NETWORK18 MEDIA & INVESTMENTS LIMITED 1 Network18 Media & Investments Limited Financial Statements 2019-20 2 NETWORK18 MEDIA & INVESTMENTS LIMITED Independent Auditor’s Report TO THE MEMBERS OF NETWORK18 MEDIA & INVESTMENTS LIMITED Report on the Audit of the Standalone Financial Statements Opinion We have audited the accompanying standalone financial statements of Network18 Media & Investments Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2020, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2020, and its loss, total comprehensive loss, its cash flows and the changes in equity for the year ended on that date. Basis for Opinion We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor’s Responsibility for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report. Sr. Key Audit Matter Auditor’s Response No. 1 Carrying values of investments in certain subsidiaries and an Principal audit procedures performed: associate Our audit procedures included a combination of Investments in subsidiaries and an associate are accounted for at cost less testing the design, implementation and operating impairment, where applicable, in the Company’s financial statements. effectiveness in respect of management’s assessment of existence of indicators of Investments are tested for impairment if impairment indicators exist. impairment and where applicable, determination If such indicators exist, the recoverable amounts of the investments in of recoverable amounts to measure the impairment subsidiaries and an associate are estimated in order to determine the extent provision that needs to be accounted for. of the impairment loss, if any. Any such impairment loss is recognised in Our substantive testing procedures included the Statement of Profit and Loss. evaluation of appropriateness of management’s Significant Management judgement is required in the area of impairment judgement whether any indicators of impairment testing, particularly in assessing: (1) whether an event has occurred that existed by reviewing financial and other available may indicate that the investment values may not be recoverable; (2) whether information / data, if any, of the subsidiaries and the carrying value of investment can be supported by the recoverable an associate as at March 31, 2020. amount, being fair value less costs to sell calculated based on revenue For those investments where indicators multiples, EBITDA multiples, recent transactions, recent offer price, recent of impairment existed, we have examined independent valuer’s report, as applicable, where cash flow projections management’s judgement in the area of impairment are not available or value in use calculation using cash flow projections testing by considering and evaluating revenue from financial budgets approved by senior management covering a 5-year multiples, EBITDA multiples, recent transactions, period, reorganisation of businesses, the appropriate key assumptions to recent offer price, recent valuation, NETWORK18 MEDIA & INVESTMENTS LIMITED 3 be applied in valuation including whether appropriate revenue growth cash flow projections, the reasonableness of key rates, net profit margin and perpetual growth rates used to estimate future assumptions including revenue growth rates, net cash flows and discounting rates applied to these forecasted future cash profit margin and perpetual growth rates used to flows. Any change in the bases or assumptions could materially affect the estimate future cash flows and discounting rates recoverable amount used in the impairment test with a consequent impact on applied to these forecasted future cash flows, as the financial statements of the Company. In view of the foregoing, valuation applicable. We also evaluated appropriateness and allocation of investments in certain subsidiaries and an associate has of management’s impairment assessment by been identified as a Key Audit Matter. As at March 31, 2020, carrying value involving our valuation specialists. of such investments aggregates Rs. 3,14,990 lakhs. Refer Note 3(e) to the standalone financial statements. 2 Carrying value of goodwill Principal audit procedures performed: In accordance with Ind AS, goodwill needs to be tested for impairment at Our audit procedures included a combination of every reporting period. Recoverability of the carrying value of goodwill is testing the design, implementation and operating predicated upon appropriate attribution of goodwill to a cash generating unit effectiveness in respect of management’s or group of cash generating units (CGU) and determination of recoverable basis for allocation of goodwill to CGUs and amount of the underlying CGUs. determination of recoverable amounts to measure Significant Management judgement is required in the area of impairment the impairment provision, if any, that needs to be testing, particularly in assessing whether the carrying value of the CGU accounted for. including the goodwill can be supported by the recoverable amount, As part of our substantive testing procedures, being fair value less costs to sell calculated based on recent transactions, we have examined management’s judgement in recent offer price, recent independent valuer’s report, the appropriate key the area of impairment testing by considering assumptions to be applied in valuation including whether appropriate and evaluating recent transactions, recent offer revenue growth rates, net profit margin and perpetual growth rates used price, recent valuation, the reasonableness of key to estimate future cash flows and discounting rates is applied to these assumptions including revenue growth rates, net forecasted future cash flows. Any change in the bases or assumptions could profit margin and perpetual growth rates used to materially affect the recoverable amount used in the impairment test with a estimate future cash flows and discounting rates consequent impact on the financial statements of the Company. applied to these forecasted future cash flows, as In view of the foregoing, valuation and allocation of goodwill have been applicable. We also evaluated appropriateness identified as a Key Audit Matter. As at March 31, 2020, carrying values of of management’s impairment assessment by goodwill is Rs. 29,100 lakhs. involving our valuation specialists. Refer Notes 3(d) and 42 to the standalone financial statements. Information Other than the Financial Statements and Auditor’s Report Thereon • The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board’s Report including Annexures to Board’s Report, Business Responsibility Report and Corporate Governance Report in Annual Report, but does not include the consolidated financial statements, standalone financial statements and our auditor’s report thereon. • Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. • In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. • If, based on the work we have performed, we conclude that there is a material misstatement of this other information,