 60,000,000 - 57 (Previous year Nil) Loan Bonds of USD 100,000 (approximately Rs. 5,700,000) each 290,415,000 - Nil (Previous year 240,000) 15% Cumulative Redeemable Convertible Preference Shares of Rs 10/-each in VT Holdings Private Limited - 100,250,005 Aggregate of unquoted investments 5,839,934,123 2,004,015,537 Total 7,669,842,841 8,664,391,081

SCHEDULE 8 : CURRENT ASSETS, LOANS & ADVANCES Inventories (at cost) Raw materials, stores and spare parts 66,429,528 6,222,216 Work in progress 12,818,954 - Finished goods 709,047 - Tapes 7,263,546 - 87,221,075 6,222,216 Sundry debtors (Unsecured) Debts outstanding for more than 6 months - considered good 345,419,729 - - considered doubtful 303,991,654 613,054,711 Other debts - considered good 2,126,086,301 2,064,649,684 2,775,497,684 2,677,704,395 Less: Provision for doubtful debts 304,971,694 123,312,681 2,470,525,990 2,554,391,714 Cash and bank balances Cash on hand 3,612,305 3,394,322 Cheques in hand 1,354,067 - Balance with scheduled banks : - in current accounts* 822,056,824 697,700,600 - in deposit accounts** 1,880,856,940 1,352,823,664 Balance with Other Banks - in current accounts* 7,170 - 2,707,887,306 2,053,918,586 * Includes in Unclaimed dividend accounts, application money refundable accounts 46,301,087 2,786,353 ** Includes held in accounts as per Rule 3A of Companies (Acceptance of Deposits) Rules, 1975 150,203,051 37,896,075 Under lien with manager to offer (to the shareholders of Infomedia India Limited). - 293,126,291 Loans & advances (Unsecured, considered good) Share application Money Paid for Shares 519,644,321 2,263,504 Share application Money Paid for Units 50,000 - Amounts due from subsidiaries & Companies 38,305,846 235,101,251 Advance to vendors 101,952,882 120,670,290 Security and other deposits 307,981,523 246,514,359 Service tax input credit 18,054,296 - Interest accrued but not due 18,919,996 9,349,533 Advances recoverable in cash or in kind or for value to be received 1,370,592,252 1,091,919,935 - Income tax paid [net of provision Rs. 61,557,000 (Previous year Rs. 30,900,000)] 673,528,561 189,161,565 - MAT credit entitlement 40,000,000 - - Fringe benefit tax paid 969,000 - - Tax deducted at source 6,927,527 - - Service Tax & Cenvat 28,238,081 113,626,234 - Other advances 171,592,544 128,809,199 3,296,756,829 2,137,415,870

56 NETWORK18 MEDIA & INVESTMENTS LIMITED SCHEDULES TO CONSOLIDATED BALANCE SHEET March 31, 2009 March 31, 2008 (Rs.) (Rs.) SCHEDULE 9 : CURRENT LIABILITIES & PROVISIONS Current liabilities Book Overdraft 10,301,964 13,345,917 Sundry creditors 6,701,099 1,576,967,810 Advances from customers 3,872,025,692 474,511,767 Sundry Deposits 8,866,706 Interest accrued but not due 51,067,863 52,145,698 Other liabilities 297,654,180 475,454,152 Statutory Liablities 15,682,958 265,390 Equity warrants refunable application money 23,700,000 4,286,000,462 2,592,690,734 Investor Education and Protection Fund Unclaimed dividend 3,775,910 1,279,331 Unclaimed aplication money received for allotment of 41,731,199 - Unclaimed debenture redemption money 793,978 1,506,372 46,301,087 2,785,703 4,332,301,549 2,595,476,437 Provisions Provision for retirement benefits 212,753,641 77,884,913 Provision for fringe benefit tax (net of advances) 4,470,996 8,797,751 Provision for Income tax 91,874,802 26,389,298 Provision for rebate returns 5,697,817 107,172 Provision for Wealth Tax 134,086 - Proposed/Interim dividend [Including Corporate Dividend tax payable 379,907 104,914,948 SAR Outstanding 134,086 - 315,311,249 218,094,082

SCHEDULE 10 : MISCELLANEOUS EXPENDITURE (To the extent not Written off or adjusted) Preliminary expenses 15,923 1,325,519 Debenture redemption premium - 4,242,139 Rights Issue Expenses 91,393,168 96,767,098 Pre-operative expenses 30,207,838 24,522,268 121,616,929 126,857,024

SCHEDULE 11 : PROFIT & LOSS ACCOUNT Opening balance (744,874,168) (391,923,644) Less: Profit on account of merger in subsidiary w.e.f. last year 46,343,440 - Less : Transfer to Debenture Redemption Reserve - 47,473,169 Less: Adjustment on account of change in minority interest 77,678,539 49,523,794 Add: transfer from DRR - 76,598,340 Add : Income trf from TV18 as per scheme 659,525,644 - Add : Loss in subsidiary acquired by ibn18 65,167,087 - Add : Dividend rec. from subsidiary 40,881,830 - Profit /(Loss) brought forward from Profit and loss account (1,818,851,328) (332,551,901) Closing balance (1,922,172,914) (744,874,168)

57 NETWORK18 MEDIA & INVESTMENTS LIMITED SCHEDULES TO CONSOLIDATED PROFIT & LOSS ACCOUNT March 31, 2009 March 31, 2008 (Rs.) (Rs.) SCHEDULE 12 : INCOME FROM OPERATIONS Income from business news operations 252,500,389 6,416,540,254 Equipment rentals and other receipts 24,603,846 60,497,435 Income from Investment Business 878,101,934 - Income from business news operations 6,446,794,256 - 7,602,000,425 6,477,037,689 SCHEDULE 13 : OTHER INCOME Interest on - Loan to entities under significant influence - 3,333,701 - Fixed deposits 91,974,152 84,137,071 - Others 69,339,694 39,464,124 Dividend on short term investments 116,383,799 226,799,898 Dividend from units in venture capital trust (Long Term Investment) 95,000,000 - Dividend on Long term Investments 9,276,626 - Profit / (Loss) on short term investments 85,006,243 55,060,027 Share in surplus of long term investment 578,000,000 - Profit on sale of long term Investment 31,553,284 6,952,243 Profit on Sale Of Assets 7,537,058 197,382 Exchange rate fluctuation 40,620,595 76,868 Excess provision written back 72,500,716 9,828,514 Exceptional Income 90,000,000 - Net Income from Option Premium 46,480,000 - Miscellaneous income 25,321,432 12,627,581 1,358,993,599 438,477,409 SCHEDULE 14 : PRODUCTION, ADMINISTRATIVE AND OTHER COSTS Studio and equipment hire charges 109,967,306 103,630,605 Telecast and uplinking fees 99,406,903 63,467,567 Tapes consumed 10,805,842 317,337,643 Content and franchise expenses 478,419,801 347,281,263 Media professional fees 222,846,516 167,127,770 Consumables and spares 15,796,844 4,537,833 Other production expenses 117,650,478 103,807,030 Rent 466,185,623 213,261,858 Electricity expenses 140,623,867 55,762,472 Insurance 23,223,956 12,864,985 Traveling and conveyance 376,825,753 291,513,044 Vehicle running and maintenance 110,254,725 61,714,176 Communication expenses 232,007,032 97,370,380 Distribution, Advertising and Business Promotion 920,832,557 417,767,914 Event Expenses 77,679,661 24,093,513 Commission 7,125,000 - Business Promotion 2,272,601 11,424,981 Entertainment Expenses 1,450,540 354,666 Conference & Meeting 1,004,889 76,353 Brand Building 82,595,945 - Freight & Distribution Expenses 232,231,072 - Membership and subscription 4,389,575 3,946,458 Repairs and maintenance - Plant & machinery 101,308,976 45,488,298 - Others 65,210,867 33,680,537 Legal and professional expenses 309,425,139 146,776,747 Directors sitting fees 1,232,000 1,196,500 Loss on sale / disposal of assets 660,604 736,728 Miscellaneous expenditure written off 787,875 593,794 Loss on exchange rate fluctuation 318,907,921 27,718,584 Bad debts written off/ Provisions 703,659,264 138,465,176 Loss on sale of investments 518,226 - Material consumed 305,681,911 - Miscellaneous expenses 130,870,404 52,494,091 Band Placement fee paid 509,840,135 409,558,331 Support costs 289,268,838 244,858,332 Film Costs 36,387,252 9,247,667 Software expenses 8,126,151 - Office expenses 37,757,468 20,696,305 Miscellaneous Production Expenses - 30,278,580 Amortisation of Goodwill 15,193,730 - Airtime Purchased - 25,928,606 Provision for diminution in value of investments - 3,263,359 Rebate return etc. 17,875,074 - Long term investments written off 2,055,000 - 6,588,363,321 3,488,322,146 58 NETWORK18 MEDIA & INVESTMENTS LIMITED SCHEDULES TO CONSOLIDATED PROFIT & LOSS ACCOUNT March 31, 2009 March 31, 2008 (Rs.) (Rs.) SCHEDULE 15 : PERSONNEL EXPENSES Salaries and bonus 2,481,614,887 1,299,064,791 Contribution to provident fund and other funds 118,657,190 62,720,603 Staff welfare expenses 169,114,754 87,531,462 Retirement benefits 112,342,361 38,009,235 Employee stock compensation expenses 141,148,540 303,285,143 3,022,877,732 1,790,611,234 SCHEDULE 16 : INTEREST AND OTHER CHARGES Interest on: -Term loans 1,259,533,676 631,231,081 - Cash credit 188,087,656 65,170,420 - Fixed Deposit 54,299,284 30,856,673 - Non Convertible debenture - 14,627,264 - Commercial Paper 125,556,843 23,545,943 -Others 24,121,428 28,693,676 Other financial charges 200,489,637 100,557,152 1,852,088,524 894,682,209 Schedule 17: Notes to accounts 1. a. These financial statements comprise a consolidation of the accounts of Network 18 Media and Investments Limited, the company, its subsidiaries and Joint Ventures / Associates, as listed below. S. No. Name of Subsidiary Percentage of holding by the Company as at 31.03.09

Direct Subsidiary 1 Network18 Holdings Limited (Cayman Islands) 99.99 2 Network18 India Holdings Private Limited 100.00 3 Setpro18 Distribution Limited 66.00 Subsidiary by virtue of Control 4 Television Eighteen India Limited 44.96 5 ibn18 Broadcast Limited 49.79 Subsidiaries of Subsidiary Companies Subsidiaries of ibn18 Broadcast Limited 6 RVT Media Private Limited 100.00 7 ibn18 Media & Software Limited 100.00 Subsidiaries of Television Eighteen India Limited 8 iNews.com Limited 99.15 9 NewsWire18 Limited 77.50 10 RVT Investments Private Limited 100.00 11 Television Eighteen Mauritius Limited 100.00 12 Television Eighteen Media and Investments Limited 100.00 13 I-Ven Interactive Limited 63.98 Subsidiaries of Television Eighteen Mauritius Limited, Mauritius 14 Web18 Holdings Limited, Cayman Islands 67.57 15 Namono Investments Limited, Mauritius 100.00 16 TV18 UK Limited, U.K. 100.00 Subsidiaries of Web18 Holdings Limited , Cayman Islands * 17 E-18 Limited, Cyprus 100.00 Subsidiaries of E-18 Limited 18 e-Eighteen.com Limited 91.95 19 Television Eighteen Commoditiescontrol.com Limited 79.97

59 NETWORK18 MEDIA & INVESTMENTS LIMITED

20 Web18 Software Services Limited 100.00 21 Big Tree Entertainment Private Limited 60.00 22 Care Websites Private Limited 90.00 Subsidiaries of e-Eighteen.com Limited 23 Moneycontrol Dot Com India Limited 100.00 Subsidiaries of Capital 18 Limited 24 Colosceum Media Private Limited 100.00 25 Stargaze Entertainment Private Limited 88.89 26 Capital 18 Acquisition Corporation, Cayman Islands 98.00 Subsidiaries of Network18 Holdings Limited 27 TV18 HSN Holdings Limited, Cyprus 68.11 Subsidiaries of TV18 HSN Holdings Limited 28 TV18 Home Shopping Network Limited 100.00 Subsidiaries of I-Ven Interactive Limited 29 Infomedia 18 Limited 62.05 Subsidiaries of Infomedia 18 Limited 30 Cepha Imaging Private Limited 100.00 31 Keyword Group Limited, U.K. 100.00 32 Keyword Publishing Services Limited, U.K. 100.00 33 Software Services LC, U.S.A. 100.00 Subsidiaries of Keyword Group Limited, U.K. 34 American Devices India Private Limited 100.00 35 Keyword Typesetting Services Limited, U.K. 100.00 Joint Ventures of Subsidiaries 36 Ibn Lokmat News Private Limited 50.00 37 Jagran 18 Publications Limited 50.00 38 Jobstreet.com India Private Limited 50.00 39 Reed Infomedia India Private Limited 49.00 Associates of Subsidiaries 40 Viacom18 Media Private Limited 33.71

1 b. Investments held for Disposal The following investments held by Television Eighteen Mauritius Limited for disposal have been disclosed separately and the financials of these Companies have not been consolidated. Company Country of Incorporation Percentage shareholding as at 31.03.2009 B K Holdings Limited (BKH) w.e.f. 17 May, 2007. Mauritius 100.00 Capital 18 Limited (Capital 18) w.e.f. 6 June, 2007. Mauritius 100.00 * TV18 holds additional 13.88% of the capital in Web 18 Holding through its wholly owned subsidiary TEMIL. Shares of Web 18 comprise Class A and Class B equity shares. Holders of Class A ordinary share are entitled to ten votes for every Class A ordinary shares held and the holders of Class B ordinary shares are entitled to one vote for every Class B ordinary shares held. TV18 holds Class A equity shares through its subsidiaries. Its voting power in Web 18 Holding is 85.97% which is different from the percentage of shareholding. ** TV18 directly holds additional 3.63% of the equity capital of Infomedia. 2. Background. A. In relation to Network18 Media and Investments Limited (N18/Parent) a. N18 was incorporated as SGA Finance and Management Services Private Limited in 1996. The name was changed to Network 18 Fincap Private Limited in April 2006. The company was converted into a Public Company on October 20, 2006. The name was further changed to Network18 Media & Investments Limited on December 1, 2007. b. N18 is registered with the Reserve Bank of India as a Non Banking Finance Company and by virtue of its asset size, is classified as a ‘Systemically Important Non Banking Financial Company ’. c. N18, as at March 31, 2009, (i) jointly with Network 18 India Holdings Private Limited holds 49.21% of the issued capital of TV 18 and (ii) jointly with Network18 India Holdings Pvt. Ltd and RVT Investments Private Ltd holds 49.79% of the issued capital of ibn18

60 NETWORK18 MEDIA & INVESTMENTS LIMITED Broadcast Limited (ibn18) . N18 also controls the composition of the Board of Directors of both TV 18 and ibn18. d. During the year under review, N18 has taken over the business of Investment Advisory services of Capital 18 Media Advisors Private Limited along with its contracts , employees etc. e. During the year under review, N18 was engaged in the business of Investments, Event and Sports Management and Investment / Management advisory services. B. In relation to Network18 India Holdings Private Limited ( N18 India) N18 India was incorporated on August 13, 2007. Consequent to the acquisition of its Equity Shares by N18, it has become a wholly owned Subsidiary of that Company. C. In relation to Television Eighteen India Limited ( TV18 ) and its subsidiaries Television Eighteen India Limited (TV18) was incorporated in 1993 and is primarily engaged in content production and broadcasting. Television Eighteen Commoditiescontrol.com Limited (TECCL), formerly Eighteen Entertainment India Limited, had acquired the running business of an established commodities portal – M/s Agri Informatics India Private Limited on 29 October, 2004. However, during the year ended 31 March, 2007 the Parent’s investment in TECCL was sold to E-18 Limited Cyprus, (E 18, Cyprus) which became the holding company subsequent to such disposal. Television Eighteen Mauritius Limited (TEML) was incorporated in 1996 in the Republic of Mauritius under the Mauritius Offshore Business Activities Act, 1992 with production of television programmes as its principal business activity. The said Act has since been repealed and replaced by the Companies Act, 2001 under which TEML is a company holding Category 1 Global Business License and is regulated by the Financial Services Commission of Mauritius. E – Eighteen.com Limited (E-18) was incorporated on 28 March, 2000 as a subsidiary of the Company with the primary objective of setting up of business and finance internet portal. E-18 acquired the business of an established personal finance portal Moneycontrol Dot Com India Limited (MCD) on 21 May, 2000. Shares of E-18 were sold to E-18 Limited, Cyprus (E 18, Cyprus) on 15 June 2006 and subsequent to the sale E-18 became a subsidiary of E 18 Limited, Cyprus. iNews.com Limited was incorporated on 28 August, 2000 as a subsidiary of the TV18 and is yet to commence operations. RVT Investments Private Limited was incorporated on 9 July, 2006 as the subsidiary of the TV18 with the primary objective of dealing or trading in shares, securities and debentures. Newswire18 Limited (Newswire) (formerly News Wire 18 India Private Limited) was incorporated on 18 September, 2006 as Livewire Motion Pictures Private Limited. Newswire became a subsidiary of TV18 consequent to the transfer of the entire share capital of the promoters of Livewire Motion Pictures Private Limited i.e. Raghav Bahl, Sanjay Ray Chaudhuri and Vandana Malik, to the Company on 15 November, 2006. The name change was effective from 1 December, 2006 pursuant to a resolution passed by the members for the same. During the year ended 31 March, 2007 Newswire acquired the staff and business of Crisil Market Wire Limited, India’s first real-time financial news agency and market data platform Company. Mobilenxt Teleservices Private Limited (Mobilenxt Tele) was incorporated in February 2006 with the primary objective of retailing of mobile handsets, accessories and related products and services. Mobilenxt Tele became an associate of the Company in March 2008 and it was subsequently sold on 29 September, 2008. MobileNXT Online Private Limited (MobileNXT Online) was incorporated on 27 August, 2007 with the objective of engaging in the business of online marketing and selling of electronic products, mobile phones etc. MobileNXT Online was an associate w.e.f from 7 September, 2007 upto 13 January, 2008 and became a subsidiary of TV18 w.e.f 14 January, 2008. MobileNXT Online had not commenced operations and the holding in this company was disposed off on 29 September, 2008. Television Eighteen Media and Investment Limited (TEMIL) was incorporated in Mauritius under the Companies Act 2001, on 28 November, 2007 and is a wholly owned subsidiary of TV18. The Company has been incorporated with the primary objective of engaging in media business and investing in media undertakings. TV18 acquired a majority stake in I-Ven Interactive Limited during the year ended 31 March, 2009. Further, TV18 acquired control of the Board of Directors of Infomedia 18 Limited (formerly Infomedia India Limited), a listed company which is a subsidiary of I-Ven, on 21 August, 2008. Infomedia, its subsidiaries and its joint venture company are engaged in print media operations including publishing of business directories and special interest magazines in India, printing, E-publishing services and agency services. Jagran 18 Publications Limited was incorporated on 10 March, 2008 as a 50:50 Joint Venture between Television Eighteen India Limited and Jagran Prakashan Limited. The Company had not yet commenced its business operations as at the year end. D. In relation to ibn 18 Broadcast Limited (ibn18) ibn18 Broadcast Limited was incorporated on 6 June, 2005 as Global Broadcast News Private Limited. Ibn18 was converted into a public limited Company and a revised Certificate of Incorporation was issued to give effect to this change w.e.f. 12 December, 2005. Later, the name of ibn18 was changed to ibn18 Broadcast Limited (hereinafter referred as “ibn18”) and a revised Certificate of Incorporation was issued to give effect to this change on 02 April, 2008. ibn18 is in the business of broadcasting, telecasting, relaying and transmitting general news programmes and operates the news channel “CNN IBN” (consequent to a licensing and content sharing agreement with Turner Broadcasting System Asia Pacific, Inc.). The commercial operations of ibn18 commenced on 17 December, 2005. Further, after merger of ibn7 undertaking of Jagran TV Private limited, ibn18 is broadcasting, telecasting, relaying and transmitting hindi general news programmes and operates the news channel “IBN7”. RVT Media Private Limited (RVT Media), a 100% subsidiary of ibn18, is engaged in the business of broadcasting, telecasting, transmitting or distributing in any manner, any audio, video or other programmes or software. Jagran TV Private Limited has become 100% subsidiary of ibn18, pursuant to Scheme of Arrangement approved by the High Court Order dated 22 November, 2008 with effect from 1 October 2007. IBN Lokmat News Private Limited (IBN Lokmat), a 50% joint venture with Lokmat Newspapers Private Limited, is in the business of broadcasting; telecasting, relaying and transmitting general news programmes and operates the news channel “IBN Lokmat”. Viacom18 Media Private Limited (Viacom18), an associate of ibn18 (33.70% shareholding), operates four TV channels (“Colors”, “MTV” (India), “Nick” (India) and “VH1”), and has a films division (“Studio18”) and sells merchandise related to its brands.

