Auditors’ Report - DishTV

45

Auditors’ ReportTo,The Members,Dish TV India Limited

1. We have audited the attached Balance Sheet of Dish TV India Limited (“the Company”) as at March 31, 2008 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order, 2003 (the ‘Order’) issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956 (“the Act”), on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we annex hereto a statement on the matters specified in paragraph 4 and 5 of the said Order.

4. We draw reference to Note 25 regarding the Scheme of Arrangement sanctioned by the High Court of Judicature at Bombay on January 12, 2007 and High Court of Judicature at New Delhi on December 18, 2006, effect of which has been given in the financial statements for the year ended March 31, 2007 except re-organization and actual allotment of share capital which has been given effect to these financial statement.

5. Further to our comments in the Annexure referred to in paragraph (3) above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) In our opinion, proper books of accounts as required by law have been kept by the Company, so far as appears from our examination of those books;

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

e) On the basis of written representations received from the directors, and taken on record by the Board, we report that none of the director is disqualified as at March 31, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together the significant accounting policies and notes thereon give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008;

ii) In the case of the Profit and Loss Account, of the Loss of the Company for the year ended on that date; and

iii) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.

L.K. ShrishrimalPartnerMembership No. 72664

For and on behalf ofMGB & Co.Chartered Accountants

Place : MumbaiDated : June 18, 2008

46

Annexure referred to in paragraph 3 of Auditors’ Report to the members of Dish TV India Limited on the accounts for the year ended March 31, 2008.

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets.

(b) According to the information and explanations given to us, the fixed assets, except consumer premises equipments installed at the customer premises have been physically verified by the management as per the phased program of verification and no discrepancies were noticed on such verification. In our opinion the frequency of verfication is reasonable having regard to the size of the Company and nature of its assets.

(c) During the year, there was no disposal of substantial part of fixed assets.

(ii) (a) The inventory has been physically verified by the management at the end of the year. In our opinion, the frequency of such verification is reasonable.

(b) In our opinion the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion, the Company has maintained proper records of the inventory and no discrepancy were noticed on physical verification as compared to book records.

(iii) (a) The company has not granted any loan, secured or unsecured to Companies, firms or other parties covered in the register maintained under Section 301 of the Act.

(b) According to the information and explanations given to us, the Company has taken an unsecured loan from a company covered in the register maintained under Section 301 of the Act. The maximum balance during the year was Rs. 7718.14 Lacs and the year end balance of such loan is Rs. 403.62 lacs.

(c) The rate of interest and other terms and conditions of such loan are prima facie not prejudicial to the interests of the Company.

(d) As per the information made available to us, the aforesaid loan is repayable on demand and hence there is no overdue amount at the year end.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control

system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and sale of goods and services. During the course of our audit, no major weaknesses were noticed in the internal control system in respect of these areas.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that need to be entered in the register maintained under Section 301 of the Act have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transaction made in pursuance of contracts or arrangements entered into the register maintained under Section 301 of the Act and exceeding the value of Rupees five lacs in respect of each party during the year, have been made at prices which appear reasonable having regard to the prevailing market prices at the relevant time.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Act and the rules framed there under.

(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

(viii) We are informed that the Central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Act In respect of the Company’s activities.

(ix) According to the records of the Company examined by us and information and explanations given to us:

(a) The Company has been generally regular except delay in few cases in depositing its statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Service Tax, Entertainment Tax, Cess and others as applicable. There are no undisputed amounts payable in respect of the aforesaid dues which have been remained outstanding as at March 31, 2008 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there is no dues of Income Tax Sales Tax, Custom Duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute except the following:

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Name of statue Nature of dues

Amount (Rs. in lacs)

Period to which pertain

Forum where

dispute is pending

Uttar Pradesh Entertainment & Betting Tax Act, 1979*

Entertainment Tax

920.20 2003 - 2004 to

2006 - 2007

Allahabad High Court

Uttar Pradesh Entertainment & Betting Tax Act, 1979(As Applicable to Uttarakhand)*

Entertainment Tax

88.36 2003 - 2004 to

2006 - 2007

High Courtof

Uttarakhand

(x) The accumulated losses of the Company are more than fifty percent of its net worth at the end of the financial year. Further, the Company has incurred cash losses during the current financial year as well as in the immediately preceeding financial year.

(xi) On the basis of our examination and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks/financial institutions except as given below:

Name of the Bank / Financial Institution

Nature of Dues

Amount Involved

(Rs in Lacs)

Period of Default

(In Days)Axis Bank Principal 3,750.00 31Axis Bank Principal 500.00 16Axis Bank Principal 3,250.00 28IDBI Bank Interest 65.49 23

(xii) According to the information and explanations given to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) According to the information and explanations given to us, the Company is not chit fund or a nidhi / mutual benefit fund / society.