61 NETWORK18 MEDIA & INVESTMENTS LIMITED Of the total equity share capital of the Group, 47,724,140 equity shares of face value of Rs.2 each (Previous year 52,055,140 equity shares of face value of Rs.2/- each) are held by Network 18 Media & Investments Limited (Formerly known as Network 18 Fincap Limited). Network 18 Media & Investments Limited is also the holding company by virtue of management control over the Group’s operations of ibn18. E. In relation to Setpro18 Distribution Private Limited Setpro18 Distribution Private Limited was originally incorporated on 28 September 1993 as Setpro Holdings Private Limited. The name of the Company was changed to Setpro18 Distribution Private Limited on May 11,2007. The company was converted into a public limited company on May 20,2008. F. In relation to Network 18 Holdings Limited , Cayman Islands (N18CI) Network 18 Holdings Limited, Cayman Islands is the holding company of TV18 HSN Holdings Private Limited G. In relation to TV18 HSN Holdings Limited, Cyprus The company is a Joint Venture between Network 18 Holdings Limited, Cayman Islands and SAIF II Mauritius Company Limited for the purpose of promoting and holding the Investment in TV18 Home Shopping Network Private Limited. H. In relation to TV18 Home Shopping Private Limited, India (TV18HSN) TV18 Home Shopping Network Limited (Formerly TV18 Home Shopping Network Private Limited), (the Company), was incorporated in India on 13 June 2006 as TV18 Home Shopping Network Private Limited. A fresh certificate of incorporation consequent to the change in name to TV18 Home Shopping Network Limited was issued by the Registrar of Companies, National Capital Territory of Delhi and Haryana on 10 June, 2008 under section 23(1) of the Companies Act, 1956. TV18 HSN is primarily engaged in the business of distribution of consumer and other products and to provide services to customers at their doorstep pursuant to orders placed by the customers for listed vendor products on its television channel, website and on call centres operated specifically for this purpose. As at 31 March, 2009, of the total equity shares, 790,449 equity shares are held by the holding company, TV18 HSN Holdings Limited, Cyprus, which is a subsidiary of Network 18 Holdings Limited, the ultimate holding company being Network18 Media & Investments Limited (formerly Network 18 Fincap Limited). TV18 HSN Holdings Limited, Cyprus, the holding company of TV18 HSN, had received an approval from the Foreign Investment Promotion Board of the Government of India for investment in the Company for the purpose of creation and uplinking of a television channel which will not cater to News and Current Affairs programs. TV18 HSN had made an application to the Ministry of Information and Broadcasting requesting for permission to uplink the aforesaid television channel and the approval for the same was received on 23 November, 2007. The channel “Home Shop 18” was launched on 9 April, 2008. 3. Significant Accounting Policies The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles (GAAP) in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 to the extent applicable. The significant accounting policies adopted in presentation of the financial statements are: a. Use of estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements and the reporting amounts of income and expenses during the year. Examples of such estimates include provision for doubtful debts, future obligations under employee retirement benefit plans, income taxes, and useful life of fixed and intangible assets. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.Contingenices are recorded when it is probable that that a liability will be incurred , and the amount can be reasonably estimated. b. Basis of consolidation These consolidated financial statements are prepared in accordance with the principles and procedures prescribed by Accounting Standard (AS 21) Consolidated Financial Statements, Accounting Standard (AS 23) Accounting for Investments in Associates in Consolidated Financial Statements and Accounting Standard (AS 27) Financial Reporting of Interests in Joint Ventures prescribed by the Companies (Accounting Standards) Rules 2006 for the purpose of preparation and presentation of consolidated financial statements. The financial statements of the subsidiary companies, joint ventures and associates used in the consolidation are drawn up to the same reporting date as that of the (N18) Parent. The consolidated financial statements have been prepared on the following basis: i. The financial statements of the Parent and its subsidiary companies have been consolidated on a line-by-line basis by adding together like items of assets, liabilities, income and expenses. Inter-company balances and transactions and unrealised profits or losses have been fully eliminated. ii. Interest in jointly controlled entities is reported using proportionate consolidation. iii. The consolidated financial statements include the share of profit/loss of associate companies, which are accounted under the ‘Equity method’ as per which the share of profit of the associate company has been added to the cost of investment. An associate is an enterprise in which the investor has significant influence and which is neither a subsidiary nor a joint venture. iv. The excess of cost to N18 of its investments in subsidiary companies over its share of the equity of the subsidiary companies at the dates, on which the investments in the subsidiary companies are made, is recognised as ‘Goodwill’ being an asset in the consolidated financial statements. Alternatively, where the share of equity in the subsidiary companies as on the date of investment, is in excess of cost of investment of the Company, it is recognised as ‘Capital Reserve’ and shown under the head ‘Reserves and Surplus’, in the consolidated financial statements. v. Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the dates on which investments are made by N18 in the subsidiary companies and further movements in their share in the equity, subsequent to the dates of investments. 62 NETWORK18 MEDIA & INVESTMENTS LIMITED

c. Revenue Recognition Revenue from media operations includes advertising income, sponsorship income, income from portal operations, publishing of business directories, special interest magazines, printing services, E-publishing services and agency services and other related income and is recognised as follows: • Revenue from sale of advertising time is recognised on the accrual basis when advertisements are telecast in accordance with contractual obligations. • Revenue from sponsorships / management contracts is recognised on accrual basis in accordance with contractual arrangements. Revenue from sale of entry tickets is recognised on receipt basis. • Advertising revenue from business directories is recognised in the period in which the directories are given for pagination (printing) and are accounted net of commissions and discounts. • Advertising revenue from special interest magazines is recognised in the period in which the magazines are published and are accounted net of commissions and discounts. • Advertisement revenue earned from displaying banner ads on the portal is recognised proportionately on the number of impressions achieved. • Revenues from sponsorship contracts is recognised proportionately over the term of the sponsorship. • Subscription revenue is recognised on the accrual basis in accordance with the terms of the contract with the distribution and collection agency. • Subscription revenue from the Group’s print publications is recognised as earned, on a per issue basis over the subscription period. • Circulation revenue includes sales to retail outlets/newsstands, which are subject to returns. The Group records these retail sales upon delivery, net of estimated returns. These estimated returns are based on actual returns. • Revenue from media related professional and consultancy services is recognised in accordance with contracts on rendering of services. • Revenue from sponsor buttons placed on specific areas of the Group’s websites which provide users with direct link to sponsor’s websites is recognised ratably over the period during which the advertisement is displayed. • Revenue from content licensing is recognised proportionately over the period of the contract for sale of content. • Income from online trading, comprising exclusivity fees received from customers for displaying their logos on the portal is recognised proportionately based on the volume of online trading generated or at the end of the contract period, whichever is earlier. • Revenue from printing jobs is recognised on completion basis and is accounted net of taxes. • Revenue from traded products is recognised when the significant risks and rewards of ownership of the products has passed to the buyer and is stated net of taxes and discounts. • Revenue from event sale is recognised on the completion of the event and on the basis of the related service performed. • Revenue from E-publishing for projects undertaken is recognised at the time when invoice is raised as per the terms settled with the customers. • Agency commission revenue is recognised as per the terms of agreement with the principals, on rendering of relevant services. • Interest income is recognised on time proportionate basis taking into account the amount outstanding and the rate applicable. • Equipment rental is accounted for on the accrual basis for the period of use of equipment by the customer. Other receipts are recognised on rendering of services or accrual basis in accordance with contracts with customers. • Dividends on investments are accounted for when the right to receive dividend is established. • Profit / Loss on sale of investments are computed on the basis of weighted average cost on date of disposal of investments. • In the case of TV 18 Home Shopping Network Limited, income comprises commission earned on sale of products directly by the vendor to the customers whose orders are processed the company’s distribution channel . Revenue for commission is recognised at the time of delivery of products / services to customers in accordance with contracted terms with the vendors. • Band Placement fees are recognised pro rata over the period of subsequent contracts with operators. d. Fixed Assets Fixed assets are stated at their original cost of acquisition/installation less depreciation. All direct expenses attributable to acquisition/ installation of assets are capitalised. e. Depreciation • Depreciation on all assets is charged on straight line basis over the estimated useful lives using rates (including double / triple shift depreciation rates wherever applicable) prescribed by Schedule XIV of the Companies Act, 1956, except in respect of: • Cost of improvements to leasehold premises is amortised over the remaining period of lease (including renewal options) of the premises. • Computer software which is depreciated over a period of 5 years in case of ibn18 Broadcast Limited, Television Eighteen India Limited (TV18) and Newswire18 Limited and 4 years in case of Infomedia and 3 years in case of Web 18 Holding and its subsidiaries (Web Group). • Furniture and fixtures which are depreciated over a period 10 years in case of TEML and 5 years in case of the Web Group. • Vehicles which are depreciated over a period of 4 years in case of Web Group,6.67 years in the case of TV18 Home Shopping Network Limited. Vehicles of Infomedia and its subsidiaries, are depreciated on the written down value method at the rates specified in Schedule XIV of the Companies Act, 1956 • Plant & machinery – distribution equipment which is depreciated over a period of 8 years in case TV18. • Plant & machinery which is depreciated over a period of 5 years in case of TEML and 3 years in case of the Web Group. • Office equipment which is depreciated over a period of 3 years in case of the Web Group. In the case of TV 18 Home Shopping Network Limited communication equipment is depreciated over 3 years while other office equipment is depreciated over 6.67 years. • Computer hardware which is depreciated over a period of 3 years in case of the Web Group. • Web site development costs that provide additional functions or features to the Web Group’s website are capitalised and amortised over the estimated life of two years. • Major reconditioning expenses on plant, machinery and equipment of Infomedia Group are depreciated over a period of three years or life of the assets, whichever is lower. • Cost of leasehold and is amortised over the period of lease. • News archives are depreciated on a straight line basis at the rate of 4.75% per annum. Useful life of news archives is estimated

63 NETWORK18 MEDIA & INVESTMENTS LIMITED for a period longer than 10 years as the contents of the same are continuously used in day to day programming and hence the economic benefits from the same arise in a period longer than 10 years. • Goodwill arising on acquisition of assets and acquired brands are amortised over a period of five years. • Depreciation on additions is charged proportionately from the date of acquisition/ installation except in case of TEML where the assets are depreciated for the full year in the year of acquisition. Assets costing less than Rs. 5,000 individually are fully depreciated in the year of purchase. • Depreciation on assets disposed-off during the year is charged proportionately till the date of sale except in the case of TEML where no depreciation is charged in the year of disposal. f. Goodwill on consolidation The Group accounts for goodwill arising on consolidation at cost and recognises where applicable, any impairment. g. Impairment of assets At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset. Reversal of impairment loss is recognised immediately as income in the profit and loss account. h. Inventory valuation Inventories comprising stocks of used and unused tapes, work-in-progress and completed pilot programmes are stated at cost on first in first out basis. Stocks of tapes are written off over their useful life which is estimated to be three years. Other inventories of raw materials like paper and binding material, work in progress and finished goods are valued at lower of cost or net realisable value. Cost is determined on a weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and to make the sale. i. Investments Long term investments are stated at cost less other than temporary diminution in the value of such investments. Current investments other than temporary are carried forward at lower of cost or fair value. In the case of the parent long term investments are stated at cost less other than temporary diminution in the value of such investments. In accordance with the Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 read with Accounting Standard 13 issued by the Institute of Chartered Accountants of India. j. Employee Benefits i. The employees’ provident fund scheme is a defined contribution plan. Contribution to the employees’ provident fund is charged to the profit and loss account during the period in which the employee renders the related service. ii. Short term employee benefits (medical, leave travel allowance etc.) expected to be paid in exchange for the services rendered are recognised on undiscounted basis. iii. Some companies in the group provides for gratuity, a defined benefit retirement plan (the “Gratuity Plan”) covering eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan of the Group provides for a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the tenure of employment. Some companies in the group make contributions to funds administered and managed by the insurance companies for the amount notified by the said insurance companies. The liabilities of some other group companies in respect of Compensated absences and Gratuity are unfunded . The present value of the obligation under such defined benefit plans for the Group is determined based on actuarial valuation using the projected unit credit method, which recognised each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation is based on the market yields on government securities as at the balance sheet date. Actuarial gains/losses are recognised immediately in the profit and loss account. The liability with respect to the Gratuity Plans is determined based on actuarial valuations done by independent actuaries at the year end and any differential between the fund amount as per the insurer and the actuarial valuation is charged to revenue. iv. Benefits comprising long term compensated absences constitute other long term employee benefits. The liability for compensated absences is provided on the basis of an actuarial valuation done by an independent actuary at the year/period end. Actuarial gains and losses are recognised immediately in the profit and loss account. v. In case of Infomedia, voluntary retirement compensation is fully charged off in the year of severance of service of the employee. k. Miscellaneous Expenditure i. Preliminary expenses Preliminary expenses of TV18 incurred till 31 March, 2003 are amortised over a period of 10 years. For the subsidiaries, preliminary expenses are either written off when incurred or amortised over 2 to 10 years. ii. Premium on redemption of debentures in the case of TV18. Premium on redemption of debentures is written off over the term of the debentures. l. Foreign Currency Translation Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences on foreign exchange transactions settled during the year are recognised in the profit and loss account. Monetary items denominated in foreign currency and outstanding at the balance sheet date are translated at the exchange rate prevailing at the date of balance sheet, the resultant exchange differences are recognised in the profit and loss account.

64 NETWORK18 MEDIA & INVESTMENTS LIMITED In case of forward exchange contracts, the premium or discount arising at the inception of such contract, is amortised as income or expense over the life of contract as well as exchange difference on such contracts i.e. difference between the exchange rate at the reporting/ settlement date and the exchange rate on the date of inception/ last reporting date, is recognised as income/ expense for the period. Any income or expense on account of exchange differences either on settlement of the contract or on translation of the unmatured foreign currency contract at the rate prevailing on the balance sheet date is recognised in the profit and loss account. In respect of foreign integral operations, monetary assets and liabilities are translated at the exchange rate prevailing at the date of the balance sheet. Non-monetary items are translated at the historical rate. The items in the profit and loss account are translated at the average rate during the year. The differences arising out of the translation are recognised in the profit and loss account. In respect of foreign non integral operations, asset and liabilities are translated at the exchange rate prevailing at the date of the balance sheet. The items in the profit and loss account are translated at the average exchange rate during the year. The differences arising out of the translation are transferred to the exchange translation reserve. m. Income Tax Income tax comprises current income tax and deferred tax. Advance taxes and provisions for current taxes are presented in the balance sheet after off – setting advance taxes paid and income tax provisions. Deferred tax charge or credit is recognised on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal, subject to consideration of prudence, in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. If there are carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognised only if there is virtual certainty that such deferred tax assets can be recogonised against future taxable profits. Unrecognised deferred tax assets of earlier years are reassessed and recognised to the extent that it has become virtually/reasonably certain that future taxable income will be available against which such deferred tax assets can be recognize. Minimum alternate tax (MAT) paid in accordance with Indian Income Tax Act, 1961, which gives rise to future economic benefit in the form of adjustment from income tax liability, is recognised when it is reasonably certain that the same will be set off and adjusted from the current tax charge for that year. Tax provisions for overseas subsidiaries/ joint ventures is determined in accordance with the tax laws of their respective country of incorporation. Provision for fringe benefit tax (FBT) is made on the basis of the applicable FBT on the taxable value of eligible expenses as prescribed under the Indian Income Tax Act, 1961. n. Website development costs Costs incurred in the planning or conceptual development of websites are expensed as incurred. Once the planning or conceptual development of a web site has been achieved, and the project has reached the application development stage, the Group capitalises all costs related to web site application and infrastructure development including costs relating to the graphics and content development stages. Training and routine maintenance costs are expensed as incurred. o. Accounting for Employee Share Based Payments Measurement and disclosure of the employee share based payment plans is done in accordance with the Guidance Note on Accounting for Employee Share-based Payments, issued by the Institute of Chartered Accountants of India (ICAI). The Company measures compensation cost relating to employee stock options using the intrinsic value method. Compensation expense is amortised on a straight line basis/graded basis over the vesting period of the stock option/award. Modifications to stock option/award schemes are effected in line with the Guidance Note on Accounting for Employee Share-based Payments, issued by ICAI p. Provisions and Contingencies A provision is recognised when the Group has a present obligation as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and reliable estimate can be made of the amount of the obligation. A contingent liability is recognised where there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. q. Leases i. Operating Lease Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Operating lease charges are recognised as an expense in the profit and loss account on a straight-line basis over the lease term. ii. Finance Lease Leases under which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. The lower of fair value of assets and present value of minimum lease rentals is capitalised as fixed assets with the corresponding amount shown as lease liability. The principal component in the lease rentals is adjusted against the lease liability and the interest component is charged to the profit and loss account. r. Earnings Per Share The Group reports basic and diluted earnings per equity share in accordance with Accounting Standard 20, Earnings Per Share. Basic earnings per equity share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year except where the result would be anti dilutive. s. Segment Information i. Business segments Based on similarity of activities, risks and reward structure, organization structure and internal reporting systems, the Group operates in the media business segment mainly comprising media and related operations. This includes television, internet and print media including publishing. ii. Geographic segments Secondary segmental reporting is performed on the basis of the geographical location of customers i.e. within India and overseas. 65 NETWORK18 MEDIA & INVESTMENTS LIMITED

t. Barter Transactions Barter transactions are recognised at the fair value of consideration receivable or payable. When the fair value of the transactions cannot be measured reliably, the revenue/expense is measured at the fair value of the goods/services provided/received adjusted by the amount of cash or cash equivalent transferred. u. Derivative Instruments As per the Institute of Chartered Accountants of India announcement on derivative accounting, accounting for derivative contracts other than those covered under Accounting Standard 11 (AS-11) – The Effects of Changes in Foreign Exchange Rates, are marked to market on a portfolio basis and the net loss after considering the offsetting impact on the underlying hedged item is charged to the profit and loss account. Net gains are ignored. v. Borrowing Costs Borrowings costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset when it is probable that they will result in future economic benefits to the enterprise and the costs can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred. 4. Consolidation of Network 18 Holdings Limited , Cayman Islands and TV18 HSN Holdings Limited, Cyprus The financial statements of Network 18 Holdings Limited, Cayman Islands, used for the purpose of this consolidation ,are prepared in accordance with International Financial Reporting Standards as adopted by the European Union . The financial statements of TV18 HSN Holdings Limited, Cyprus, used for the purpose of this consolidation, are prepared asper International Financial Reporting Standards as adopted by the European Union and Cyprus Companies Law, Cap.113 . Both the above financial statements have been adopted for consolidation with the parent by the management on an ‘as is’ basis. Management is of the view that adjustments, if any, arising out of the conversion on the financial statements to Indian GAAP are not likely to be material. 5. Share Capital of Network 18 Media & Investments Limited a. During the year under review 120,198 (618,860) Equity Shares of Rs 5/- each were issued to Employees / Network 18 Employees Welfare Trust pursuant to various Stock Option/ Stock award plans. b. The Board of Directors of the Company, in their meeting held on March 5,2007 approved a resolution under Section 81(1) of the Companies Act,1956 for Issue of Partly Convertible Cumulative Preference Shares of Rs 200/- each. Each PCCPS would consist of a convertible part of Rs 50/- , convertible into one equity shares at a premium of Rs 45/- per share and a non convertible part of Rs 150/- each. Each fully paid up PCCPS would also entitle the holder to a detachable warrant convertible into one Equity share within the exercise period commencing from 24 months from the date of allotment upto 48 months from the said date. The issue opened in April 2008 and the PCCPs were alloted on May 15,2008 . On payment of call money , 10,272,355 PCCPs were converted into Non Convertible part (of Rs 150/- each ) of the PCCPs and Rs 50/- each was converted into one equity shres of Rs 5/- at a premium of Rs 45/- per share. The same number of detachable warrants were issued. c. At a meeting of the warrant holders convened on January 9,2009 , a resolution for early conversion of the said warrants was approved at a price of Rs 49.69 per warrant ( inclusive of premium of Rs 44.69 per share) . 10,060,806 Equity shares of Rs 5/- each were issued to eligible warrant holders on payment of the conversion money. d. Sums of Rs 598,473,received as at year end, were outstanding ,pending conversion into Shares / warrants. Operational Outlook 6 The Parent (N18) has incurred operating losses of Rs. 1818.79 million during the year ended 31 March, 2009. These losses mainly arose due to losses in the TV18 group, ibn18 & HSN group. 7. The TV18 Group • In the TV18 group losses mainly arose due to losses in the Infomedia group, web group and news wire. The Infomedia Group is in the process of restructuring its businesses and expects cost reductions through right sizing and increased manpower productivity. Further, new lines of business are being added, which along with consolidation of existing products and introduction of new products in the publishing segment are expected to improve the revenues of Infomedia Group substantially. Further, the Infomedia Group is also in the process of introducing new technologies in the product efficiency so as to cater to newer market and de-risk the revenue share. • The Web Group is currently implementing a plan to increase turnover, improve profitability and the financial position of the Web Group. The Web Group has been in investment mode in last few years and has incurred substantial product development and promotional expenses. The Web Group plans to raise capital in the near term either through private equity or public offering to fund its capital expenditure and future expansion programs. • Newswire has incurred operating losses during the year ended 31 March, 2009 and there has been an erosion in its networth. Management expects to achieve operational break even and to generate profits in due course. 8. In the case of TV18 Home Shopping Network Limited • The accounts of the Company have been prepared on the basis that the Company is a going concern. However having regard to the fact that the net worth of the Company has been substantially eroded, the ability of the Company to continue as a going concern is dependent on the improvement of the Company’s future operations and continued financial support from the Ultimate Holding Company. The Ultimate Holding Company has confirmed to provide such financial support as the need arises. • The accounts do not include any adjustments relating to recoverability and classification of recorded asset amounts and the classification of liabilities that might be necessary should the Company be unable to continue as a going concern. 9. Significant transactions in the case of the Parent Company N18 has acquired the Investment Advisory Business of M/s Capital18 Media Advisors Private Limited on going concern basis along with related contracts and employees, with effect from January 1, 2009. 10. Significant transactions in the case of TV 18 A. Investment in Infomedia18 Limited TV18, I-Ven Interactive Limited (‘I-Ven’), Infomedia 18 Limited (Infomedia) (formerly Infomedia India Limited) (‘Target Company’) and India Advantage Fund – II (‘IAF II’), a trust constituted under the provisions of the Indian Trust Act, 1882, had entered into a Share Purchase, Share Subscription and Warrant Subscription Agreement dated 11 December, 2007 (‘agreement’). As at the date 66 NETWORK18 MEDIA & INVESTMENTS LIMITED