(xiv) According to the information and explanations given to us, the Company has not dealt in or traded in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from banks and financial institutions.

(xvi) According to the information and explanations given to us, the term loans raised during the year have been applied for the purposes for which the loans were obtained.

(xvii) On the basis of overall examination of Balance Sheet and the Cash Flow Statement of the Company and related information as made available to us, we report that short-term fund amounting to Rs 25,300.93 lacs have been used for long term investments.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

(xix) The Company has not issued any secured debentures during the year.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) Based on the audit procedures and according to the information and explanation given to us, we report that no fraud on or by the Company has been noticed or reported during the year.



Place: MumbaiDated: June 18, 2008

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Notes 2008 2007 SOURCES OF FUNDS

Shareholders’ Funds Share Capital 2 428,222,803 428,222,803 Reserves and Surplus 3 - - 428,222,803 428,222,803

Loan Funds Secured Loans 4 683,867,989 1,444,696,311 Unsecured Loans 5 4,582,382,574 306,314,726 5,266,250,563 1,751,011,037

TOTAL 5,694,473,366 2,179,233,840

APPLICATION OF FUNDS

Fixed Assets Gross Block 6 8,480,379,746 6,170,233,853 Less : Depreciation/Amortization upto date 2,164,124,767 673,702,453 Net Block 6,316,254,979 5,496,531,400 Captial Work-in-Progress 1,379,766,116 1,126,405,690 7,696,021,095 6,622,937,090

Investments 7 944,510,040 944,510,040

Current Assets, Loans and Advances Inventories 8 47,121,761 11,370,689 Sundry Debtors 9 384,369,921 390,643,722 Cash and Bank Balances 10 199,423,105 113,316,720 Loans and Advances 11 2,844,150,261 1,869,406,314 3,475,065,048 2,384,737,445 Less: Current Liabilities and Provisions 12 Current Liabilities 11,340,786,570 8,576,968,604 Provisions 35,340,748 18,940,733

11,376,127,318 8,595,909,337 Net Current Assets (7,901,062,270) (6,211,171,892)

Profit and Loss Account 13 4,955,004,501 822,958,602 TOTAL 5,694,473,366 2,179,233,840

The accompanying notes form an integral part of these financial statements

Balance Sheet as at March 31,

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

L.K. Shrishrimal Jawahar Lal Goel B D NarangPartner Managing Director Director

For and on behalf of MGB & Co. Rajeev K Dalmia Jagdish PatraChartered Accountants Chief Financial Officer Company Secretary

Place : MumbaiDate : June 18, 2008

(Currency: Indian Rupees)

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Profit and Loss Account for the year ended March 31,

Notes 2008 2007

INCOME

Sales and Services 14 4,127,437,993 1,909,150,977

Other Income 15 29,731,339 33,975,422

4,157,169,332 1,943,126,399

EXPENDITURE

Cost of Goods Sold 16 204,525,875 5,407,941

Operating Expenses 17 3,430,297,809 2,242,573,213

Personnel Cost 18 295,075,929 148,720,588

Administration and Other Expenses 19 321,549,727 340,724,104

Selling and Distribution Expenses 20 2,028,159,412 1,028,900,407

Financial Expenses (net) 21 513,241,235 117,823,546

Depreciation/Amortization 6 1,490,472,689 575,283,677

8,283,322,676 4,459,433,476

Profit/(Loss) Before Tax (4,126,153,344) (2,516,307,077)

Provision for Taxation - Current Tax - -

- Deferred Tax (Refer Note 27.2) - -

- Fringe Benefit Tax 5,743,502 2,450,467

- Wealth Tax 50,911 57,856

- Short Provision for earlier years 98,142 -

Profit/(Loss) After Tax (4,132,045,899) (2,518,815,400)

Balance Brought Forward (2,518,815,400) (3,268,593,174)

Less: Transfer to Restructuring Account - 3,268,593,174

Balance Carried over to Balance Sheet (6,650,861,299) (2,518,815,400)

Basic and Diluted Earnings Per Share of Re.1 (Refer Note 36) (9.65) (5.88)







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2008 2007

2. SHARE CAPITAL (Refer Note 25) Authorized 730,000,000 Equity Shares of Re. 1 each 730,000,000 730,000,000

Issued, Subscribed and Paid-up 428,222,803 (715,687,650) Equity Shares of Re. 1 each fully paid up 428,222,803 715,687,650

Of the above 249,300,890 Equity Shares of Re. 1 each fully paid up were alloted for considerstion other than cash pursuant to the Scheme of Arrangement (Refer Note 25)

Share Capital Suspense - (287,464,847)

TOTAL 428,222,803 428,222,803

3. RESERVES AND SURPLUS Securities Premium : (Refer Note 25) As per Last Balance Sheet - 3,728,245,250 Less: Transferred to Restructuring Account - 3,728,245,250