of the agreement, the Target Company was a subsidiary of I-Ven and is listed on the Bombay Stock Exchange Limited (‘BSE’) and the National Stock Exchange of India Limited (‘NSE’). Further, as at the date of the agreement, I-Ven held 12,396,999 equity shares of the Target Company representing 62.73% of the outstanding equity shares of the Target Company. As per the terms of the agreement, subject to statutory and regulatory clearances: i. TV18 agreed to purchase from IAF II such number of fully paid up equity shares of I-Ven (‘sale shares’) which would transfer to TV18 an economic interest of 40% of the issued and paid up equity shares of the Target Company. In addition, TV18 agreed to subscribe to and I-Ven agreed to issue and allots a stipulated number of fully paid up equity shares (‘subscription shares’) of I-Ven. As at the year ended 31 March, 2008, TV18 had not purchased/subscribed to the above mentioned shares and had a commitment of Rs. 1,779 million as at the year ended 31 March, 2008, in respect of the above. Pursuant to the agreement, the said consideration was to be placed in an escrow account pending which TV18 was to provided for interest, at the rate of 14 % per annum compounded monthly. ii. It was envisaged that TV18 would make an offer (‘offer’) as per the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997 to the shareholders of the Target Company for acquiring up to 20% of the voting capital of the Target Company. In the event, TV18 is not able to acquire an economic interest of 53% of the issued and paid up equity shares of the Target Company after the offer and purchase of sale shares, IAF II agreed to sell additional equity shares (‘subsequent sale shares’) of I-Ven to TV18 to ensure that the Company acquires an economic interest of 53% in the issued and paid up equity capital of the Target Company. The offer closed on 28 April, 2008 and TV18 acquired 720,931 equity shares (face value Rs. 10 each) at an aggregate cost of Rs. 170.86 million representing 3.63% of the voting capital of the Target Company pursuant to such offer. iii. The Target Company agreed to issue 5,000,000 warrants (‘warrants’) to TV18, in accordance with Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 – Guidelines for Preferential Issues. The warrant consideration price was fixed at Rs. 237 per warrant. Each warrant was convertible into one fully paid up equity share of Rs. 10 each of the Target Company on exercise of options and on payment of the stipulated warrant exercise price. The option was exercisable during a period of 18 months from the date of allotment of warrants that is 7 February, 2008. During the previous year ended 31 March, 2008, TV18 had paid 10% of the consideration price i.e. Rs. 23.70 per warrant aggregating to Rs. 118.50 million to the Target Company and 5,000,000 warrants were allotted to TV18. b. Further on 21 August, 2008: i. IAF II agreed to transfer 5,451,900 shares of I-Ven held by it to TV18. ii. TV18 agreed to subscribe to and pay for 2,775,566 shares of I-Ven, being the subscription shares, at a fair value determined as Rs. 216.17 per share. As at 31 March, 2009, TV18 had purchased/subscribed to 8,227,466 shares i.e 63.98% of the issued and paid up equity shares of I-Ven amounting to Rs. 1,778.55 million. Further TV18 had taken control of the Board of Directors of Infomedia on 21 August, 2008. TV18 had also paid interest amounting to Rs. 98.66 million during the year ended 31 March, 2009 for acquisition of Infomedia. c. A scheme of arrangement to merge I-Ven into Infomedia has been filed with the Hon’ble High Court of Bombay on 18 February, 2009. On the scheme becoming effective, all the assets and liabilities of I-Ven shall be transferred to, and vested in Infomedia as a going concern. d. Subsequent to the year end, in view of the market conditions, TV18 decided to not subscribe to the warrants at the aforementioned consideration price and has accordingly written off its investment in 5,000,000 partly paid convertible equity warrants amounting to Rs. 118.50 million as per the principles laid down under Accounting Standard 4 ‘Contingencies and Events Occurring After Balance Sheet Date’. Further, subsequent to the year end, Infomedia filed a Draft Letter of Offer with the Securities and Exchange Board ofIndia proposing to bring out a Rights Issue of its equity shares. TV18 has given an undertaking to subscribe to the full extent of their rights entitlement in the proposed Rights Issue of Infomedia. The financial position and results of I-Ven Interactive Limited, it’s subsidiaries and joint venture, as included in the Consolidated Financial Statements for the year ended 31 March, 2009 is as given below: Particulars Rupees Funds Employed Reserves & surplus 24,948,414 Secured loans 631,470,402 Deferred tax liability 36,552,673 Current liabilities 771,866,427 Provisions 45,638,828 Application of Funds Fixed assets (net) 317,693,851 Goodwill on consolidation 879,029,031 Investments 1,596,605 Inventories 82,054,665 Sundry debtors 417,548,557 Cash and bank balances 66,638,637 Loans & advances 452,094,322 Profit and loss account (debit balance) 449,056,127

67 NETWORK18 MEDIA & INVESTMENTS LIMITED

Particulars Rupees Income Sales 1,150,082,488 Other income 31,307,752 Expenditure Production,administrative & other expenses 1,101,926,693 Personnel expenses 520,263,094 Depreciation 66,501,863 Interest and othr financial charges 62,748,825 Provision for taxation 35,653,770 Minority interest (156,778,035) Short provision of dividend of earlier years 130,157 Profit/(Loss) for the year (449,056,127) B. Investment in Media Venture Capital Trust-II (MVCT) The shareholders of TV18 vide postal ballot resolutions dated 12 September, 2006 and 16 July, 2007 permitted the Company to take an indirect equity exposure in a venture capital trust structure post which TV18 executed a trust deed to form the Media Venture Capital Trust-II (‘MVCT’). The objective of the Trust is to make strategic investments in businesses including in the media and entertainment industry through companies/special purpose vehicles (SPVs). TV18 also entered into a co-investment agreement with Mr. Raghav Bahl, the promoter, who has guaranteed a minimum stipulated rate of return on the investment over a specified period. The investment in MVCT as at 31 March, 2009 was Rs. 2,481.80 million (Previous year Rs. 604 million) as against the limit of Rs. 4,000.00 million approved by the shareholders. MVCT directly or through companies/SPVs has invested in various companies which are at different stages of start up/ operations. Management has reviewed the business plans/financial statements/ valuations of these companies. Based on management’s evaluation of these companies’ current operations and future business plans management is of the view that these investments will yield reasonable returns post the gestation period. Other income includes Rs. 95.00 million (Previous year Rs. 39.20 million) pertaining to dividends from units of MVCT. C. Investment in ibn18 Broadcast Limited TV18 through its subsidiary RVT Investment Private Limited (RVT) had acquired 15,000,000 convertible warrants of Rs. 102 each in ibn18 Broadcast Limited on a preferential basis in accordance with Security and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000. Each warrant is convertible into one fully paid equity share of Rs. 2 each. RVT had paid Rs. 153.00 million being 10% of the total consideration as per the terms of allotment. During the year ended 31 March, 2009, subsequent to payment of the balance 90% consideration of Rs. 1,377.00 million, 12,500,000 warrants were converted into 12,500,000 fully paid equity shares of Rs. 2 each. The option to convert the balance 2,500,000 warrants into equity shares of Rs. 2 each was yet to be exercised as on 31 March, 2009. Of the 12,500,000 equity shares received on conversion of warrants, 8,502,131 equity shares have a lock in period of three years from the date of allotment and the balance 3,997,869 equity shares have a lock in period of one year from the date of allotment. D. Acquisition of Big Tree Entertainment Private Limited On March 1, 2007, E18 Limited (Cyprus), a fully owned subsidiary of Web 18 Holdings Limited, entered into a business purchase agreement with Big Tree Entertainment Private Limited (Big Tree) and the promoters of Big Tree to acquire 60% interest in Big Tree. The 60% interest was acquired by subscription of 8,548 partly paid up equity shares issued by Big Tree and purchase of 2,581 fully paid up equity shares from the promoters for USD 3.3 million i.e. approximately Rs. 131.90 million. The agreement also provides for a further consideration of USD 1 million (i.e. approximately Rs. 51 million) to be paid to Big Tree for the partly paid up shares if Big Tree’s cash balance falls below USD 2 million.(i.e. approximately Rs. 100.00 million). Of this USD 0.66 million (i.e. approximately Rs. 30.00 million) has been paid until 31 March 2009. The acquisition had been accounted for during the year ended 31 March, 2008 since the payment for consideration to Big Tree and transfer of shares to E-18 Limited, Cyprus was completed in April, 2007. Goodwill of USD 2.69 million had been recognised by E-18 Limited, Cyprus on this acquisition. E. Acquisition/disposal of Ambit Capital Private Limited On 24 July 2007, E 18 Limited (Cyprus) acquired 35% equity stake in Ambit Capital Private Limited for a consideration of USD 1.26 million i.e. approximately Rs. 50.50 million. On 20 March 2008, E 18 Limited , Cyprus sold 34.5% of its stake in Ambit Capital Private Limited for a consideration of USD 1.02 million i.e. approximately Rs. 40.77 million. On 5 January, 2009 E-18 Limited (Cyprus) sold the remaining stake in Ambit Capital Private Limited for a consideration of USD 276,756 (i.e. approximately Rs. 13.39 million). The investment in Ambit Capital Private Limited had been accounted for under the equity method from the date of allotment of shares i.e. 24 July, 2007 to the date of divestment of equity shares below 20% i.e. 20 March, 2008. F. Acquisition of Care Websites Private Limited The Web Group had purchased 90% equity shares of Care Websites Private Limited on 18 August 2006 from the existing shareholders on that date. The balance 10% shares have a put / call option after 30 months from 18 August 2006 at higher of the following: Rs. 2.22 million or proportionate value of the balance interest based on an enterprise valuation computed as higher of the following valuation bases: i. 2.5 times of net revenues of the business for the 12 month period immediately preceding the month in which the option is exercised. ii. 15 times of net profits after taxes of the business for the 12 month period immediately preceding the month in which the option is exercised. G. Acquisition of Cricketnext.com On 2 December, 2006, the Web Group entered in to a Business Transfer Agreement (BTA) and acquired the brand cricketnext.com 68 NETWORK18 MEDIA & INVESTMENTS LIMITED for a consideration of Rs. 10 million (USD 0.20 million), which has been capitalised as an intangible asset. The Group is required to pay additional consideration at the end of 24 months and 48 months from the date of acquisition, based on specified revenue and earning targets. The future payments are recorded as additional purchase price when the contingency is resolved and are amortised over the remaining useful life of the brand. Such additional consideration as at 31 March 2009 was USD 0.09 million i.e. approximately Rs. 4.58 million. H. Business Transfer Agreement with Burrp! Software Private Limited Infomedia entered into a Business Transfer Agreement with Burrp! Software Private Limited (“Burrp”) for acquiring the specified business of Burrp as a going concern on a slump sale basis for a lump sum consideration of Rs. 42,550,000 from March 15, 2009. The said consideration was allocated on an estimated basis as under: Particulars Amount (Rs.) 1 Intangible Assets 40,422,500 2 Computers 2,127,500 42,550,000 I. Investment in Joint Venture The Web Group (Forming part of the TV18 group) had invested in 50% of the equity share capital of Jobstreet.com India Private Limited on 15 November 2006. The Web Group also has a call option to purchase further 20% of the fully diluted equity capital on the following terms: Call options can be exercised at any time during the option period. The option period is defined as 3 years commencing after 3 months of the date the completion has occurred. The call option has to be exercised in relation to all the options shares and not part thereof. The call option can be exercised within 2 years of the option period for USD 3.25 million or for USD 4 million during the last year of the option period. Further, the Web Group has given a commitment to Jobstreet.com India Private Limited to infuse such amounts of capital as may be determined by the Board of Jobstreet.com India Private Limited subject to an overall limit of USD 2 million i.e. approximately Rs. 101.90 million in the form of redeemable, non-cumulative, non convertible, preference shares of face value of Rs. 10 each, for a period of 20 years and carrying a nominal rate of dividend of 0.1%. J. Investments held for disposal Television Eighteen Mauritius Limited, Mauritius incorporated two wholly owned subsidiaries B K Holdings Limited, Mauritius and Capital 18 Limited, Mauritius for making investments in certain media companies. Investment made by TEML in B K Holdings Limited, and Capital 18 Limited, were intended for subsequent disposal. TEML entered into separate agreements to dispose off its entire holding in these two entities. In view of the temporary control of TEML in these two entities, financials of these entities have not been included for consolidation. K. Zero Coupon Secured Partly Convertible Debentures (ZCSPCD) TV18 had, during the year ended 31 March, 2003, issued 895,546 ZCSPCD of face value of Rs. 150 each for cash at par on right basis to the existing equity shareholders of TV18 in the ratio of 1 ZCSPCD for every 13 equity shares held. Rs. 20 of the ZCSPCD was to be converted into two equity shares of Rs. 10 each. Accordingly, TV18 had allotted 1,791,092 shares to the ZCSPCD holders. The balance of Rs. 130 was to be redeemed together with a premium of 25% of the value redeemed in four annual installments commencing from the end of the third year of the issue date. The premium on debentures is charged to the share premium account.

Year Principal amount per Principal Redemption premium Premium amount Total redemption ZCSPCD per ZCSPCD amount per ZCSPCD (Rs.) % % (Rs.) (Rs.) 3 19.50 15 25 4.88 24.38 4 19.50 15 25 4.88 24.38 5 19.50 15 25 4.88 24.38 6 71.50 55 25 17.88 89.38 Total 130.00 32.52 162.52 The ZCSPCDs holder’s interest in respect of redemption thereof, all costs, charges, expenses and other monies were secured by way of an exclusive charge on land and first pari passu charge on the other fixed assets of TV18. The first, second and third installments of redemptions were paid in February 2006, March 2007 and February 2008 respectively. The fourth and final installment of Rs. 80.04 million (comprising principal Rs. 64.03 million and premium Rs. 16.01 million) was paid during the year. Further, Rs. 114.01 million was transferred out of the debenture redemption reserve on redemption of debentures during the year. L. TV18’s interests in jointly controlled entities are:

Name Country of Percentage of ownership Incorporation interest as at 31 March, 2009 Jagran 18 Publications Limited (Jagran) India 50% Jobstreet.com India Private Limited (Jobstreet) India 50% Reed Infomedia India Private Limited (Reed)* India 49%

69 NETWORK18 MEDIA & INVESTMENTS LIMITED

The Group’s share of each of the assets, liabilities, income and expenses, etc. related to its interest in joint ventures is: (Amounts in Rupees) Particulars Jobstreet Reed Jagran Total A. Assets Fixed assets 490,241 929,236 403,973 1,823,450 615,218 - - 615,218 Current assets, loans and advances: - Cash and bank balances 17,621,058 953,666 43,697 18,618,421 29,745,154 - - 29,745,154 - Accounts receivable 2,893,043 4,840,770 900,000 8,633,813 2,528,103 - - 2,528,103 - Loans and advances 4,904,549 1,190,700 1,336,036 7,431,285 4,497,025 - - 4,497,025 B. Profit and loss account (debit balance) 67,575,647 - 15,824,973 83,400,620 45,838,795 - - - C. Liabilities Current liabilities and provisions 4,807,795 15,664,257 39,472 20,511,524 8,032,731 - - 8,032,731 Unsecured loans - - 8,219,207 - D. Income

Income from operations 9,963,499 10,486,450 - - 67,50,272 - - - Income from others 1,681,925 1,033,683 - - 2,500,678 - - - E. Expenditure Production, administrative and other costs 8,988,535 21,931,983 - - 7,562,989 - - - Personnel costs 10,676,549 10,292,864 - - 12,642,040 - - - Interest and finance costs 12,224 - - - 54,555 - - - Depreciation 236,304 364,498 - - 200,723 - - - D. Other Matters Capital commitments Nil Nil Nil Nil Nil Nil Nil Nil

M. Income from operations includes amounts aggregating to Rs. 43,110,175 (Previous year Rs. 4,692,956) pursuant to contracts/ arrangements entered into with two (Previous year two) Companies listed in the register maintained under Section 301 of the Com- panies Act, 1956. Further, expenditure amounting to Rs. 5,446,366 (Previous year Rs. 6,953,037) comprising content and franchise expenses amounting to Rs. 5,446,366 (Previous year Rs. Nil), financial charges Rs. Nil (Previous year Rs. 3,755,000) and legal and professional expenses amounting to Rs. Nil (Previous year Rs. 3,198,037) has been recorded pursuant to contracts/ arrangements entered into with one (Previous year one) company listed in the register under Section 301 of the Companies Act, 1956. Prior approval of the Central Government, in accordance with the requirements of Section 297 of the Companies Act, 1956, had not been obtained for such contracts/ arrangements entered into during the current year and during the previous year ended 31 March, 2008. The Company has made an application to the Central Government to seek post facto approvals N. Pursuant to the Scheme of Arrangement between the Company, SGA News Limited and Network 18 Fincap Private Limited (now known as ‘Network18 Media & Investments limited’) as approved by the Hon’ble High Court of Delhi in 2006, shares of Network18 Media & Investments Limited (formerly Network 18 Fincap Private Limited) held by the promoter were transferred to the trust for the benefit of the Company. Other income of TV18 for the year ended 31 March, 2009 includes Rs. 57.80 million relating to distribution of surplus of the trust. O. TV18 disposed off its investment in an associate, during the year ended 31 March, 2009. “Loss for the year” after minority interest and share in loss of associates for the year ended 31 March, 2009 and “Profit and loss account (Debit balance)” as at 31 March, 2009 includes share of loss of an associate amounting to Rs. 13.66 million and is net off profit on sale of long term investment of Rs. 26.88 million which is based on the unaudited financial statements of the associate.

70 NETWORK18 MEDIA & INVESTMENTS LIMITED Further, a subsidiary which had not commenced operations had been disposed off during the year and based on the unaudited financial statements there was no impact on the consolidated financial statements of its disposal. P. Provision for rebates, returns etc Disclosures as required by Accounting standard 29 (AS-29) Provisions, Contingent Liabilities and Contingent Assets as at 31 March, 2009 are as follows: (Amounts in Rupees) Additions during Amounts utilised Unused amounts reversed Balance as at the year during the year during the year 31.03.2009

Provision for rebates, returns etc. 40,964,912 35,267,095 - 5,697,817 A provision is recognised for expected returns on products sold during the period based on past experience of level of returns. It is expected that most of this cost will be utilised in the next financial year. Assumptions used to calculate the provision for returns are based on current sales level and current information available about returns. Q. The net-worth of the joint venture company Reed Infomedia India Private Limited (JV) has been completely eroded as at 31 March, 2009. Reed Elsevier Overseas B.V (REOBV), the holding company of the JV has communicated it’s intention not to provide any further financial support to the JV to meet the JV’s obligations. Consequently, the management of the JV have decided to discontinue the JV’s operations and the employment of the personnel hired by the JV have been terminated. Thereafter, the JV does not have definite business plans. Accordingly, the financial statements of the JV have been prepared assuming the JV will not continue as a going concern and accordingly, fixed assets have been stated at lower of written down value and net realisable value, and current assets and liabilities are stated at the values at which they are realisable / payable. Further, in view of the above mentioned developments REOBV, and Infomedia have agreed to terminate the shareholding agreement dated 13 December, 2005, and to wind up and liquidate the JV on or after 30 September, 2009. REOBV shall pay to Infomedia a sum of Rs 12.00 million as compensation for termination of the Shareholders Agreement and to discharge certain obligations to wind up and liquidate the JV and print and publish RIIL Magazines upto winding up and transfer of RIIL Magazines to Infomedia. At the time of winding up of the JV, REOBV shall not be liable to contribute anything over and above the unpaid amount of share capital subscribed by it. Before winding up of the JV, Infomedia Limited shall pay its part of the pending share application of Rs. 19.60 million or convert its dues into share application monies. Hence Rs 37.00 million (being the exposure towards investments in the JV and receivables from the JV Rs. 29.40 million and receivables from the JV Rs. 7.60 million net of guaranteed inflows) has been provided for in the Profit and Loss Account for the year ended 31 March, 2009. R. Share issue expenses amounting to Rs. 91,393,168 are being carried in the balance sheet as miscellaneous expenditure (to the extent not written off or adjusted) pending issue of shares. On completion of issue of shares, these will be adjusted against the securities premium account. 11. Significant transactions in the case of Ibn18 Broadcast Limited A. Scheme of arrangement between Jagran TV Private Limited, BK Fincap Private Limited and ibn18 Broadcast Limited • Ibn18’s Scheme of Arrangement has been approved by the Honorable High Court of Delhi on September 15,2008 and filed with the Registrar of Companies on November 22 , 2008 .The scheme was to: • demerge IBN 7 News Undertaking of Jagran TV Private Limited (JTV) into ibn18 with effect from 1 October, 2007 (Appointed date); and • Merger B K Fincap with ibn18 with effect from 2 October, 2007 (Appointed date). • Consequent upon merger of the BK Fincap Private Limited stands dissolved and Jagran TV Private Limited continue to exist to carry on the other activities. • a Demerger of ibn7 News Undertaking of JTV into ibn18 (Scheme A) i. News Business Undertaking of JTV comprising the business activities of running the ‘IBN7’ channel along with all related assets, liabilities and employees has been transferred on a going concern basis at book value to ibn18 from the appointed date of 1 October 2007. ibn18 without any further payment has issued 24.23 fully paid up equity shares of face value of Rs.10 each (121.15 fully paid up equity shares of face value of Rs.2 each) to shareholders of Jagran TV Private Limited for every 100 Equity shares of face value of Rs.10 each held in Jagran TV Private Limited. ii. The scheme became effective on approval by the Honorable High Court of Delhi on 22 November, 2008 and its filing with the Registrar of Companies. On the scheme becoming effective, the following assets and liabilities of ibn 7 News Undertaking were transferred to the ibn18 at book value: Particulars Amount (Rs.) 1. Fixed assets (Net) 334,249,738 2. Current assets, loans and advances: - Sundry Debtors 156,582,786 - Cash and Bank Balances 30,739,299 - Loan and advances 59,968,752 247,290,837 3. Less: Current liabilities and provisions: - Current Liabilities 150,492,933 - Provisions 10,045,176 160,538,109 4. Net current assets 86,752,728 5. Total assets (1+4) 421,002,466

71 NETWORK18 MEDIA & INVESTMENTS LIMITED

Particulars Amount (Rs.) 6. Total liabilities Secured Loan 322,215,806 Unsecured Loan 719,371,726 1,041,587,532 7. Net value of assets transferred on demerger (5-6) (620,585,066) 8. Share application money paid cancelled (see note v. below) 20,000,000 9. Share capital issued as part of purchase consideration - to outside shareholders 3,262,377 - to BK Fincap (squared off on amalgamation of BK Fincap with ibn 18) (See note 3 b.(vi)) 29,349,932 32,612,309 10. Balance debited to securities premium (7-8-9) 673,197,375

iii. As per the scheme, during the intervening period, JTV shall be deemed to have been carrying on all business and activities relating to the merged undertaking on behalf of the ibn18 and all profits accruing to the Transferor Company, or losses arising or incurred by them relating to the merged undertaking shall be treated as the profits or losses of the ibn18. iv. Debit balance of profit and loss account of Rs. 93,094,889 of the division for the period 1 October 2007 to 31 March, 2008 was adjusted from the opening balance of the profit and loss account of the previous year v. Share Application money pending allotment inter se between ibn18 and IBN& News Undertaking amounting to Rs 20,000,000 appearing in the books of account of the company and the division stand cancelled . C. Merger of BK Fincap Limited i. BK Fincap Private Limited which is a holding company of Jagran Television Prviate Limited, along with all related assets, liabilities and employees has been merged on a going concern basis at book value to ibn18 from the appointed date of 2 October, 2007. In consonance to the abovementioned scheme, ibn18 has issued 1,662.76 fully paid up equity shares of face value of Rs.10 each (8,313.80 fully paid up equity shares of face value of Rs.2 each) to shareholders of BK Fincap Private Limited for every 100 Equity shares of face value of Rs.10 each held in BK Fincap Private Limited. ii. The scheme became effective on approval by the Honorable High Court of Delhi on 22 November, 2008 and its filing with the Registrar of Companies. On the scheme becoming effective, the following assets and liabilities of BK Fincap Limited were transferred to the ibn18 at book value: Particulars Amount (Rs.) 1. Investments 332,346,700 2. Current assets, loans and advances:

- Cash and Bank Balances 87,321 - Loan and advances 464,000,000 464,087,321 3. Less: Current liabilities and provisions: - Current Liabilities 105,657 - Provisions 10,000 115,657 4. Net current assets 463,971,664 5. Net value of assets transferred on merger (1+4) 796,318,365 6. Share application money paid cancelled (see note iii below) 115,000,000 7. Shares issued to BK Fincap on demerger of ibn 7 News Undertaking of JTV into ibn18 adjusted (see 29,349,932 note iv. below) 651,968,433 8. Cancellation of investment by ibn18 in the equity shares of BK Fincap (see note iv. below) (687,412,740)

9. Share capital issued as part of purchase consideration(see note iv. below) 29,349,932

72 NETWORK18 MEDIA & INVESTMENTS LIMITED

Particulars Amount (Rs.) (658,062,808) Balance debited to securities premium (5-6-7-8-9) (6,094,375)

iii. Share application money pending allotment inter-se between ibn18 and BK Fincap amounting to Rs. 115,000,000 appearing in the books of accounts of the respective Companies stands cancelled. iv. Pursuant to the Scheme of Arrangement, the amount representing the difference between: • Assets and liabilities transferred pursuant to the amalgamation of BK Fincap and consequent cancellation of New Equity shares on Demerger issued to BK Fincap, and • Aggregate value of New Equity Shares on Amalgamation and cancellation of investment by ibn18 in the equity shares of BK Fincap; • shall be debited to the Securities Premium Account of ibn18. v. Debit balance of profit and loss account of Rs. 36,268 of BK Fincap for the period 2 October, 2007 to 31 March, 2008 was adjusted from the opening balance of the profit and loss account of the previous year. D. Investment in optionally convertible equity warrants of Viacom18 Media Private Limited Ibn18 has subscribed to 12 million ‘Investor Warrants’ of USD 3.33 (Rs. 169.83 approximately) per warrant aggregating to USD 40 million (Rs. 2,038 million approximately) as follows: i. Series “A” - 4,500,000 warrants ii. Series “B” - 4,500,000 warrants iii. Series “C” - 3,000,000 warrants and has paid Rs. 1 each for these warrants aggregating to Rs. 12 million. Each warrant is convertible into one fully paid up equity share of Viacom18 on exercise of options and on payment of the balance of the stipulated warrant consideration price. The option is exercisable during a period of 12, 24 and 36 months from the date of allotment of warrants of “A”, “B”, and “C” series respectively. As at the year end, the Parent has a commitment towards the balance consideration price (i.e. approximately Rs. 168.83 per warrant) aggregating to approximate Rs. 1,273.75 million for the subscribed and allotted warrants. The Parent intends to fulfil its commitment within the stipulated time period. Further, during the year, the Parent has made following investments in equity shares of Viacom18 Media Private Limited. Particulars (Rs. in million) 2,276,694 shares in rights issue 300.00 4,500,000 shares on conversion of Series “A” Investor Warrants 714.75 7,500,100 shares purchased from BK Holdings Limited, Mauritius 1,219.27 1,234,567 shares in preferential allotment 200.00 Total 2,434.02 In addition, ibn18 has given an advance of Rs. 200 million towares share application money. As at 31 March 2009 Viacom has significant accumulated losses and its networth has been substantially eroded. Having regard to the long term investment and strategic involvement with the Company, no provision is considered necessary for diminution in the value of investment and advance for share application paid.. E. Investments in IBN Lokmat Private Limited (IBN Lokmat) The ibn18 has invested Rs. 155.3 million (including amount paid for share application money) in IBN Lokmat. As at 31 March, 2009, IBN Lokmat has significant accumulated losses and its net worth has been substantially eroded. Having regard to the long term investment and strategic involvement with the ibn18, no provision is considered necessary for diminution in the value of investment and advance for share application paid. F. Investment by RVT Investments Private Limited During the year, shareholders of the Parent at the Extra Ordinary General Meeting held on December 22, 2008 have approved the issue and allotment of 15,000,000 Convertible Warrants (Warrants) at a price of Rs.102/- each in accordance with the provisions of Chapter XIII of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 to RVT Invest- ments Private Limited (RVT Investments), a promoter group Parent. The Parent has allotted the aforesaid Warrants on 13 January, 2009 pursuant to which the Parent received Rs.153 million being 10% of the total amount of Rs.1,530 million in respect thereof. During the year, RVT Investments has applied for conversion of 12,500,000 Warrants and paid Rs. 1,147.50 million. The Parent has allotted 12,500,000 equity shares of face value of Rs. 2/- each upon conversion of Warrants at a premium of Rs 100/- per equity share as per the terms of issue of Warrants. As at the year end, 2,500,000 fully paid up Warrants amounting to Rs. 25.50 Million were outstanding for conversion into equity shares. The Parent has received the share application money against these Warrants for conversion into equity shares. Utilisation of funds raised from the issue of Warrants on preferential basis and conversion of Warrants into equity shares is as under: (Rs. In million) Purpose Amount Purchase of equity shares of Viacom18 Media Private Limited 1,219.00 Share application money paid to IBN18 (Mauritius) Limited 81.50 Total 1,300.50

73 NETWORK18 MEDIA & INVESTMENTS LIMITED

G. Interest in Joint Venture The Parent’s interest, as a venturer, in jointly controlled entity as at March 31, 2009 is: Name of the Parent Country of Incorporation % Voting power held IBN Lokmat News Private Limited India 50%

The following amounts represent the Parent’s share of the assets and liabilities and revenue and expenses of the joint venture and are included in the consolidated balance sheet and consolidated profit and loss account: Particulars As at 31.03.2009 As at 31.03.2008 (Rs.) (Rs.) A. Assets

Fixed assets 116,515,880 109,617,145 Current assets, loans and advances: - Cash and bank balances 4,805,609 31,507,224 - Accounts receivable 9,965,367 - - Loans and advances 16,346,487 6,416,696 - Inventory 61,928 - B. Profit and loss account (debit balance) 189,033,311 34,838,512 C. Liabilities Current liabilities and provisions 78,387,379 37,918,333 Unsecured loans 115,591,202 58,211,244 D. Income Income from operations 18,176,973 - Income from others 9,000 861,665 E. Expenditure Production, administrative and other costs 98,230,191 18,391,838 Personnel costs 40,786,372 12,034,122 Interest and finance costs 13,645,055 1,680,510 Depreciation 18,781,193 3,238,707 F. Profit/(Loss) before tax (153,256,837) (34,483,512)

G. Profit/(Loss) after tax (154,194,799) (34,838,512) H. Other matters Capital commitments - -

12. Significant transactions in the case of TV18 Home Shopping Network Limited A. Preference share capital (i) 5% Optionally Convertible Preference Shares During the period ended 31 March, 2007, the Company had issued 101,181 5% optionally convertible preference shares of Rs. 100 each at a premium of Rs. 400 each to the holding company. These preference shares carry a ‘put/call’ option of conversion into equity shares of the Company at a price determined mutually by the subscriber and the Board of Directors of the Company in conformity with the applicable regulatory provisions relating to pricing prevailing at the time of exercise of the option. These shares will be redeemed after the expiry of 10 years, at a premium of Rs. 400 per share. As at 31 March, 2009, in the absence of distribution profits, the Company has not created any Capital Redemption Reserve towards the repayment of 5% Optionally Convertible Preference Shares. The Company intends to use the balance in ‘Security Premium Account’ in providing for the premium payable on the redemption/conversion of preference shares and hence, not appropriated any amount towards the same. (ii) 0.01% Compulsory Convertible Preference Shares During the previous year the Company had issued 291,998 0.01% Compulsory Convertible Preference Shares of Rs. 100 each at a premium of Rs. 450 each to the holding company. These preference shares are compulsorily convertible into equity shares at any time during the period of 10 years from the date of issue at a price determined mutually by the subscriber and the Board of Directors of the Company in conformity with the applicable regulatory provisions relating to the price prevailing at the time of conversion. The preference shares shall be entitled to a premium, to be determined based on the maximum rate of dividend payable by an Indian company under the prevailing regulatory guidelines (on preference shares held by a foreign investor). The amount of premium will

74 NETWORK18 MEDIA & INVESTMENTS LIMITED be reckoned over the term of the preference shares until conversion. The Company intends to use the balance in ‘Security Premium Account’ in providing for the premium payable on the redemption/ conversion of preference shares and has hence, not appropriated any amount towards the same. B. Equity shares During the year the Company has allotted 171,890 (previous year 406,191) fully paid-up equity shares of Rs. 10 each at a premium of Rs. 685,840,842 to the holding company. 13. Contingent Liabilities and Litigation A. In respect of Guarantees given by the group for borrowings of others Guarantor Current Year Previous Year Borrower (Rs million) (Rs million) Ibn18 Broadcast Limited 272.50 228 IBN Lokmat

TV18/ Network 18 2,547.5 1999 Capital 18 Limited, Mauritius ( USD 50 million) * TV18/ N18 2,038 1,599 Viacom 18 Media Pvt Ltd TV18/Network 18/ RVT 4330.75 2,598 BK Holdings Limited (USD 85 million)(Previous year USD 65 milion)

* INR Equivalent. Other contingent liabilities B. In the case of N18 a. Shortfall undertaking given in favour of a lender in connection with loans extended to B K Holdings Ltd , Mauritius – USD 80 million. b. Fixed Deposits of Rs 180 million are pledged in connection with loans to a related party. c. Investments of the market value of Rs 902.58 million ( Rs 17,506.23 million ) are pledged in connection with loans availed by related parties. C. In the case of TV18 a. Claims against the TV18 and I-Ven and its subsidiaries (I-Ven Group) not acknowledged as debts include demands raised by Income Tax authorities Rs. 82.47 million (Previous year Rs. 82.47 million) and Rs. 158.63 million respectively. Amounts deposited by TV18 against claims – Rs.69.38 million (Previous year Rs.69.38 million). No provision has been made in the accounts for these demands as the Group expects a favorable decision in appeal. b. Sales tax / Works contract tax matters disputed by the I-Ven Group relating to issues of applicability, allow ability, etc. aggregate to Rs. 4.84 million. No provision has been made in the accounts for these demands as in the opinion of management no material liability is likely to arise on account of such matters. c. In respect of I-Ven Group, third party claims relating to compensation before Monopolies and Restrictive Trade Practices Com- mission aggregate to Rs. 20.00 million net of tax Rs. 13.27 million. The matter is pending for final hearing. No provision has been made in the accounts for these demands as in the opinion of management no material liability is likely to arise on account of such claims. d. In respect of the I-Ven Group a standby Letter of Credit has been issued for GBP 0.02 million, in favour of Barclays Bank Plc, towards banking facilities used by Keyword Group Limited. e. Guarantees given by banks on behalf of TV18 outstanding at year end Rs. 14.99 million (Previous year Rs. 14.99 million). Further, share in corporate guarantees given by an associate amounts to Rs. 54.66 million. f. TV18 and its subsidiary iNews.com Limited have extended corporate guarantee amounting to Rs.50.90 million (Previous year Rs. 50.90 million), in favour of ICICI Home Finance Company Limited in consideration of loan facility extended by ICICI Home Finance Company Limited to the employees of TV18. As at the year end, Rs. 10.13 million (Previous year Rs. 49.78 million) was outstanding in respect of such loans. g. TV18 has given corporate guarantee of Rs. 320 million (Previous year Rs. 320 million) towards fund based/non – fund based credit facility given by ICICI Bank Limited to ibn18 Broadcast Limited (formerly Global Broadcast News Limited). As at the year end, Rs. 200 million (Previous year Rs. 280 million) was outstanding in respect of such loans. h. TV18 has extended corporate guarantees of USD 50 million i.e. approximately Rs. 2,547.50 million Previous year Rs. 1,999 million) to Hong Kong and Shanghai Banking Corporation Limited for loans taken from Kingfisher Capital CLO Limited (Previous year Lehman Brothers Commercial Corporation Limited), by Capital 18 Limited, a company incorporated in Mauritius and a step down subsidiary of the Company. As at the year end, USD 25 million i.e. Rs. 1,273.75 million (Previous year Rs. 1,199 million) was outstanding in respect of such loans. i. TV18 has extended corporate guarantee of USD 85 million i.e. approximately Rs. 4,330.75 million (Previous year USD 65 million i.e. Rs. 2,598 million) to ICICI Bank Canada for BK Holdings Limited, a company incorporated in Mauritius and a step down subsidiary of the Company. As at the year end, USD 80 million i.e. Rs. 4,076 million (Previous year USD 60 million i.e. Rs. 2,398 million) was outstanding in respect of such loans. j. TV18 has extended corporate guarantee of USD 40 million i.e. approximately Rs. 2,038 million (Previous year USD 40 million i.e. Rs. 1,599 million) to Viacom 18 Media Private Limited (Viacom) (formerly as MTV Networks India Private Limited) for and on behalf of BK Holdings Limited, Mauritius. Further, as at the year end there is an outstanding liability of USD 25 million i.e. approximately Rs. 1,273.75 million. k. TV18 and an associate have purchased fixed assets under the ‘Export Promotion Capital Goods Scheme’. As per the terms of the license granted under the scheme, the Company/ associate have undertaken to achieve an export commitment of Rs.398.34 million (Previous year Rs. 398.34 million) and Rs. 148.57 million respectively over a period of 8 years, which expire over the period 7 August, 2013 to 13 November, 2014. In the event TV18/ associate are unable to execute the export obligations, TV18 shall be liable to pay customs duty of Rs. 26.47 million (Previous year Rs. 26.47 million) and the share in the customs duty 75 NETWORK18 MEDIA & INVESTMENTS LIMITED

liability of the associate would be. 18.57 million along with interest on the same at the rate of 15 per cent compounded annually. The Company/ associate are hopeful of meeting the export obligations of Rs. 211.75 million (Previous year Rs. 211.75 million) and Rs. 115.30 million respectively and accordingly no provision is required for the same. l. Mr. Victor Fernandes and other (“plaintiffs”) had on 25 August, 2006 filed a suit as derivative action on behalf of e-Eighteen. com Limited before the High Court of Bombay against Mr. Raghav Bahl, Television Eighteen India Limited (TV18) and other TV18 group entities. The plaintiffs are minority shareholders of e-Eighteen.com Limited and have alleged that Mr. Raghav Bahl, TV18, ICICI Global Opportunities Fund and e-Eighteen.com Limited had entered into a subscription cum shareholders agreement dated 12 September, 2000 under which Mr. Raghav Bahl and TV18 had inter alia undertaken that any opportunity offered to them shall only be pursued or taken up through e-Eighteen.com Limited or its wholly owned subsidiaries. The plaintiffs have alleged that Mr. Raghav Bahl and TV18 have promoted and developed various businesses through various entities which should have under the aforesaid agreement rightfully been undertaken by e-Eighteen.com Limited or its wholly owned subsidiaries. The plaintiffs have alleged that by not doing so Mr. Raghav Bahl and TV18 have caused monetary loss to e-Eighteen.com Limited as well as to the plaintiffs. The plaintiffs have valued their claim in the suit at Rs. 31,140.60 million and have inter alia prayed that Mr. Raghav Bahl, TV18 and other TV18 group entities be ordered to transfer to e-Eighteen.com Limited all their businesses, activities and ventures along with all assets and intellectual property. The plaintiffs had filed a notice of motion on 18 September, 2006 seeking ad interim relief. A reply had been filed with the Bombay High Court on 14 November, 2006. The said notice of motion was dismissed on 8 August, 2008 against which the plaintiffs have filed an appeal before the division bench of the Bombay High Court. The said appeal is pending for hearing and final disposal. Based on the legal advice by the legal counsel, management is of the view that the above claim made by the plaintiffs is unlikely to succeed and has accordingly made no provisions in the financial statements. m. TV18 as a group has received legal notices of claims, lawsuits and proceedings filed against it which arise in the ordinary course of the business and relating to monetary loss and defamation suits in relation to the news content broadcast by the Company and /or TV18 group entities (the aggregate claim in respect of the latter being Rs. 3,100.00 million). Further, the share in the contingent liability of an associate amounted to Rs. 1,151.27 million. In the opinion of the management, no material liability is likely to arise on account of such claims/law suits in relation to its financial position, or results of operations. n. As at the year end, the share in the commitment of an associate towards the balance consideration price (i.e. approximately Rs.168.83 per warrant) of subscribed and allotted warrants of Viacom18 Media Private Limited aggregated to Rs. 255.51 million. D. In the Case of ibn18 a. ibn18 has purchased capital equipment under the ‘Export Promotion Capital Goods Scheme’. As per the terms of the licenses granted under the scheme, ibn18 has undertaken to achieve an export commitment of Rs. 740.64 million (Previous year Rs. 539 million) over a period of 8 years commencing from 10 August, 2005. In the event ibn18 is unable to execute its export obligations, ibn18 shall be liable to pay customs duty of Rs. 92.58 million (Previous year Rs. 67.42 million) and interest on the same at the rate of 15 per cent compounded annually. The banks have given a guarantee amounting to Rs. 115.30 million (Previous year Rs. 84 million) on behalf of ibn18 to the custom authorities for the same. The Parent is hopeful of meeting the required export obligation. b. ibn18 has received legal notices of claims / lawsuits filed against it relating to infringement of copyrights, objectionable contents and defamation suits in relation to the programmes produced by it, the aggregate claim being Rs. 8,839.14 million (Previous year Rs. 7,724 million). In the opinion of the management, no material liability is likely to arise on account of such claims/law suits. 14. Employees Stock Option Schemes A. Network 18 Plans a . N18’s Employee Stock Option Plans (ESOPs) framed in accordance with the Securities and Exchange Board of India (Employ- ee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which have been approved by the Board of Directors and the Shareholders are listed below . Schemes listed at serial (i) to (viii) were established as mirror schemes of the then existing ESOP schemes in Television Eighteen India Limited, in terms of the Scheme of Arrangement. i) The Network 18 Employees Stock Option Plan 2002 (ESOP 2002) ii) The Network 18 Employees Stock Purchase Plan 2003 (ESPP 2003) iii) The Network 18 Employees Stock Option Plan 2004 (ESOP 2004) iv) The Network 18 Senior Employees Stock Option Plan 2004 (Senior ESOP 2004) v) The Network 18 Employees Stock Option Plan 2005 (ESOP 2005). vi) The Network 18 Long Term Retention Employees Stock Option Plan 2005 (Long Term Retention ESOP 2005”). vii) The Network 18 Strategic Acquisition Employees Stock Option Plan 2005 (Strategic Acquisition ESOP 2005”) viii) The Network 18 Stock Award Plan 2005 (Stock Awards Plan 2005) ix) The Network 18 Employees Stock Option Plan A 2007 ( ESOP A 2007) x) The Network 18 Employees Stock Option Plan B 2007 ( ESOP B 2007) xi) The Network 18 Employees Stock Option Plan C 2007 ( ESOP C 2007) xii) The Network 18 Employees Stock Option Plan 2007 ( ESOP 2007) xiii) The Network18 Employees Stock Purchase Plan 2008 (ESPP 2008) b. Shareholders of the Company have authorized the Compensation Committee to alter terms of selected ESOP Schemes in view of the volatile market conditions and consequent to schemes being unattractive. The compensation committee has therefore modified terms of vesting / exercise price in respect of Schemes listed at (iii) , (iv) and (v) c. Salient terms of the ESOP schemes of the company, in force, are:

76 NETWORK18 MEDIA & INVESTMENTS LIMITED

Particulars ESOP 2002 ESOP 2004 Senior ESOP 2004 a. Year of establishment 2006-07 2006-07 2006-07 b. Total Number of options to be vested 322,380 573,600 600,000 c. No. of options to be vested in respect of - 213,000 143,994 which terms have been changed d. Exercise price in respect of vested options Rs. 5 value on grant a.In respect of grants in a. in respect of grants (terms of which have not been modified) date lieu of options granted in lieu of options in TV 18 ESOP 2004 , granted in TV 18 at the undermentioned Senior ESOP 2004 prices ( in Rs) 02.04.05 – Rs 27.77 02.04.05- 19.86 02.04.05- Rs 53.49 02.04.05- 53.49 29.06.05- Rs 62.42 29.06.05- 54.50 29.06.05- Rs 84.67 29.06.05- 84.67 15.06.06- Rs 72.77 06.08.05- 66.63 15.06.06- Rs 93.99 06.08.05- 95.59 15.06.06- 64.85 b .In respect of fresh 15.06.06- 93.99 grants (i) 50% of 20.07.06- 131.62 options granted at 20.07.06- 154.09 discount of Rs. 100 to the market value on b.In respect of fresh grant date; grants in respect of (i) (ii) 50% of the options 50% of the options at a granted at a discount discount of Rs 125/- to of 90% of market the market price and value on grant date. (ii) 50% of the options at 90% of the market price e. Exercise price in respect of options regranted Rs 20/- 45,331 @Rs. 10/- ( as per ‘c’ above) 26,666 @ Rs. 20/- 45,331@ Rs 10/- 26,666 @ Rs. 20/-

f. Vesting date in respect of grants (terms of 1. 50% of the options, After three years from 1.One third after two which have not been modified) after one year from the the dated of grant years from the date date of grant. of grant 2. Balance 50% of the 2. Remaining two options two years after third after 4 years from the date of grant. from the grant date. g. Vesting date in respect of grants at ‘c’ above 50% on Feb 11,2010 ; 71,997 on Feb 11, 50% on 11 Feb 2011 2010 71,997 on Feb 11, 2011 h.Vesting requirements Continuation of Continuation of ser- Continuation of ser- services and such vices and such other vices and such other other conditions as conditions as may be conditions as may be may be prescribed prescribed prescribed i.Exercise period During three years During two years after During two years af- after the vesting date. the vesting date. ter the vesting date. j. Options lapsed 42,000 j.Un-granted options cancelled - - - (24024)

Particulars Strategic Stock Awards Plan 2005 ESOP 2005 Long Term Acquisition 2005 Retention ESOP 2005 a) Year of establishment 2006-07 2006-07 2006-07 2006-07

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Particulars Strategic Stock Awards Plan 2005 ESOP 2005 Long Term Acquisition 2005 Retention ESOP 2005 b)Total Number of options to be vested 720,000 Such number of Stock awards 1,080,000 300,000 as may be determined by the Board / Compensation Committee c)No. of options to be vested in respect of - - 51,200 - which terms have been changed d) Exercise price in respect of vested Rs. 31.67 Average of two weeks’ high a. Rs 97.31 a. Rs 108.13 options ( terms of which have and low price of the share for old grants for old grants not been modified) from the date of listing of For fresh b. For fresh shares of the company on grants b. At grants at a the stock exchange with discount of price equal highest trading volumes in of 10% to the to the market that period. market price value on grant of the shares date. determined. d) Exercise price in respect of vested op- - - 20/- tions (As per ‘c’ above) Vesting date ( terms of which have After one year from At the end of one year from Options to At any time at not been modified) the date of grant of the date of grant of awards vest equally the end of 4 options. over three years from the years from date of grant. the date of grant. Vesting date(As per ‘c’ above) - - 50% of - 51,200 on Feb 11, 2010 50% of 51, 200 on Feb 11, 2011 Vesting requirements Continuation of Continuation of services and Continuation Continuation services and such such other conditions as of services of services other conditions as may be prescribed and such and such other may be prescribed other conditions conditions as may be as may be prescribed prescribed Exercise period During one year During one year after vest- During one During one after vesting date. ing date. year after year after vest- vesting date. ing date. Options lapsed - 16,891 29,600 - Un-granted options cancelled - - - -

(480,000) (-) (164,400)

Particulars ESOP (A) 2007 ESOP (B) 2007 ESOP (C) 2007 ESOP 2007 Year in which 2006-07 2006-07 2006-07 2007-08 Scheme was established Number of Options 1,000,000 1,000,000 1,000,000 10,000,000 Authorised to be Granted Exercise price At discount of 25% At Rs. 5 on the Rs. 5 per option. The exercise price will be decided by the to the market price grant date. Board provided that exercise price shall share determined not be less that the par value of the Eq- with respect to the uity Shares of the Company and shall not date of grant. be more than the price prescribed under Chapter XIII of SEBI (Disclosure and In- vestor Protection) Guidelines,2000 Vesting date Options shall After a period of Equally over a After one year from the date of Grant. vest equally over one year from the period of six years The vesting shall happen in one or average period of date of grant. from the date of more tranches as may be decided by the 4 years. grant. Board

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Particulars ESOP (A) 2007 ESOP (B) 2007 ESOP (C) 2007 ESOP 2007 Vesting Continuation of Continuation of Continuation of Continuation of services and such other requirements services and such services and such services and such conditions as may be prescribed other conditions as other conditions as other conditions as may be prescribed may be prescribed may be prescribed Exercise Period During four year During four years During four years Exercise period will commence from the after vesting date. after vesting date. after vesting date. vesting date and extended upto the expiry period of the option as may be decided by the Board. Options lapsed - - Un-granted options - - - - cancelled During (1,000,000) (1,000,000) (3,00,000) the year

Particulars ESPP 2008 ESPP 2003 Year in which Scheme was 2008-09 2006-07 established Number of Equity shares 3,000,000 28,272 Authorised to be Issued Offer price The offer price will be decided by At a value equivalent to 95% of the market price compensation committee, provided that on the date of offer of shares the offer price shall not be less than par value of Equity shares of the company and shall not be more than the price prescribed under Chapter XIII of SEBI (DIP) Guidelines 2000 Exercise period 30 days Lock in requirements Share issued under the scheme shall be Share issued under the scheme shall be subject subject to lock in for a minimum period of to lock in for a minimum period of One year from One year from the date of allotment. the date of allotment. d. Details of options and weighted average prices Particulars ESOP 2002 ESOP 2004 SENIOR ESOP 2004

Options Weighted Options Weighted Options Weighted Average Average Average Price Price Price a) Outstanding at the beginning of the year 20,010 5 327,000 69.90 65.30 (40,020) (5) (573,600) (50.91) (517,316) (65.85) b) granted during the year ------(-) - (-) (-) (-) (-) c) exercised during the year - - 31,800 49.71 39,999 47.54 (20,010) (5) (246,600) (25.73) (66,660) (69.59) d) forfeited during the year ------(-) (-) (-) (-) (-) (-) e) Expired during the year - 42,000 69.59 - - (-) (-) (-) (-) (-) (-) f) Additions pursuant to bonus Issue ------(-) (-) (-) (-) (-) (-) g) outstanding at the end of the year 20,010 5 253,200 31.69 410,657 33.90 (20,010) (5) (327,000) (69.90) (450,656) (65.30) h) Exercisable at the end of the year ------(-) (-) (31,200) (36.68) (-) (-) i) number of equity share of Rs. 5 each fully paid 20,010 5 253,200 31.69 410,657 33.90 up to be issued on exercise of option (40,020) (5) (327,000) (69.90) (450,656) (65.30) j) weighted average share price at the date of 20,010 5 31,800 49.71 39,999 47.54 exercise (20,010) ( 5) (246,600) (25.73) (66,660) (69.59)

weighted average remaining contractual life - N.A. 1.66 N.A. 1.12 N.A. (years) (0.21) N.A. (0.24) N.A. (1.39) N.A.

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Particulars LONG TERM RETENTION STATAGIC ACQ. ESOP 2005 ESOP 2005 ESOP 2005

Options Weighted Options Weighted Options Weighted Average Price Average Price Average Price Outstanding at the beginning 300,000 348.35 - - 80,800 97.31 of the year (300,000) (348.35) (240,000) (31.67) (146,400) (97.31) b) granted during the year ------(-) (-) (-) (-) (-) (-) c) exercised during the year ------(-) (-) (240,000) (31.67) (65,600) (97.31) d) forfeited during the year ------

(-) (-) (-) (-) (-) (-) e) Expired during the year - - - - 29,600 97.31 (-) (-) (-) (-) (-) (-) f) Additions pursuant to ------bonus Issue (-) (-) (-) (-) (-) (-) g) outstanding at the end of 300,000 348.35 - - 51,200 20.00 the year (300,000) (348.35) (-) (-) (80,800) (97.31) h) Exercisable at the end of ------the year (-) (-) (-) (-) (-) (-) i) number of equity share of 300,000 348.35 - - 51,200 20.00 Rs. 5 each fully paid up to be Issued on exercise of option (300,000) (348.35) (-) (-) (80,800) (97.31) j) weighted average share ------price at the date of exercise (-) (-) (240,000) (31.67) (-) (-) k) weighted average remain- 2.62 N.A. - N.A. 2 N.A. ing contractual life (years) (3.62) N.A. (1.26) N.A. (0.57) N.A.

Particulars ESOP(C ) 2007 ESOP 2007

Options Weighted Options Weighted Average Price Average Price

Outstanding at the beginning of the year 700,000 5 - -

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i) number of equity share of Rs. 5 each fully paid up to 700,000 5 295,000 30 be Issued on exercise of option (700,000) (5) - (-) j) weighted average share price at the date of exercise - - - -

(-) (-) (-) (-)

k) weighted average remaining contractual life (years) 3.98 N.A. 4 N.A.

(4.99) N.A. (-) N.A.

B. TV 18 Plans a. TV18 has established several employee stock option plans (ESOPs) in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which have been approved by the Board of Directors and the shareholders. The details are as given below:  Television Eighteen India Limited Stock Option Plan 2002 (ESOP 2002)  Television Eighteen India Limited Employees Stock Option Plan 2003 (ESOP 2003)  Television Eighteen India Limited Employee Stock Option Plan 2004 (ESOP 2004)  Television Eighteen India Limited Senior Employee Stock Option Plan 2004 (Senior ESOP 2004)  Television Eighteen India Limited Long Term Retention Employee Stock Option Plan 2005 (Long Term Retention ESOP 2005)  Television Eighteen India Limited Employee Stock Option Plan 2005 (ESOP 2005)  Television Eighteen India Limited Strategic Employees Stock Option Plan 2005 (Strategic Acquisition ESOP 2005)  Television Eighteen India Limited Employees Stock Option Plan 2006 (ESOP 2006)  Television Eighteen India Limited Employees Stock Option Plan A 2007 (ESOP (A) 2007)  Television Eighteen India Limited Employees Stock Option Plan B 2007 (ESOP (B) 2007)  Television Eighteen India Limited Employees Stock Option Plan 2007 (ESOP 2007) A compensation committee comprising independent members of the Board of Directors administers the ESOPs. All options under the ESOPs are exercisable for equity shares. TV18 had declared a bonus issue of 1:1 in the AGM of the Company on 7 September, 2007 with record date of 18 October, 2007. Prior to the bonus issue, each option was exercisable for one Rs. 5 fully paid up equity share of tv18 on payment of the exercise price. Subsequent to the bonus issue each option is exercisable for two Rs. 5 fully paid up equity shares of tv18 on payment of the exercise price. TV18 had given a postal ballot notice dated 19 December, 2008 to its shareholders pursuant to Section 192A of the Companies Act, 1956 for the approval of modifications relating to exercise price and vesting of options under the ESOP (A) 2007, ESOP 2005, ESOP 2004 and Senior ESOP 2004 plans. Further the number of options recognised to be granted under the ESOP 2007 were proposed to be increased from 2,542,438 to 10,000,000 options. The result of the postal ballot was announced on 2 February, 2009 whereby the aforesaid modifications were duly approved by the shareholders of TV18. Consequent to the modifications that occurred after the vesting date of certain options the deferred employee compensation amount increased by Rs. 35.41 million which is being amortised over the additional vesting period. This incremental intrinsic value granted had been determined based on the intrinsic value of the modified stock options and that of the original stock options both estimated as on the date of the modifications. The employee stock compensation expenses in TV18 for the year increased by Rs. 4.07 million due to the aforesaid modifications. The impact of the modifications is recognised below: Plans As per original plan As per modified plan ESOP 2004 Weighted average price of options outstanding 51.94 27.58 Weighted average remaining contractual life 1.38 3.55 Senior ESOP 2004 Weighted average price of options outstanding 55.23 49.24 Weighted average remaining contractual life 2.24 3.62 ESOP 2005 Weighted average price 214.31 20.00 of options outstanding Weighted average remaining contractual life 1.89 2.85 ESOP (A) 2007 Weighted average price of options outstanding 221.31 5.00

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Plans As per original plan As per modified plan Weighted average remaining contractual life 2.51 3.85

b. Senior Employee Stock Awards (Stock Appreciation Right) Plan 2005 During 2005-2006 the Company had established the Stock Appreciation Right Plan 2005 (Senior Employee Stock Award Plan) (‘SAR’) for compensation to the employees whereby TV18 in its extraordinary general meeting held on 25 July, 2005 had approved a grant of upto 300,000 awards to eligible employees. During the earlier years, the Company had granted 299,995 awards representing 140,998 options which had vested as on 31 March, 2007. Pursuant to the scheme, the employees have a right to receive such numbers of fully paid up equity shares of Rs. 5 of the Company whose market value matches with the amount of increase due to appreciation in share price during the date of grant and date of exercise of the awards. Upto 31 March, 2008, of the 140,998 options TV18 issued 91,650 shares to employees on the exercising of the options. During the year TV18 issued 36,808 shares under this scheme, and the balance 12,540 options lapsed during the year. c. The salient terms of ESOPs schemes/ revised ESOPs schemes and SAR of the Company are set out hereunder: Particulars ESOP 2002 ESOP 2003 ESOP 2004 Senior ESOP 2004 Year in which scheme 2002-03 2003-04 2004-05 2004-05 was established

Number of options rec- 700,000 700,000 700,000 840,000 ognised to be granted 700,000 700,000 700,000 840,000 Exercise price* Rs. 5 per option. 95% of market The exercise price is The exercise price (See note 1) value on grant to be decided by the is to be decided by date. compensation committee, the compensation such that the exercise committee, and is not price is not less than the to be less than the par par value of the shares of value of the shares of the the Company and not more Company and not more than the price prescribed than the price prescribed under Chapter XIII of SEBI under Chapter XIII of (Disclosure and Investor SEBI (Disclosure and Protection) Guidelines, Investor Protection) 2000. The relevant date will Guidelines, 2000. The be the date of grant. relevant date will be the date of grant Vesting date* After one year from After one year from Option to vest after one year Option to vest after one (See note 1) the date of grant of the date of grant of from the date of grant within year from the date of options. options. such period not exceeding grant within such period ten years as may be deter- not exceeding ten years mined by the compensation as may be determined committee. by the compensation committee. Vesting requirements One year’s service One year’s service Three years of service from Two to four years of from the date of from the date of the date of grant of option service from the date of grant of option. grant of option. grant of option Exercise period During two years During one year af- During two years after vest- During a period of two/ after vesting date. ter vesting date. ing date. three years from the vesting date Un-granted options can- - - - - celled during the year - - - 8,028 *Note 1: The details of exercise price and vesting period prior to modifications are given below: Particulars ESOP 2002 ESOP 2003 ESOP 2004 Senior ESOP 2004

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Particulars ESOP 2002 ESOP 2003 ESOP 2004 Senior ESOP 2004 Exercise price before N.A. N.A. (1) 50% of options granted (1) 50% of options modification at 90% of market value on granted at 90% of market grant date; value on grant date; (2) Remaining 50% of the (2) Remaining 50% of options granted at a discount the options granted at a of Rs. 125 on market value discount of Rs. 100 on on grant date. market value on grant date. Vesting date before N.A. N.A. After three years of service (1) One third of options modification from the date of grant of granted will vest after options. two years from the date of grant of option ; (2) Remaining two third of options granted will vest after four years from the date of grant of options.

Particulars Long Term Reten- ESOP 2005 Strategic ESOP 2006 tion ESOP 2005 Acquisition ESOP 2005 Year in which scheme 2005-06 2005-06 2005-06 2006-07 was established Number of options 350,000 1,260,000 840,000 1,000,000 recognised to be 350,000 1,260,000 840,000 1,000,000 granted Exercise price* Market value on grant The exercise price is to be Rs. 100 per Rs. 5 per option. (See note 2) date. decided by the compensation option. committee, such that the exercise price is not less than the par value of the shares of the Company and not more than the price prescribed under Chapter XIII of SEBI (Disclosure and Investor Protection) Guidelines, 2000. The relevant date will be the date of grant. Vesting date* After four years from Option to vest after one year from After one year After two years (See note 2) the date of grant of the date of grant within such pe- from the date from the date of options. riod not exceeding ten years as of grant of grant of options. may be determined by the com- options. pensation committee. Vesting requirements Four years of service Three years of service from the One year’s ser- Two years of from the date of grant date of grant of option. vice from the service from the of option. date of grant of date of grant of option. option. Exercise period During two years after During one year after vesting During one During one year vesting date. date. year after vest- after vesting ing date. date. Un-granted options - - - - cancelled during the - 1,800 532,500 745,360 year

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Particulars Long Term Reten- ESOP 2005 Strategic ESOP 2006 tion ESOP 2005 Acquisition ESOP 2005 *Note 2: The details of exercise price and vesting period prior to modifications are given below: Particulars Long Term Reten- ESOP 2005 Strategic ESOP 2006 tion ESOP 2005 Acquisition ESOP 2005 Exercise price before N.A. 90% of market value on grant N.A. N.A. modification date.

Vesting date before N.A. 1. One third of options granted will N.A. N.A. modification vest after one year from the date of grant of options; 2. One third options granted will vest after two years from the date of grant of options; and 3. One third options granted will vest after three years from the date of grant of options.

Particulars ESOP (A) 2007 ESOP (B) 2007 ESOP 2007 SAR

Year in which 2006-07 2006-07 2007-08 2005-06 scheme was established Number of 1,000,000 1,000,000 10,000,000 300,000 options/awards 1,000,000 1,000,000 2,542,438 300,000 recognised to be granted Exercise price* The exercise price is Rs. 5 per option. The exercise price will be Rs. 5 (see note 3) to be decided by the decided by the compensation compensation committee, committee such that the such that the exercise exercise price is not less price is not less than the than the par value of the par value of the shares of equity shares of the Company the Company and not more and not more than the price than the price prescribed prescribed under Chapter under Chapter XIII of SEBI XIII of SEBI (Disclosure (Disclosure and Investor and Investor Protection) Protection) Guidelines, Guidelines, 2000. 2000. The relevant date will be the date of grant.

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Particulars ESOP (A) 2007 ESOP (B) 2007 ESOP 2007 SAR

Vesting date* Option to vest after one 1. One sixth options After a minimum period of one Cliff vesting (See note 3) year from the date of grant granted will vest after year from the date of Grant. period of three within such period not one year from the date The vesting shall happen years exceeding ten years as of grant of options; in one or more tranches as may be determined by the 2. One sixth options may be decided by the ESOP compensation committee. granted will vest after Compensation Committee. two years from the date of grant of options; 3. One sixth options granted will vest after three years from the date of grant of options; 4. One sixth options granted will vest after four years from the date of grant of options; 5. One sixth options granted will vest after five years from the date of grant of options; and 6. One sixth options granted will vest after six years from the date of grant of options. Vesting require- One to four years of service One to six years of Option to vest over such One to four ments from the date of grant of service from the date period, in such manner years of option. of grant of option. and subject to conditions service from as may be decided by the the date of compensation committee grant of SAR provided the employee continues in service. Exercise period During four years after vest- During four years after Exercise period will One year after ing date. vesting date. commence from the vesting vesting date date and extend upto the expiry period of the option as may be decided by the compensation committee. Un-granted - - - - options cancelled 254,750 1,000,000 - - during the year Un-granted - - 8,330,000 - options - - 2,542,438 -

*Note 3: The details of exercise price and vesting period prior to modifications are given below: Particulars ESOP (A) 2007 ESOP (B) 2007 ESOP 2007 SAR

Exercise price be- 75% of market value on N.A. N.A. N.A. fore modification grant date.

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Particulars ESOP (A) 2007 ESOP (B) 2007 ESOP 2007 SAR

Vesting date be- 1. One fourth options N.A. N.A. N.A. fore modification granted will vest after one year from the date of grant of options; 2. One fourth options granted will vest after two years from the date of grant of options; 3. One fourth options granted will vest after three years from the date of grant of options; and 4. One fourth options granted will vest after four years from the date of grant of options.

Note: Previous year figures are in italics. d. Television Eighteen India Limited Employee Stock Purchase Plans (ESPP) i. Television Eighteen India Limited Stock Purchase Plan 2003 (ESPP 2003) During 2003-2004 TV18 had established an Employee stock purchase plan (ESPP 2003) for compensation to employees whereby TV18’s plan was to issue upto 700,000 shares to eligible employees. The offer price per share was 95% of the market value of the shares as at the date of the offer. TV18 had issued 667,016 shares under ESPP 2003 upto 31 March, 2007. During the year ended 31 March, 2008, pursuant to the approval of the shareholders it was decided to cancel the issue of the remaining balance of the proposed 32,984 equity shares. ii. Television Eighteen Employee Stock Purchase Plan 2006 (ESPP 2006) In accordance with ESPP 2006 the Company’s plan was to grant 500,000 equity shares of Rs. 5 each to the eligible employees of TV18 or its subsidiaries. The offer price per share was to be 90% of the market price determined with respect to the date of grant. TV18 had not issued any shares upto 31 March, 2007. During the year ended 31 March, 2008, pursuant to the approval of the shareholders it was decided to cancel the issue of the proposed 500,000 equity shares. iii. Television Eighteen Employee Stock Purchase Plan 2007 (ESPP 2007) During 2007-2008 TV18 established an Employee stock purchase plan (ESPP 2007) for compensation to employees whereby the Company’s plan was to issue upto 532,984 shares to eligible employees. The offer price shall be decided by the compensation committee provided that the offer price shall not be less than the par value of the equity shares of the Company and shall not be more than the price prescribed under Chapter XIII of SEBI (Disclosure and Investor Protection) Guidelines, 2000. e. Details of option numbers and weighted average exercise prices The details of options and weighted average prices are as given below: Particulars ESOP 2002 ESOP 2004 Options Weighted Options Weighted (Numbers) Average Price (Numbers) Average Price (Rs.) (Rs.) a. outstanding at the beginning 53,690 2.5 749,000 48.89 of the year 50,190 5 669,200 71.20 b. granted during the year ------c. exercised during the year - - 72,800 25.65 23,345 - 294,000 35.21 d. forfeited during the year - - 113,400 48.66 - - 14,000 48.66 e. expired during the year - - - - f. additions pursuant to bonus - - - - issue 26,845 - 387,800 - g. outstanding at the end of the 53,690 2.5 562,800 27.58

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Particulars ESOP 2002 ESOP 2004 Options Weighted Options Weighted (Numbers) Average Price (Numbers) Average Price (Rs.) (Rs.) year 53,690 2.5 749,000 48.89 h. exercisable at the end of the 53,690 2.5 21,000 99.88 year - - - - i. number of equity shares of Rs. See note 1 N.A. 562,800 N.A. 5 each fully paid up to be See note 1 N.A. 749,000 N.A. issued on exercise of option j. weighted average share price - N.A. N.A. 244.80 at the date of exercise - N.A. N.A 461.00 k. weighted average remaining - N.A. 3.55 N.A. contractual life (years) 0.21 N.A. 0.32 N.A.

Particulars Senior ESOP 2004 Long Term Retention ESOP 2005 Options Weighted Options Weighted Average Average Price Price (Numbers) (Rs.) (Numbers) (Rs.) a. outstanding at the beginning of the 1,091,498 52.96 700,000 75.61 year 631,555 92.58 350,000 151.21 b. granted during the year 62 52.96 - - 20,000 510.64 - - c. exercised during the year 93,330 33.24 - - 77,778 97.33 - - d. forfeited during the year - - - - 28,028 102.86 - - e. expired during the year ------f. additions pursuant to bonus - - - - issue 545,749 - 350,000 - g. outstanding at the end of the 998,230 49.24 700,000 75.61 year 1,091,498 52.96 700,000 75.61 h. exercisable at the end of the - - - - year 136,892 51.43 - - i. number of equity shares of Rs. 5 998,230 N.A. 700,000 N.A. each fully paid up to be issued 1,091,498 N.A. 700,000 N.A. on exercise of option j. weighted average share price N.A. 243.70 - N.A. at the date of exercise N.A. 461.00 - N.A. k. weighted average remaining 3.62 N.A. 2.56 N.A. contractual life (years) 1.15 N.A. 3.56 N.A.

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Particulars ESOP 2005 Strategic Acquisition ESOP 2005 Options Weighted Options Weighted Average Average Price Price (Numbers) (Rs.) (Numbers) (Rs.) a. outstanding at the beginning 533,064 208.84 55,000 22.15 of the year 170,800 136.00 280,000 44.29 b. Granted during the year - - - - 190,000 531.13 27,500 44.29 c. exercised during - - 45,000 22.15 The year 153,068 68.00 280,000 44.29 d. forfeited during the year 40,200 141.72 - - 35,468 68.00 - - e. expired during the year - - - - f. additions pursuant to bonus - - - - Issue 360,800 - 27,500 - g. outstanding at the end of the 492,864 20.00 10,000 22.15 year 533,064 208.84 55,000 22.15 h. exercisable at the end of the - N.A. 10,000 22.15 Year 19,601 136 - - i. number of equity shares of Rs. 5 492,864 N.A. 10,000 N.A. each fully paid up to be issued 533,064 N.A. 55,000 N.A. on exercise of option - - - - j. weighted average share price N.A. N.A. N.A. 244.80 at the date of exercise N.A. 483.00 N.A. 461.00 k. weighted average remaining 2.85 N.A. 0.01 N.A. contractual life (years) 0.81 N.A. 1.01 N.A.

Particulars ESOP 2006 ESOP (A) 2007 Options Weighted Options Weighted Average Average Price Price (Numbers) (Rs.) (Numbers) (Rs.) a. outstanding at the beginning 509,280 2.5 1,490,500 221.31 of the year 226,540 5 - - b. granted during the year - - - - 28,100 5 745,250 442.61 c. exercised during the year 100,000 2.50 ------d. forfeited during the year 47,800 2.50 203,100 221.31 - - - - e. expired during the year ------f. additions pursuant to bonus - - - - Issue 254,640 - 745,250 - g. outstanding at the end of the 361,480 2.5 1,287,400 5.00 year 509,280 2.5 1,490,500 221.31 h. exercisable at the end of the 312,080 2.5 - - Year - - - - i. number of equity shares of Rs. 5 361,480 N.A. 1,287,400 N.A. each fully paid up to be issued on 509,280 N.A. 1,490,500 N.A. exercise of option - - j. weighted average share price - 58.60 - N.A. at the date of exercise - N.A. - N.A.

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Particulars ESOP 2006 ESOP (A) 2007 Options Weighted Options Weighted Average Average Price Price (Numbers) (Rs.) (Numbers) (Rs.) k. weighted average remaining 0.79 N.A. 3.85 N.A. contractual life (years) 1.79 N.A. 1.51 N.A.

Particulars ESOP 2007 SAR Options Weighted Options Weighted Average Average Price Price (Numbers) (Rs.) (Numbers) (Rs.) a. outstanding at the beginning - - 49,438 5 of the year - - 49,438 5 b. granted during the year 1,670,000 42.45 - - - - 28,100 5 c. exercised during the year - - 36,808 5 - - - - d. forfeited during the year - - 12,540 5 - - - - e. expired during the year ------f. additions pursuant to bonus - - - - Issue - - - - g. outstanding at the end of the 1,670,000 42.45 - - year - - 49,348 5 h. exercisable at the end of the - - - - Year - - - - i. number of equity shares of Rs. 5 1,670,000 42.45 - N.A. each fully paid up to be issued on - - - N.A. Exercise of option j. weighted average share price - N.A. 56.10 N.A. at the date of exercise - N.A. - N.A. k. weighted average remaining 6.63 N.A. - - contractual life (years) N.A N.A. 1.00 - There were no reportable details in respect of ESOP 2003, ESOP (B) 2007 and ESPP 2007. Note 1: The equity shares pursuant to options granted under this scheme were allotted in the past and were administered through the TV18 Employee Welfare Trust. Accordingly, there has been no further allotment of equity shares pursuant to the exercise of these options. C. Web 18 Holdings Limited Plans i. Web 18 Holding has granted options, which have been fully vested, to employees / consultants of the Web Group and employees/ consultants of the holding companies under the ESOP plan. The aggregate of such options which have not been exercised as at 31 March 2009 are 11,617,118. Each option entitles the grantee to one Class B ordinary share of USD 0.00374 (i.e. approximately Rs. 0.19) each at an exercise price of USD 1 (approximately Rs. 51) each. ii. The details of options and weighted average prices are as given below:

Particulars Web18 Holdings Limited Share Options Plan Year in which scheme was established 2008-09 Number of options recognised to be granted 18,433,736 Exercise price USD 1 (approximately Rs. 51) each Vesting date 1. One fourth of the vested options on 15 April 2009 2. One fourth of the vested options on 15 April 2010 3. One fourth of the vested options on 15 April 2011 4. Balance one fourth of the vested options 15 April 2012 Exercise period 24 months from the date of entitlement Un-granted options 6,816,618

89 NETWORK18 MEDIA & INVESTMENTS LIMITED iii. The details of options and weighted average prices are as given below: Particulars Web18 Holdings Limited Share Options Plan Option (Number) Weighted average price (Rs.) a. outstanding at the beginning - - Of the year - - b. granted during the year 11,617,118 50.95 - - c. exercised during the year - - - - d. forfeited during the year - - - - e. expired during the year - - - - f. Additions pursuant to bonus - - Issue - - g. outstanding at the end of the 11,617,118 50.95 year - - h. exercisable at the end of the - - Year - - i. number of equity shares of 11,617,118 - fully paid up to be - - issued on exercise of option j. Weighted average share price - - At the date of exercise - - k. Weighted average remaining 2.04 N.A. contractual life (years) - N.A.

b. A subsidiary of the Web Group had entered into a Memorandum of Understanding (MOU) on 14 July, 2006. In accordance with the MOU, Mr. Rishi Khiyani is entitled to certain share based payments for being in continuous employment with the Web Group for a period of 36 months. Of these share based payments, 280,000 equity shares have been vested and have been issued during the year. Balance 140,000 equity shares would vest on completion of the aforesaid 36 months. D. Infomedia 18 Limited Plans i. Employee Stock Option Plan 2004 Infomedia has provided share based payment schemes to its employees. During the year ended March 31, 2009 the following schemes were in operation: Particulars Employee Stock Option Plan 2004 Year in which scheme was established 2004 Number of options recognised to be granted 494,000 Exercise price Grant 1 86.85 Grant 2 141.45 Grant 3 150.8 Grant 4 180.5 Grant 5 154.05 Grant 6 209.85

90 NETWORK18 MEDIA & INVESTMENTS LIMITED

Particulars Employee Stock Option Plan 2004 Vesting date Grant 1 24 October, 2005 (1 Year) 40,000 30 May, 2006 (1 Year & 217 days) 60,000 31 March 2006 (1 Year & 157 days) 32,000 31 March 2007 (2 Years & 157 days) 32,000

Grant 2 30 May, 2006 (1 Year & 21 days) 20,000 30 May, 2007 (2 Years & 21 days) 80,000

Grant 3 27 October, 2006 (1 Year) 77,750 27 October, 2007 ( 2 Years) 77,750

Grant 4 26 October, 2007 ( 1 Year) 8,750 26 June, 2008 (2 Years) 8,750

Grant 5 26 October, 2007 (1 Year) 9,250 26 October, 2008 (2 Years) 9,250

Grant 6 21 November, 2008 (1 Year) 19,250 21 November, 2009 ( 1 Year) 19,250 Vesting requirements Should be in service at date of vesting Exercise period Three Years Un-granted options cancelled during the previous Nil year Un-granted options Nil

The above scheme is covered under the approval of the shareholders vide their Annual General Meeting held on July 28, 2004 as modified at Extra Ordinary General Meeting held on January 20, 2005. ii. The details of options and weighted average prices are as given below: Particulars Employee Stock Option Plan 2004

Options Weighted Average Price (Numbers) (Rs.) a. outstanding at the beginning 187,250 158.89 of the year b. granted during the year - - c. exercised during the year 111,250 142.80 d. forfeited during the year 36,250 169.90 e. expired during the year - - f. additions pursuant to bonus - - Issue g. outstanding at the end of the 39,750 193.90 year h. exercisable at the end of the 27,750 - 91 NETWORK18 MEDIA & INVESTMENTS LIMITED

Particulars Employee Stock Option Plan 2004

Options Weighted Average Price (Numbers) (Rs.) Year i. number of equity shares of 39,750 N.A. fully paid up to be issued on exercise of option j. weighted average share price 193.90 N.A. at the date of exercise k. weighted average remaining 2.29 N.A. contractual life (years) E. ibn18 Broadcast Limited Plans a. GBN Employees Stock Option Plan 2007 (“ESOP 2007”) i. During the year, ibn18 had established an Employee Stock Option Plan (ESOP 2007) in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which have been approved by the Board of Directors and the shareholders. A remuneration/ compensation committee comprising independent, non executive members of the Board of Directors administers the ESOPs. All options under the ESOPs are exercisable for equity shares. Ibn18 had declared stock split of 1 equity share of face value of Rs. 10 each in 5 equity share of Rs. 2 each through postal ballot dated 19 December 2007, the results of which were declared on 25 January 2008. The Parent plans to grant upto 1,700,000 (8,500,000 options pursuant to split of 1 share of face value of Rs.10 in 5 shares of face value of Rs.2 each) options to eligible employees of the Group and directors of the Group and holding parent of the Parent. ii. Options granted during the year under ESOP 2007 shall vest with the grantee equally over a four years period from the date of grant. The exercise period of the options is a period of two years after the vesting of the options. Each option is exercisable for one equity share of Rs. 2 each fully paid up on payment of exercise price (as determined by the remuneration/compensation committee) of share determined with respect to the date of grant. The Parent has granted 3,920,642 options (19,603,210 options after split) upto 31 March, 2009. iii. The movement in the scheme is set out as under: Particulars ESOP 2007 ESOP 2007 Year ended 31.03.09 Year ended 31.03.08 Options Weighted Options Weighted Average Average Price Price (Numbers) (Rs.) (Numbers) (Rs.) a. Outstanding at the beginning of period/year 2,236,250 55.00 - - b. Granted during the year 1,494,392 55.00 2,426,250 100.35 c. Exercised during the year - - - - d. Forfeited during the year 380,450 55.00 190,000 101.06 e. Expired during the year - - - - f. Outstanding at the end of the year 3,350,192 55.00 2,236,250 100.29 g. Exercisable at the end of the year - - - - h. Number of equity shares of Rs. 2 each fully paid up 3,350,192 NA 2,236,250 NA to be issued on exercise of option i. Weighted average share price at the date of exercise NA NA NA NA j. Weighted average remaining contractual life (years) 1.59 NA 1.61 NA

F. In the case of TV18 Home Shopping Network Limited a. During the current year the employees of the Company have been granted stock options under TV18 HSN Holdings Limited Share Option Plan 2008 of TV18 HSN Holdings Limited. Particulars TV18 HSN Holdings Limited Share Option Plan 2008 Year in which scheme was established 2008-09

92 NETWORK18 MEDIA & INVESTMENTS LIMITED

Particulars TV18 HSN Holdings Limited Share Option Plan 2008 Number of options authorised to be granted 2,587,316 Exercise price The exercise price in respect of the options shall be decided by the Compensation Committee. Vesting date a) 25% of the options vest on 9 April 2009 b) 25% of the options vest on 9 April 2010 c) 25% of the options vest on 9 April 2011 d) Balance 25% of the options vest on 9 April 2012. Vesting requirements 1 to 4 years of service. Exercise period Employees would be entitled to exercise 25% of the Vested Options at anytime during the 12 month period from the first anniversary of the date of grant and the balance of 75% of the Vested Options shall be exercised as to 25% at anytime during the 12 month period after at every subsequent anniversary of the date of the grant. Un-granted options 738,316

b. Details of the scheme Particulars Options Weighted average Weighted average Price (Numbers) Price (USD) (Rs. approximately) Outstanding at the beginning of the year - - - Granted during the year 1,849,000 0.11 5.60 Exercised during the year - - - Forfeited during the year - - - Outstanding at the end of the year 1,849,000 0.11 5.60 Exercisable at the end of the year - - - Weighted average remaining contractual life (years) 2.53 N.A. N.A.

15. Pro forma Accounting for Stock Option Grants The N18’s group applies the intrinsic value-based method of accounting for determining compensation cost for its stock-based compensation plans. Had the compensation cost been determined using the fair value approach, the group’s net income and basic and diluted earnings per share as reported would have reduced to the pro forma amounts as indicated: Particulars Current Year Previous Year Rs millions Net profit after tax (1818.79) 45.26 Add Stock based employee compensation expenses debited to profit and 141.15 302.045 loss account Less Stock based employee compensation expenses based on fair value 327.56 526.023 Difference between (i) and (ii) 186.41 223.978 Adjusted proforma profit / (loss) (2,005.20) (178.72) Difference between (a) and (c) 186.41 223.98 Basic earning per shares (31.43) 0.88 Pro forma basic earning per share (33.98) (3.48) Diluted earning per shares (30.82) 0.87 Pro forma diluted earning / (Loss) per share (Rs) (33.98) (3.42) 16. Miscellaneous Expenditure of the group includes (a) Preliminary expenses of Television Eighteen India Limited incurred till March 31,2003 which are amortised over a period of 10 years (b) Premium on redemption of Debentures (c) Expenses Of Rs Nil ( previous year 96,767,098) towards a Rights Issue of Partly Convertible Cumulative Preference Shares by N18, subscription to which was open as at the Balance Sheet date (b) Pre-operative expenses aggregating to Rs. 121,616,929 (Previous year Rs. 24,133,639) relating to iNews.com Limited as the Company had not commenced operations until 31 March, 2009.

93 NETWORK18 MEDIA & INVESTMENTS LIMITED 17. Loans A. In the case of N18 a. Vehicle loans are secured by the hypothecation of vehicles financed. b. All loans are secured by the Pledge of Investments. A loan of Rs 130 million (Previous Year Rs 250 million) is additionally secured by charge over current assets. c. Unsecured Loans are guaranteed by the Managing Director. d. Amounts repayable within one year: 1,797.21 million (Previous Year Rs 2,105.94 million) B. In the case of TV18 a. Cash credit/Working capital demand loan (WCDL) of Rs. 989.10 million with banks are secured by: i. Out of the above, Rs. 547.64 million is secured by first charge on all current assets of the TV18, on pari passu basis with working capital lenders; ii. Out of the above, Rs. 358.57 million is secured by first charge on all fixed assets and second pari passu charge on all current assets of the Infomedia Group. Further, Rs. 50.00 million is secured by first charge on all current assets and second pari passu charge on movable and immovable fixed assets of Infomedia Group, additionally Rs. 241.05 million is secured by corporate guarantee from subsidiaries of Infomedia; iii. Out of the above, Rs. 32.89 million is secured by first charge on all current assets of e-Eighteen.com Limited and by personal guarantee of Managing Director of the TV18. b. Term loans from banks as on 31 March, 2009 amounted to Rs. 1,150.71 million: i. Out of the above, Rs. 60.71 million is secured by first charge on pari passu basis on TV18’s immovable and movable properties (except for the land), both present and future, save and except charges created/to be created in favour of TV18’s bankers on current assets for securing borrowings for working capital requirements; ii. Out of the above, Rs. 50.00 million and Rs. 218.75 million is secured by way of first charge on fixed assets and second charge on the current assets of TV18 and Infomedia respectively and Rs. 1.25 million is secured by way of first charge on all fixed assets of the subsidiary of Infomedia and Rs. 220.00 million is secured by way of first charge on all fixed assets and current assets of the Newswire. Further Rs. 220.00 million is also secured by way of pledge of shares in subsidiary of Infomedia; iii. Out of the above, Rs. 270.00 million is collaterally secured by corporate guarantee of the Network18 Media & Investments Limited (formerly Network18 Fincap Limited); iv. Out of the above, Rs. 600.00 million is secured by way of first charge on the project assets financed out of the loan ranking pari passu with other term lenders of the project and is also secured by way of pledge of shares of TV18 held by the promoters and personal guarantee of the Managing Director of TV18; c. Other loans from banks amounting to Rs. 9.25 million and Rs. 1.14 million are secured by hypothecation of vehicles of TV18 and Web Group respectively. d. Term Loans from others as on 31 March, 2009 amounted to Rs. 985.10 million: i. Out of the above, Rs. 175.00 million is secured by first charge on fixed assets and second charge on current assets of the Company on pari passu basis and is collaterally secured by corporate guarantee of Network18 Media & Investments Limited; ii. Out of the above, Rs. 800.00 million is secured by hypothecation of equipment purchased out of the loan and is collaterally secured by pledge of shares by the promoters , personal guarantee of the Managing Director of the Company and corporate guarantee of Network18 Media & Investments Limited; iii. Out of the above, Rs. 10.10 million is secured by way of a first charge on the buildings financed out of the loans. e. Term loans include recognised loans amounting to Rs. 1,138.50 million which have been invested in mutual funds and fixed deposits, pending deployment. C. In the case of ibn18 a. Cash credit from banks of Rs. 414.73 million are secured by: i. First pari passu charge on all the current assets of the ibn18. ii. Additionally secured by unconditional and irrevocable corporate guarantee of Network18 Media & Investments Limited (Formerly Network 18 Fincap Limited). iii. Out of above, a cash credit facility amounting to Rs 325.53 million is additionally secured by second charge on the ibn18’s movable fixed assets. iv. Out of above, a cash credit facility amounting to Rs 57.08 million is secured by only hypothecation of book debts of IBN7 (Parent’s division). v. Out of above, a cash credit facility amounting to Rs 2.25 million is secured by only Charge on the IBN Lokmat’s machineries present and future, Collateral Security of all other fixed assets of the IBN Lokmat and Corporate Guarantee from ibn18 and Lokmat Newspapers Private Limited. b. The term loan of Rs. 532.27 million is taken from bank: i. Out of above, a term loan amounting to Rs. 200.00 million is secured by:  First charge on the Parent’s movable assets, subject to the charges on current assets created/to be created in favour of the Parent’s bankers for securing borrowings for working capital requirements.  Unconditional and irrevocable personal guarantee of a Director.  Letter of comfort from Television Eighteen India Limited (TV18) whereby TV18 undertakes to take all necessary steps to ensure that the Parent fulfils all necessary obligations under the agreement including arrangement of funds for payment to the bank in accordance with the terms and conditions of the loan agreement. ii. Out of above, a term loan amounting to Rs. 173.50 million is secured by:  Hypothecation of entire assets of ibn7 (Parent’s division)  Personal guarantee of 10 members of Gupta family

94 NETWORK18 MEDIA & INVESTMENTS LIMITED  Corporate guarantee of Rainbow Packers Pvt Ltd iii. Out of above, a term loan amounting to Rs. 45.65 million is secured by:  First charge on all movable assets including plant and machinery and equipment acquired / to be acquired out of the proceeds of the term loan of ibn7 (Parent’s division)  Personal guarantee of 4 members of Gupta family iv. Out of above, a term loan amounting to Rs. 113.13 million is secured by:  Charge on the IBN Lokmat’s machineries present and future.  Collateral Security of all other fixed assets of the IBN Lokmat.  Corporate Guarantee from ibn18 and Lokmat Newspapers Private Limited. c. Other loans from banks are secured by hypothecation of vehicles. D. In the case TV18 HSN Term loan from a bank is secured by: i. First exclusive charge on current assets and moveable fixed assets. ii. Personal guarantee of a director. iii. Corporate guarantee of Network18 Media & Investments Limited, the ultimate holding company. E.- eighteen.com Limited ( E18) is subject to financial and other covenants under the line of credit from DBS Bank Ltd . The financial covenants require E18 to maintain the following financial ratios ( computed based on standalone financial statements); (i) the ratio of current assets to current liabilitries at a minimum of 1.33 (ii) the ratio of total liabilities plus financial guarantees to tangible net worth not exceeding 2 and (iii) interest service coverage ration at a a minimum of 3. Other covenants include that the parents’ ( TV18’s) shareholding in E18 should not reduce below 51% without prior consent of the Bank,and that no additional debt is to be taken by E18 without prior consent of the Bank. As at March 31,2009,E 18 was not in compliance with certain covenants. 18. Leases a) The Group has taken various office premises under operating lease agreements. These are generally non cancelable and are renewable by mutual consent on mutually agreed terms. b) Lease payments for the year: Rs 416.58 million (Rs. 202.33 million) c) The future minimum lease payments under non-cancelable operating leases are : Rs million Current year Previous Year Not later than one year 463.57 274.63 Later than one year but not later than five years 996.52 493.43 Later than five years 68.30 339.42

18 . Earnings Per Share Particulars Units Year ended March 31, 2009 Year ended March 31, 2008 a. Net profit after tax Rs. (1,818,787,278) 45,256,416 b. Weighted average of number of equity shares No. of Shares 57,870,810 51,293,355 used in computing basic earning per share c. Basic earning per share ( a/b) Rs. (31.43) 0.88 d. Weighted average of the number of shares No. of Shares 2,054,525 1,878,466 under options e. Adjustment for weighted average number of No. of Shares (1,215,363) (853,847) shares that would have been issued at fair value f. Weighted average of number of Equity shares No. of Shares 58,709,972 52,317,974 used in computing Diluted earning per share (b+d+e) g. Diluted earning per share (a/f) Rs. (30.98) 0.87 h. Effect of potential equity shares (c-g) Rs. (0.45) 0.02

19. Minority interest Reconcilation Particulars Current year (Rs) Previous year (Rs) Opening balance 4,155,913,493 2,487,856,710 Add(less): Issue of preference shares by subsidiaries (666,225,598) 664,400,000 Add(less): On account of acquisition of subsidiary (46,382,590) - Add(less): Minority’s share of share capital - - Add (less): Adjustment on account of transfer of subsidiary / Change of interest in 657,249,421 49,947,945 subsidiary Add(less): Minority’s share of accumulated profit/(loss) 253,586,597 95,747,457 Add ( less) Minority’s share related to share premium 1,453,951,284 994,133,037

95 NETWORK18 MEDIA & INVESTMENTS LIMITED

Add (less)Minority’s share related to ESOP reserve 49,174,961 89,089,756

Add (less)Minority’s share related to Exchange reserve (67,093,472) (9,372,882)

Add (less): Share in current year profit/ (loss) (1,648,714,081) (181,458,867) Add (less) Exchange difference on preference shares/preference share capital in (36,200,000) subsidiary held by minority Add (Less): Minority share related to change in Equity 8,630,802 - Add ( less) :Preference Shares held by Minority redeemed (399,700,000) - Add (Less) :Appropriation adjustment of Minority Interest (141,783,241) - Less: Others - 1,770,337 Closing balance 3,608,607,576 4,155,913,493

20. Deferred tax Deferred tax assets and liability are being offset as they relate to taxes on income levied by the same governing taxation laws. Break up of deferred tax assets/liabilities and reconciliation of current year deferred tax charge: (All Amount in Rupees) Opening Bal- Deferred tax on (Charged)/ Closing Balance ance Companies acquired Credited to P&L during the year DEFERRED TAX LIABILITY Deferred Tax Liabilities Tax impact of difference between carrying 3,618,237 (33,157,776) 5,280,655 (24,258,884) amount of fixed assets in the financial state- (114,863,605) - 8,581,827 (106,301,778) ments and the income tax return Fiscal allowance on investments - (20,539,255) 417,841 (20,121,414) - - - - Total (A) 3,618,237 (53,697,031) 5,698,496 (44,380,298) (114,883,605) - 8,581,827 (106,301,778) Deferred Tax Assets Tax impact of expenses charged in the fi- - 9,999,745 (3,254,856) 6,744,889 nancial statements but allowable as deduc- 47,997,945 - 6,273,664 54,271,609 tions in future years under the provisions of income tax legislation Provision for doubtful debts - 18,301,898 (17,219,162) 1,082,736 2,861,100 - 14,351,776 17,212,876 Brought forward business losses to be set - - - - off in future years 14,316,508 - (14,316,508) - Total (B) - 28,301,643 (20,474,018) 7,827,625 65,175,553 - 6,308,932 71,484,485 Total (A-B) 3,618,237 (25,395,388) (14,775,522) (36,552,673) (49,708,052) - 14,890,759 (34,817,293) a) Break up of deferred tax assets and reconciliation of current year’s deferred tax: (All amounts in Rupees) Opening Deferred tax on (Charged)/ Closing Balance Balance Companies acquired Credited to P&L during the year DEFERRED TAX ASSETS Deferred Tax Liabilities Tax impact of difference between carrying (108,594,493) - 17,572,413 (91,022,080) amount of fixed assets in the financial state- (748,776) - (1,783,923) (2,532,699) ments and the income tax return Total I (108,594,493) - 17,572,413 (91,022,080) (748,776) - (1,783,923) (2,532,699)

96 NETWORK18 MEDIA & INVESTMENTS LIMITED

Deferred Tax Assets Tax impact of expenses charged in the fi- 57,006,596 - 124,536,652 181,543,248 nancial statements but allowable as deduc- 518,817 - 2,216,170 2,734,987 tions in future years under the provisions of income tax legislation Provision for doubtful debts 36,730,067 - 15,667,106 52,397,173 13,216,612 - 6,300,579 19,517,191 - Total (D) 93,736,663 - 140,203,758 233,940,421 13,735,429 - 8,516,749 22,252,178 Total (C-D) (14,857,830) - 157,776,171 142,918,341 12,986,653 - 6,732,826 19,719,479

21. Disclosures as required by Accounting Standard 15 (All Amounts in Millions) The reconciliation of opening and closing balances of the present value of the defined obligation for the continuing businesses as at : Particulars Year ended Year ended 31-Mar-09 31-Mar-08 Gratuity Ben- Compensated Gratuity Benefits Compensated efits Absences Absences Change in benefit obligations : Present value of obligation at the beginning of the year (A) 41.96 48.37 21.41 22.71 Adjustment for increase in opening provision for retirement 52.92 20.31 - - benefits (B)**

Current service cost 29.22 35.85 14.95 20.75 Interest cost (D) 5.34 4.16 1.71 1.82 Actuarial loss/(gain) (E) 19.18 28.63 4.18 5.14 Benefits paid (F) (4.91) (15.86) (0.29) (2.05) Fair Value of Assets - - - - Present value of Obligation at the year end 143.71 121.47 41.96 48.37 (A+B+C+D+E+F) Change in plan assets: Fair value of plan assets at the year beginning 12.45 - 8.89 - Fair value of plan assets from Acquisition of New Business 37.15 - - -

Expected return on plan assets 2.83 - 0.43 - Employer’s contributions 2.98 - 4.00 - Benefits paid (4.80) - (0.29) - Actuarial gain/ (loss) (2.58) - (0.58) - Fair value of plan assets at the year end* 48.03 - 12.45 - * compensated absences not funded Net liability: Present value of obligation at the year end 143.71 126.81 41.96 48.37 Fair value of plan assets at the year end 48.03 - 12.45 - Unrecognised past service cost - - - - Benefits paid by the group on behalf of the fund 4.40 - - - Net liability 91.28 126.81 29.51 48.37 b. Expenses recognised in the profit & loss account : Current service cost (A) 29.22 35.85 15.21 20.75

97 NETWORK18 MEDIA & INVESTMENTS LIMITED

Interest cost (B) 5.34 4.16 1.71 1.82 Actuarial loss/(gain) I 21.76 28.63 4.76 5.14 Expected Return on plan assets (2.83) - (0.69) - Net cost (A+B+C+D) 53.49 68.65 20.99 27.71 c. Actuarial assumptions used:- Discount Rate 7.00 7.00 8.00 8.00 Expected Salary Escalation Rate 6.00 6.00 6.00 6.00 Mortality Table LIC(1994-96) LIC(1994-96) LIC(1994-96) LIC(1994-96) duly Modified duly Modified duly Modified duly Modified Retirement Age 60 Yrs 60 Yrs 60 Yrs 60 Yrs Withdrawal Rates Age Percentage Age Percentage Upto 30 Year 3.00 Upto 30 Year 3.00 Upto 44 Year 2.00 Upto 44 Year 2.00 Above 44 year 1.00 Above 44 year 1.00

**included in personnel expenses 22. Derivative contracts , foreign exchange forward contracts and unhedged foreign currency exposure. A. In the case of the TV 18 group the forward contracts outstanding as at the Balance Sheet date are :. Year Particulars of Derivatives Purpose 2008-2009 Sell USD 10,000,000 Hedge of expected receivables against future sales.

Infomedia Group has entered into options contracts to the tune of USD 10.00 million for hedging its US Dollar (USD)/GBP revenues for a period up to one year and ten months from the date of the Balance Sheet. Under the said options, the rate of USD-INR has been fixed for the entire period of the option. Under the option contract, Infomedia has the right to exchange a fixed sum at the strike price (the price fixed in the option contract) if the INR-USD rate is below the strike price on the fixing date (various specified dates on which the option contract will mature in part over a period of next one year and ten months). Further, Infomedia is also liable to exchange twice the fixed sum at the strike price if the INR-USD rate is above the strike price on the fixing date. The Mark to Market (MTM) valuation of these options computed as on March 31, 2009 indicates a loss of Rs. 133.53 million which has been duly accounted for. The MTM loss has been provided for and disclosed as an exceptional item in the Profit and Loss Account. As mentioned in the above paragraph, the liability is based on the INR-USD exchange rate on the fixing date. Therefore, the liability is contingent on the future movement of INR-USD exchange rates. The MTM valuation indicates the amount Infomedia will have to pay to the bankers if it wishes to rescind the option contract as on the date of the Balance Sheet. The MTM valuation also assumes that the Infomedia has neither the USD inflows nor the GBP inflows that would arise to it during the tenure of the option contract and it therefore assumes that Infomedia would be meeting these obligations by acquiring the relevant foreign exchange from the open market. Based on the past history of Infomedia’s operations as well as the projected plans in the future, Infomedia will have robust inflows in dollar as well as in GBP during the tenure of the said options. Infomedia believes that the options would safeguard it from USD fluctuation in future. Infomedia also believes that it would be able to meet its obligations under the options out of its future inflows. Tv18 has recognised losses of Rs. 87.05 million on derivatives transactions for the year ended 31 March, 2009. The details of foreign currency exposures that are not hedged by derivative instruments or otherwise where the functional currency is INR: Currency Payable Rupee equivalent Receivable Rupee equivalent (Rs.) (Rs.) USD 3,957,092 201,486,460 9,364,928 480,272,468

GBP 54,798 3,992,637 606,953 36,591,685 EURO 63 50,873 98,202 6,626,738 CAD - - 524 21,893 JYP 1,963,310 1,385,112 - - SGD 13,791 475,615 - - MYR 9,486 120,887 - -

The details of foreign currency exposures that are not hedged by derivative instruments or otherwise pertaining Sto Web 18 Holding and a subsidiary where the functional currency is USD: Particulars Currency Rupees (Rs.) Equivalent amount in USD Payable (liabilities) INR 49,398,403 969,547

98 NETWORK18 MEDIA & INVESTMENTS LIMITED

Particulars Currency Rupees (Rs.) Equivalent amount in USD GBP 198,463 282,016

Receivable (assets) N.A. - -

B. In the case of ibn18 ibn18 does not use foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. ibn18’s foreign currency exposure not hedged by a derivative instrument or otherwise as on 31 March, 2009 is as follows: Currency Payable Rupee equivalent Investments (Including Rupee equivalent (Rs.) Share application) (Rs.) USD 2,487,909 126,758,954 6,045,492 306,730,011 GBP 34,718 2,529,571 - -

C. in the case of N18 The Company’s foreign currency exposure not hedged by a derivative instrument or otherwise as on 31 March, 2009 is as follows: Currency Amount payable Rupee equivalent (Rs.) GBP ( Expenses payable) 15,066 1,097,724 GBP ( Advance refundable) 63,018 5,261,859

23. Related Party disclosures a. List of related parties i. Key Management Personnel • Raghav Bahl (Also exercises control by virtue of having a substantial interest in the voting power of the Company) b. Relatives of Key Management Personnel • Late Sh. P.N. Bahl • Ms .Subhash Bahl • Ms. Ritu Kapur • Ms. Vandana Malik c. Entities over which persons listed above are able to exercise significant influence • RB Investments Private Limited • RRB Holdings Private Limited • RVT Holdings Private Limited • RVT Fincap Private Limited • RRK Holdings Private Limited • RB Software Private Limited • RB Softech Private Limited • BK Media Private Limited • BK Media Mauritius Private Limited, Mauritius • Digital 18 Media Private Limited • VT Investments Private Limited • SGA News Limited • VT Holdings Private Limited • RVT Softech Private Limited • Greycells 18 Media Private Limited • Keyman Financial Services Private Limited • RRB Investments Private Limited • Tangerine Digital Entertainment Private Limited • RRK Finhold Private Limited • VT Softech Private Limited • Network 18 Publications Limited • RB Finhold Private Limited • RRB Fincap Private Limited • RVT Finhold Private Limited • Wespro Digital Private Limited • Film Investment Managers (Mauritius)Limited (earlier BK Enterprises Limited) • Media Venture Capital Trust II • BK Communications Limited • BK Ventures Limited • BK Capital Limited • TV 18 Senior Professionals Trust • Mobilenxt Teleservices Private Limited • Juxt Consult Research and Consulting Private Limited • Goosefish Media Venture Private Limited • Blue Slate Media Private Limited • RRK Finvest Private Limited • Web18 Securities Private Limited

99 NETWORK18 MEDIA & INVESTMENTS LIMITED • Kishore Securities Private Limited • BK Finhold Private Limited • RRK Media Private Limited • Mobile NXTonline Private Limited • Web Chutney Studio Private Limited • Capital18 Limited, Mauritius • Capital18 Acquisition Corporation Cayman Island • RB Holdings Private Limited • The Network18 Trust • Jagran18 Publications Limited • IFC Distribution Private Limited • India International Film Advisors Private Limited • Capital 18 Media Advisors Private Limited • RRB Media Private Limited • VT Media Private Limited • Den Network Limited • TV18 Senior Professional Trust Note : Related party relationships are as identified by the Company and relied upon by the Auditors a. Transactions / balances outstanding with related parties ( Amount in Rs) Particulars Entities under Significant Key Management Personnel Relatives of Key Management influence Personnel (Rs ) (Rs) (Rs) Income from operations and other income. Jagran TV Private Limited - (38,291,235)

SGA News Ltd 1,200,000 (15,179,635)

Network 18 Publications Private Lim- 8,200,080 ited (4,777,677) Tangerine Digital Entertainment Pri- - vate Limited (337,080)

Media Venture Capital Trust II 95,000,000 (39,204,000) Greycells 18 Media Private Limited 28,835,495 (2,718,341) Wespro Digital Private Limited 43,631,047 (3,174,271) The Indian Film Company , Guernsey - (280,707,098) Viacom18 Media Pvt. Ltd 126,149,283 (-) IBN Lokmat News Private Limited 19,640,625 (-) Mobilenxt Teleservices Private Limited 16,928,162 (-) Network 18 Trust 578,000,000 (-) Digital 18 Media Pvt. Ltd 150,000 (-) VT Softech Private Limited 2,534,229 (-) RVT Holdings Pvt Ltd. 1,975,028 (-) Investment made in units of venture capital fund. Media Venture Capital Trust II 1,607,800,000 (604,000,000) Network18 Trust 270,000,000 (-) Equity shares issued to Raghav Bahl / Ritu Kapur - (50,000) Assets transferred to

100 NETWORK18 MEDIA & INVESTMENTS LIMITED

BK Media Private Limited. - (8,563,988) Expenditure for Services received. Raghav Bahl 213,777 (6,047,516) Ritu Kapur 1,886,327 (1,473,600) Capital 18 Media Advisors Private 6,123,020 Limited (7,417,155) Viacom18 Media Pvt. Ltd 8,860,989 (-) Network 18 Publications Private 199,950 Limited (-) RVT Holdings Pvt Ltd 590,625 (-) Tangerine Digital Entertainment 5,500,000 Private Limited (-) DEN Digital Entertainment Networks 336,044,550 Private Limited (-)

SGA News Limited - (9,395,324) Interest paid to BK Media Private Limited. - (71,839) Network 18 Publications Private - Limited (216,583) TV 18 Senior Professional Trust - (1,328,738) SGA News Limited 127,523 (-) Reimbursement of Expenses (received) Jagran TV Private Limited - (58,335,176) Jagran 18 Publications 1,751,424 (-) SGA News Limited 27,683,483 (42,948,869)

Wespro Digital Private Limited 14,086,041 (16,519)

Colosceum Media Private Limited 617,946 (3,908,088) Greycells 18 Media Private Limited 11,800,706 (2,330,475) IBN Lokmat News Private Limited 94,680,462 (24,394,570) Network 18 Publications Private 4,090 Limited (72,666)

BK Media Mauritius Private Limited. - (3,544,328) Tangerine Digital Entertainment - Private Limited (197,055) Viacom18 Media Pvt. Ltd 9,148,900 (985,282) Digital 18 Media Pvt. Ltd 2,554,529 (-)

101 NETWORK18 MEDIA & INVESTMENTS LIMITED

IFC Distributions Pvt. Ltd 203,670 (-) Indian International Film 1,452,108 (-) Capital 18 Media Advisors Pvt. Ltd. 603,179 (-) Big Tree Entertainment Pvt. Ltd. 8,190 (197,055) Stargaze Entertainment Private 63,000 Limited (-) Webchutney Studio Pvt Ltd - (98,528) Expenses incurred towards purchase of fixed assets on behalf of the company. Jagran TV Private Limited - (149,809) Reimbursement of Expenses ( paid)

Jagran TV Private Limited - (17,200,038) IBN Lokmat News Private Limited 3,119,082 (3,688,103) SGA News Limited 1,367,043 (38,213,820) Colosceum Media Private Limited - (229,319) Viacom18 Media Pvt. Ltd 227,980 (-) Jagran18 Publications Ltd. 14,389 (-) Network 18 Publications Private 56,104 Limited (-) Greycells 18 Media Private Limited 598,773 (-) Network 18 Trust 11,617 (-) VT Softech Private Limited 507,469 (-)

RVT Holdings Private Limited 256,523 (-) Amount collected on behalf of (received) Wespro Digital Private Limited 220,941,189 (13,957,692) RVT Holdings Private Limited 7,555,151 (-) Greycells 18 Media Private Limited 306,040 (-) Investment purchased from Media Venture Capital Trust II 245,000,000 (100,000,000) Investment made in equity share during the year Viacom18 Media Pvt. Ltd 2,434,019,661 (-) Jagran TV Private Limited - (200,500,000) VT Investments Private Limited 72,000 (-)

102 NETWORK18 MEDIA & INVESTMENTS LIMITED

IBN Lokmat News Private Limited - (86,250,000) The Indian Film Company, (Guernsey) - (807,810,000) Mobilenxt Teleservices Private Limited - (151,190,000) Investment made in preference share during the year VT Investments Private Limited 290,000,000 (-) VT Holdings Private Limited 245,612,500 (-) Sale of equity share during the year VT Investments Private Limited 36,000 (-) Mobilenxt Teleservices Private Limited 151,190,000 (-) Raghav Bahl 36,000 (-) Sale of Preference share during the year VT Investments Private Limited 290,000,000 (-) Loans / Advances given during the year Jagran18 Publications Ltd. 5,550,000 (-) SGA News Ltd 1,000,000 (-) Network 18 Publications Private 10,000,000 Limited (-) Mobilenxt Teleservices Private Limited 809,914 (-)

VT Softech Private Limited 12,148,989 (-) Wespro Digital Private Limited 30,000,000 (-) Loans / Advances received back given during the year Viacom18 Media Pvt. Ltd 26,010,657 (-) Network 18 Publications Private 3,400,000 Limited (-) Mobilenxt Teleservices Private Limited 809,914 (-) VT Softech Private Limited 14,173,797 (-) Loan taken from BK Media Private Limited. - (68,800,000) TV 18 Senior Professional Trust - (325,560,812) Loan returned to BK Media Private Limited. - (68,800,000) TV 18 Senior Professional Trust - (325,560,812) Share application money paid pending allotment.

103 NETWORK18 MEDIA & INVESTMENTS LIMITED

Jagran TV Private Limited - (100,000,000) Share application money paid during the year VT Investments Private Limited 54,000,000 (-) Share application money refunded during the year VT Investments Private Limited 54,000,000 (-) Balances outstanding at the year end Amount due from Tangerine Digital Entertainment 197,055 Private Limited (197,055) Viacom18 Media Pvt. Ltd. 79,112,517 (1,127,749) India International Film Advisors 1,282,500 Private Limited. (295,584) Studio 18 UK Limited 89,182 (498,692) Studio 18 USA Limited 504,076 (504,076) IBN Lokmat News Private Limited 15,074,972 (19,955,181) Jagran TV Private Limited - (99,394,224) Greycells 18 Media Private Limited 20,102,742 (11,547,163) Network 18 Publications Private 8,859,816 Limited (5,167,505) Ibn18 Trust 9,870 (-) Webchutney Studio Pvt Ltd. 98,528 (98,528) Bigtree Entertainment Pvt Ltd - (197,055) Colosceum Media Pvt Ltd. - (747,767)

Loan / Advances at the year end Jagran18 Publications Ltd. 4,151,815 (-) Digital 18 Media Pvt. Ltd 1,980,583 (-)

VT Softech Private Limited 15,443,709 (-) Viacom18 Media Pvt. Ltd 18,191,398 (-) IBN Lokmat News Private Limited 48,959,695 (-)

Wespro Digital Private Limited 28,600,000 (-) SGA News Limited 41,771,890 (10,132,099) Network 18 Publications Private 13,137,532 Limited (-) Greycells 18 Media Private Limited 8,242,945 (-)

104 NETWORK18 MEDIA & INVESTMENTS LIMITED

India International Film Advisors 29,683 Private Limited. (-) Tangerine Digital Entertainment 268,150 Private Limited (-) Amounts due to SGA News Limited - (6,694,736) Media Venture Capital Trust II - (60,796,000) Viacom18 Media Pvt. Ltd 6,448,732 (26,010,657) IBN Lokmat News Private Limited 1,576,346 (-) Network 18 Publications Private 1,013,571 Limited (-) RVT Holdings Private Limited 275,110 (-) BK Media Mauritius Private Limited 163,559 (163,559) Wespro Digital Private Limited 40,316,886 (10,766,902) DEN Digital Entertainment Networks 2,635,700 Private Limited (-) Mobilenxt Teleservices Private Limited - (67,988,031)

Corporate Guarantees given for Jagran TV Private Limited - (637,000,000) Viacom18 Media Pvt. Ltd 43,920,000 (1,598,800,000) IBN Lokmat News Private Limited 44,500,000 (228,000,000) Capital 18 Ltd, Mauritius 548,500,000 (USD 50 million) (1,999,000,000)

BK Holdings Limited, Mauritius ( USD 1,732,750,000 65 million) (2,598,050,000) Corporate Guarantees as at the year end (given for) Jagran TV Private Limited - (473,200,000) Viacom18 Media Pvt. Ltd 2,038,000,000 (1,598,800,000) IBN Lokmat News Private Limited 272,500,000 (228,000,000) Capital 18 Ltd, Mauritius 2,547,500,000 (USD 50 million) (1,999,000,000) BK Holdings Limited, Mauritius 4,330,750,000 (2,598,050,000) Shortfall undertaking given to secure 4,000,000,000 the loan of B K Holdings Limited (INR (4,000,000,000) equivalent to USD 80 million) Investment Pledged in connection with loans availed by (market value) TV 18 Senior Professional Trust 1,199,240,000 (1,672,272,679) Raghav Bahl - (104,594,294) Share Application Money Paid at the year end

105 NETWORK18 MEDIA & INVESTMENTS LIMITED

IBN Lokmat News Private Limited 34,500,000 (-) Viacom18 Media Pvt. Ltd 200,000,146 (-)

B K Fincap Private Limited - (115,000,000) Share Application Money Paid for units at the year end Media Venture Capital Trust II 50,000 (-) Purchase of Fixed Assets VT Softech Private Limited 1,307,688 (-) Sale of Assets Greycells 18 Media Private Limited 61,000 (5,416,875) Deposits payable as at year end Greycells 18 Media Private Limited 1,935,938 (1,935,938) Advance received Viacom18 Media Pvt. Ltd - (26,010,657)

24. a. Information about Business Segments – Primary Income / Expenditure (Rs million) Investment activities MEDIA OPERATIONS Others Total (Rs) Revenues 706.68 6,766.18 2,390.99 9,863.85 (1,023.97) (5,288.72) (1,412.38) (7,725.07)

Less Inter company Revenue 66.93 204.78 631.14 902.85 (1.21) (332.52) (475.82) (809.55) Expenses - 9,190.81 2,038.73 11,229.54 (4,827.97) (1,549.86) (6,377.83) Less Inter company Expenses 746.85 461.05 1,207.90 (567.54) (242.01) (809.55) Segment result 639.75 (1,882.56) 182.17 (1,060.64) (1,022.76) (695.77) (371.29) (1,347.24) Less: Interest & Financial Charges 1,950.75 (951.90) Less: Other unallocable expenses 334.13 (115.76) Profit before taxes (3,345.52) (279.58) Income tax (Net of MAT Credit and including FBT) (32.24) (236.60) Profit for the period (3,313.28) (42.98) Assets / Liabilities* Segment Assets 7,025.91 15,430.15 647.17 23,103.23 (5,966.85) (11,691.73) (982.01) (18,640.59) Segment Liabilities 2,418.44 7,651.03 13,033.76 23,103.23 (4,062.36) (3,854.85) (10,723.38) (18,640.59) Capital expenditure - 6.88 - 6.88 (59.10) (83.98) (143.08) Depreciation - 656.69 58.76 715.45 (387.58) (405.10) (792.68) Other Non cash expenses** - 1,065.53 102.83 1,168.36 (311.86) (144.06) (455.92)

d. Geographical

106 NETWORK18 MEDIA & INVESTMENTS LIMITED

Details Domestic Overseas Total ( Rs million) Segment Revenue 8,400.47 560.52 8,960.99 (5,607.58) (1,307.94) (6,915.52) Segment assets 24,875.09 689.04 25,564.13 (14,280.42) (1,512.36) (15,792.78) Addition to fixed assets 2,366.34 0.30 2,366.64 (1,016.68) (215.37) (1,232.05)

24 . Prior period adjustments in case of Network 18 and TV18 comprise of : Particulars Year ended 31-03-2009 Year ended 31-03-2008 Rent - 7,319,752 Employee stock compensation expenses 16,222 16,532,115 Other personnel expenses - 1,265,620 Repairs and maintenance-plant & machinery - (1,442,393)

Site support costs 1,235,160 3,088,485 Excess provision written back - (226,089) Content and franchise expenses 11,961,404 - Legal and professional expenses 22,083,441 - Exchange fluctuation (3,200,000) - Income from media operations (9,347,380) - Miscellaneous expenses - 51,286 Others 537,000 (204,301) Share of loss of an associate (6,308,293) - Advertisement Expenses 5,169,431 Travelling Expenses 952,397 Producltion Expenses 367,109 Vehicle Hire Charges 411,649 Interest on Term Loan 80,137 Interest paid to Income Tax Department 5,892,493 Event Expenses 108,596 Event Income (241,333) VAT Liability written Off (Studiio18) (649,625) Total 29,068,408 26,384,475

25. Managerial remuneration of Rs 3.74 millions paid by Infomedia Ltd and Rs 11.46 millions paid by Network18 Media & Investments Limited is subject to approval of the Central Government . 26. Taxation a. Fringe benefit tax on ESOP/ ESPP/ SARs has been paid by the group and subsequently recovered from employees, consequently, there is no impact on the Profit and Loss accounts of the group entities.. b. Under the current Mauritius Legislation , TEML is subject to income tax at the rate of 15%but is entitled to a tax credit for the foreign taxes equivalent to the greater of the actual foreign taxes paid and 80% of Mauritius tax payable on its foreign source income. c. There are no taxes on income or gains in the Cayman Islands and Web 18 Holdings Limited has received an undertaking from the governor in Cabinet of the Cayman Islands exempting it from all local income, profits and capital taxes for a period of twenty years from May 9,2006. Accordingly , no provision for income taxes is included for the Company in these financial statements. d. In accordance with the provisions of the Cyprus Income tax laws as also applicable to E 18 Limited , Cyprus, its chargeable profits are liable to Corporation tax at the rate of 10%. Furthermore, E 18 Limited, is subject to 10% special contribution levied on interest receivable other than that arising out of ordinary course of business and closely related activities of the company. e. Transfer Pricing : As per the Transfer Pricing Rules of the Income tax Act, 1961 every Parent is required to get a transfer pricing study conducted to determine whether the international transactions with associated enterprises were undertaken at an arm’s length basis for each financial year end. Transfer pricing study for the transactions during the year ended 31 March, 2009 is currently in progress and hence adjustments if any which may arise there from have not been taken into account in these financial statements for the year ended 31 March, 2009 and will be effective in the financial statements for the year ended 31 March, 2009. However in the opinion of the Group’s management, adjustments, if any, are not expected to be material. 27. E.- eighteen.com Limited ( E18) is subject to financial and other covenants under the line of credit from DBS Bank Ltd . The financial covenants require E18 to maintain the following financial ratios ( computed based on standalone financial statements); (i) the ratio of current assets to current liabilities at a minimum of 1.33 (ii) the ratio of total liabilities plus financial guarantees to tangible net worth not exceeding 2 and (iii) interest service coverage ratio at a minimum of 3. Other covenants include that the parents’ ( TV18’s) shareholding in E18 should not reduce below 51% without prior consent of the Bank,and that no additional debt is to be taken by E18 without prior 107 NETWORK18 MEDIA & INVESTMENTS LIMITED

consent of the Bank. As at March 31,2009,E 18 was not in compliance with certain covenants. 28. In respect of the disposal / write off of the parent’s erstwhile investments in SGA Media Inc, USA, the company is yet to seek approval of the Reserve Bank of India. 29. Compliance with Reserve Bank of India Guidelines a. A substantial amount of investments were acquired by the company by virtue of the Scheme of Arrangement between SGA News Limited, the Company and Television Eighteen India Limited which was approved by the Hon’ble Delhi High Court. Consequent to the above, the size and pattern of the company’s investments have been substantially determined by implementation of the said Scheme, which is, alongwith inadequacy in Net Owned Funds, not in compliance with Prudential Guidelines prescribed by the Reserve Bank of India for ‘Systemically Important Non Banking Financial Companies’. b. The Parent Company’s current activities do not require any provisioning in accordance with the above guidelines. c. In view of losses in the current year, the parent has not created the Reserve required to be created u/s 45IC of the Reserve Bank of India Act. d. Additional disclosures as required by NBFC guidelines as applicable only to the Parent Company : i. CRAR Items Current Year Previous year i) CRAR(%) (9.01%) (44.03%) ii) CRAR – Tier 1 Capital (%) (26.08%) (44.03%) iii) CRAR – Tier II Capital (%) 17.06% -

ii. Exposure to Real Estate Sector : Rs Nil iii. Maturity pattern of certain assets and liabilities Liabilities Assets Borrowings Other borrow- Borrowings Market borrow- Advances Investments from Banks ings from NBFCs ings (1) (2) 1 day to 30/31 days - - - - - 30.05 Over one month to ------two months Over two months to 1.93 21.50 - - 3.00 - three months Over three months to 6.93 10.50 - - - - six months Over six months to 103.86 22.00 13.00 - - - one year Over one year to three 2.08 60.00 - - - - years Over three years to 0.04 - - - - 25.00 5 years Over 5 years - - - - - 647.54 Total 114.84 114.00 13.00 - 3.00 702.59

Note 1 : Includes advances in the nature of loans 2 : Does not include Share Application monies given

30. Utilisation of Rights Issue Proceeds The Parent Company has utilised an aggregate sum of Rs 1,542.356 millions towards the stated purposes, from the proceeds of the Rights Issue of Partly Convertible Cumulative Preference Shares of Rs 200/- each . The Unutilised funds are deployed in Mutual Funds/ Bank Fixed Deposits . 31. Previous year figures have been reqrouped to conform to current year’s presentation ..

For and on behalf of the board Raghav Bahl Sanjay Ray Chaudhuri Managing Director Director

Noida R D S Bawa Shilpa Aggarwal June 30, 2009 Chief Financial Officer Manager Corporate Affairs & Company Secretary

108 NETWORK18 MEDIA & INVESTMENTS LIMITED ------Dividend Proposed 272,222,837

after Profit (27,891) (42,491) taxation (352,288) (591,179) (533,962) (543,724) (251,556) 6,876,535 6,734,838 1,680,717 4,290,820 (717,009) 22,998,844 (5,395,010) (1,691,439) (7,936,974) (1,481,124) 34,868,294 30,120,482 (47,506,702) 353,096,045 (12,973,742) 304,878,564 198,223,022 (17,187,782) (68,662,228) (41,006,532) (102,685,522) (139,920,771) (134,992,423) (353,188,273) (493,417,731) (382,142,415) (682,204,077) (357,797,696)

- - for 64,588 27,470 taxation 132,710 333,706 259,172 Provision 2,181,459 3,015,568 1,300,000 2,050,000 3,736,028 1,406,623 9,903,402 9,500,000 13,701,547 16,007,516 17,164,258 (2,523,395) 172,661,856 (150,021,840) Profit before (27,891) (42,491) taxation (352,288) (533,962) (543,724) (251,556) (591,179) 4,211,443 (717,009) 9,057,994 1,534,444 4,423,530 1,708,186 48,201,182 36,700,390 (5,395,010) (7,936,974) 35,127,466 47,284,740 (1,691,439) (12,909,154) 477,540,420 (47,506,702) 362,999,446 (16,854,076) (59,162,228) (41,006,532) (102,685,522) (138,620,771) (132,942,423) (489,681,703) (380,735,792) (353,188,273) (666,196,561) (357,797,696)

over 7,769 1,315 Turn- 18,870 62,956 542,389 4,878,203 2,387,724 3,166,437 45,431,910 39,620,344 38,638,885 22,617,606 28,946,491 42,654,524 332,210,262 118,917,267 463,347,175 743,268,798 651,105,597 533,157,268 236,800,643 239,862,866 1,351,472,919 1,938,437,975 4,196,558,594 3,270,128,278

------855,814 114,743 36,450,357 14,148,044 78,313,088 218,430,094 278,434,159 290,415,051 770,846,927 Investments Subsidiaries) 2,018,485,000 1,286,487,500 2,063,049,300 2,218,872,500 2,527,769,661 3,315,763,421 6,503,665,596 (Except in case of Investment in

Total 372,400 7,178,313 Liabilities 14,702,326 22,254,228 68,036,821 68,864,104 81,110,195 67,806,437 47,509,594 394,272,920 764,099,545 265,723,719 212,084,039 552,790,373 533,471,848 176,795,513 972,944,707 480,857,115 285,078,599 1,224,056,622 2,544,230,807 4,038,109,963 1,308,318,609 1,024,522,369 2,063,330,321 1,609,723,895 2,260,486,524 1,492,402,656 1,205,621,747 3,304,849,386 6,027,164,273 3,761,808,472 4,260,700,000 15,860,511,647 10,369,957,977

Financial Year ended 31 st March, 2009 FINANCIAL DETAILS OF SUBSIDIARIES 7,178,313 372,400 14,702,326 68,036,821 68,864,104 81,110,195 67,806,437 47,509,594 394,272,920 176,795,513 764,099,545 533,471,848 972,944,707 265,723,719 480,857,115 285,078,599 Total Assets 22,254,228 2,544,230,807 4,038,109,963 1,224,056,622 1,308,318,609 552,790,373 2,063,330,321 1,609,723,895 2,260,486,524 1,492,402,656 1,205,621,747 3,304,849,386 6,027,164,273 3,761,808,472 4,260,700,000 212,084,039 15,860,511,647 10,369,957,977 1,024,522,369

(83,607) Reserves (350,883) 4,134,805 3,709,475 3,666,984 4,290,820 7,290,079 16,026,008 (1,684,696) 76,890,092 46,769,610 12,760,847 (2,496,815) (1,120,798) (4,653,956) (2,732,796) 175,866,399 994,206,472 (15,271,474) (41,090,140) 717,405,602 526,040,783 526,584,507 415,622,325 (207,694,585) (113,008,170) 1,000,354,083 4,645,732,117 2,476,165,596 4,146,033,368 (104,663,408) 1,902,697,294 2,265,890,000 (239,655,831) (169,866,791)

86 40 86 51 51 39.97 Capital 199,850 500,000 500,000 254,750 1,000,000 6,235,000 6,235,000 18,232,401 60,000,000 26,788,940 47,222,390 45,503,490 89,857,320 67,890,044 67,890,044 94,810,000 60,000,000 34,566,370 413,470,747 535,939,050 600,071,210 597,831,520 109,500,000 535,939,050 204,136,625 267,281,630 587,802,956 1,605,200,040 1,605,200,040 1,894,810,000

Cyprus BK Holdings Limited, Mauritius TV18 UK Limited, Colosceum Media Namono Investments Limited, Cyprus Web18 Holdings Limited, Cayman Islands Private Limited Capital 18 Limited, Mauritius RVT Investments Private Limited iNews.com Limited and Investments Limited NewsWire18 Limited TV18 Home Shopping Television Eighteen Media Network Limited Television Eighteen Mauritius Limited

TV18 HSN Holdings Limited, Name of Subsidiary Television Eighteen Setpro18 Distribution ibn18 broadcast Limited Company Network18 Holdings Limited, Cayman Islands India Limited Limited Network18 India Holdings Private Limited S.

14 15 18 16 17

11 12

10 7 9

4 5 3

No. 1. 109 NETWORK18 MEDIA & INVESTMENTS LIMITED

170,593 (11,630) (30,497) (89,381) (182,913) (171,959) (9,935,103) (4,265,550) (4,858,472) (8,230,406) (123,035,770) for after Dividend 45,078 (511,984)

Proft Provision Proft Proposed before 170,593 (11,630) (30,497) (89,381) taxation taxation taxation 1,235,264 (6,272) 1,241,536

(9,935,103) 466,574 (182,913) 402,036 (466,906) 2,911,491 1,230,317 (4,265,550) (4,858,472) 1,226,987 (171,959)

50,276,489 62,278,188 12,377,600 134,667 12,242,933 70,637,728 (49,566,663) 126,500 (49,693,163) 43,692,723 (41,547,167) 325,000 (41,872,167) 47,435,171 (25,803,179) 121,000 (25,924,179) 207,031,107 (25,324,027) 144,425,927 (62,907,352) 3,964,783 (29,288,810) (752,469) (62,154,883) 103,402,159 (46,494,023) 327,531,998 246,360 (46,740,383) 35,399,895 21,128,977 14,270,918 216,149,217 120,643,143 (552,934,003) (307,074,082) 1,880,000 (554,814,003) 1,700,000 (308,774,082) 5,500 1,371,243,214 (822,945,863) 23,593,302 (846,539,165) 52,358 23,313,609 (32,309,120) 326,575 (32,635,695) Subsidiaries)

of Investment in Total Investments Turn- 941,387 3,114,797 6,054,185 4,826,338 Liabilities (Except in case over

Financial Year ended 31 st March, 2009 FINANCIAL DETAILS OF SUBSIDIARIES 219 7,286

8,634 820,704 4,826,338 72,861 (27,018,099) 58,038,522 84,983,760 Capital Reserves Total Assets 100,000 30,497 100,000 1,00,000 185,480 106,821,242 188,605,277 188,605,277 500,000 5,374,602 645,347 3,114,797 900,000 37,745,428 39,042,070 39,042,070 7,921,862 169,476 433,728,934 602,253,347 602,253,347 130,422,500 690,677 (8,230,406) 100,000 (42,127) 68,903 68,903 500,000 133,363 941,387 185,480 60,080,858 206,639,804 206,639,804 4,700,020 70,277,298 199,962,037 124,984,719 8,278,000 (14,214,137) 19,727,678 19,727,678 7,865,300 (288,392,228) 804,117,386 804,117,386 3,964,250 (113,638,764) 142,441,610 142,441,610 54,040,000 34,272,929 394,155,401 394,155,401 19,498,813 328,308,687 21,048,445 20,543,370 505,075 61,900,000 5,598,183 77,497,543 77,497,543 12,138,550 46,040,862 114,589,790 56,410,379 54,040,000 42,885,556 315,665,767 315,665,767

128,592,250 341,051,030 940,887,813 (425,795,973) 1,089,880,126 1,700,423,808 1,785,168,751 20,400,063 1,591,105 22,722,211 (14,113,949) 13,328,252 (27,442,201) 244,758,654 403,939,956 827,582,990 827,582,990 282,364,798 13,027,743 (123,035,770) (formerly Jagran TV Private Limited)* Private Limited* Private Limited Com India Limited Private Limited Commoditiescontrol.com Limited 3,964,250 (85,176,659) 128,110,599 128,110,599 Cayman Islands S. Name of Subsidiary No. Company 36 RVT Media Private Limited 34 Keyword Typesetting Services Ltd * 219 33 Keyword Publishing Services Ltd * 7,286 35 Software Services LC* 37 ibn18 Media & Software Limited 134,589,500 (133,903,344) 738,781 738,781 31 Cepha Imaging Private Limited* 1,593,100 69,386,528 199,899,794 128,920,166 30 American Devices India 32 Keyword Group Ltd* 28 I-Ven Interactive Limited* 29 Infomedia 18 Limited* 26 e-Eighteen.com Limited 25 Care Websites Private Limited 8,278,000 (18,479,687) 24,006,415 24,006,415 27 Moneycontrol Dot 24 Big Tree Entertainment 19 Stargaze Entertainment 20 Capital 18 Acquisition Corporation, 8,814 950,421 6,054,185 23 Television Eighteen 21 E-18 Limited, Cyprus 22 Web18 Software Services Limited 8,043,820 (799,093,646) 1,427,043,520 1,427,043,520 Note: *These Companies were not the subsidiaries of Company in previous year. Hence only current year fgures are given. Numbers mentioned in italics are of previous year. The Annual Accounts of the aforementioned subsidiary companies and the related detailed information are available for inspection by any member/ investor at the registered office of the Company and that of the subsidiary companies subsidiary the of that and Company the of office registered the at investor member/ any by inspection for available are information detailed related the and companies subsidiary aforementioned the of Accounts Annual The concerned. The Company shall make available these documents/ details upon request by any member of the Company or its Subsidiary companies interested in obtaining the same. the obtaining in interested companies Subsidiary its or Company the of member any by request upon details documents/ these available make shall Company The concerned. 110 Network18 Media & Investments Limited Regd. Off.: 601, 6th Floor, Commercial Tower, Hotel Le Merdien, Raisina Road, New Delhi-110 001

ATTENDANCE SLIP (TO BE SIGNED AND HANDED OVER AT THE ENTRANCE OF THE MEETING HALL) I/We hereby record my/our presence at the 14th ANNUAL General Meeting of the above named Company held at 11.30 A.M. on Friday, the 28th day of August 2009 at M.P.C.U Shah Auditorium, Mahatma Gandhi Sanskritik Kendra, 2 Raj Nivas Marg, Shree Delhi Gujarati Samaj Marg, Civil Lines, Delhi – 110 054

NAME(S) OF THE MEMBER(S) Registered Folio No.

Client ID No.

DP ID No.

No. of shares held

Name of Proxy (in block letters) (To be filled in, if the Proxy attends instead of the Member)

Member’s/Proxy’s Signature

Network18 Media & Investments Limited Regd. Off.: 601, 6th Floor, Commercial Tower, Hotel Le Merdien, Raisina Road, New Delhi-110 001

PROXY FORM I/We...... of...... being a Member’s of NETWORK 18 MEDIA & INVESTMENTS LIMITED hereby appoint...... of...... or falling him...... of...... or falling him...... of...... as my/our Proxy in my/our absence to attend and vote for me/us and on my/our behalf at the 14th ANNUAL General Meeting of the Company to be held at 11.30 A.M. on Friday, the 28h day of August 2009 at M.P.C.U Shah Auditorium, Mahatma Gandhi Sanskritik Kendra, 2 Raj Nivas Marg, Shree Delhi Gujarati Samaj Marg, Civil Lines, Delhi – 110 054.

AS WITNESSED under my/our hand(s) this...... day of...... 2009

Signed by the said...... Re. 1 Revenue Regd. Folio No./Client ID No...... Stamp DP ID No......

NOTES : 1. This Proxy need not be a member 2. The Proxy form must be deposited at the Registered Office of the Company not less than 48 hours before the time fixed for holding the meeting.