- - General Reserves: (Refer Note 25) As per Last Balance Sheet 1,695,856,798 - Transfer from Restructuring Account pursuant to the Scheme - 1,698,096,659 Less: Adjustment pursuant to transitional provisions as per AS-15 - 2,239,861

1,695,856,798 1,695,856,798

Less: Debit balance in Profit and Loss Account per contra 1,695,856,798 1,695,856,798

- - TOTAL - -

4. SECURED LOANS (For Security and other details Refer Note 26) Short Term Loan from Bank - 750,000,000 Bridge Loan from Bank 604,780,715 604,780,715 Cash Credit from Bank 75,872,009 75,725,609 Vehicle Loan 3,215,265 7,183,137 Interest accrued and due - 7,006,850

TOTAL 683,867,989 1,444,696,311

5. UNSECURED LOANS (Refer Note 26) Term Loan from Bank 351,714,000 -

Short Term Loan from Bank 800,000,000 250,000,000 Inter Corporate Deposit 3,279,700,000 54,600,000 Interest accrued and due 150,968,574 1,714,726

TOTAL 4,582,382,574 306,314,726

Notes to Financial Statements as at March 31,(Currency: Indian Rupees)

51

Notes to Financial Statements as at March 31,

6. FIXED ASSETS (AT COST)

2008 20077. INVESTMENTS (Refer Note 28)

Long Term (At Cost) - Unquoted

In Subsidiaries

12,470,544 Equity Shares of Rs. 10/- each fully paid up of Agrani 124,705,440 124,705,440

Convergence Limited (Extent of holding 51%)

50,000 Equity Shares of Rs.10 each fully paid up of Integrated Subscribers 500,000 500,000

Management Services Ltd. (Wholly owned)

94,401,004 Equity Shares of Rs. 10/- each fully paid up of Agrani 944,010,040 944,010,040

Satellite Services Limited (Wholly owned)

1,069,215,480 1,069,215,480

Less: Provision for Diminution in the Value of Investments 124,705,440 124,705,440

TOTAL 944,510,040 944,510,040

Aggregate Book value of unquoted investments 944,510,040 944,510,040

8. INVENTORIES

(As taken,valued and certified by the management)

Stock in Trade 47,121,761 11,370,689

TOTAL 47,121,761 11,370,689

Particulars GROSS BLOCK DEPRECIATION / AMORTIZATION NET BLOCK

As at01.04.2007 Additions*

Sale/ Adjustment

As at31.03.08

Up to 01.04.2007

For theYear**

Sale/ Adjustment

Up to31.03.08

As at31.03.08

As at31.03.2007

Intangible Assets

Goodwill 451,177,637 - - 451,177,637 22,558,882 90,235,527 - 112,794,409 338,383,228 428,618,755

Licence fees 100,000,000 - - 100,000,000 35,000,000 10,000,000 - 45,000,000 55,000,000 65,000,000

Software 174,148,195 1,476,232 - 175,624,427 28,015,371 42,241,861 - 70,257,232 105,367,195 146,132,824

Total (A) 725,325,832 1,476,232 - 726,802,064 85,574,253 142,477,388 - 228,051,641 498,750,423 639,751,579

Tangible Assets

Plant and Machinery 684,877,679 98,302,154 - 783,179,833 124,228,617 84,639,192 - 208,867,809 574,312,024 560,649,062

Consumer Premises Equipments

4,702,919,004 2,189,823,766 - 6,892,742,770 454,106,696 1,253,716,241 - 1,707,822,937 5,184,919,833 4,248,812,308

Computers 16,051,167 13,913,089 - 29,964,256 2,693,956 4,010,029 - 6,703,985 23,260,271 13,357,211

Office Equipments 5,542,013 3,962,754 - 9,504,767 474,034 695,274 - 1,169,308 8,335,459 5,067,979

Furniture and Fixtures 6,031,199 1,149,489 - 7,180,689 1,069,489 675,833 - 1,745,322 5,435,367 4,961,710

Vehicles 23,990,729 - 614,439 23,376,290 2,856,510 2,551,192 50,375 5,357,327 18,018,963 21,134,219

Leasehold Improvements t 5,496,230 2,132,847 - 7,629,077 2,698,898 1,707,540 - 4,406,438 3,222,639 2,797,332

Total (B) 5,444,908,021 2,309,284,099 614,439 7,753,577,682 588,128,200 1,347,995,301 50,375 1,936,073,126 5,817,504,556 4,856,779,821

Total Current Year (A+B) 6,170,233,853 2,310,760,331 614,439 8,480,379,746 673,702,453 1,490,472,689 50,375 2,164,124,767 6,316,254,979 5,496,531,400 Total Previous Year 656,820,290 5,515,138,025 1,724,462 6,170,233,853 50,910,568 622,850,985 59,100 673,702,453 5,496,531,400


Note:

(1) * Previous year includes transfer of assets Rs. 422,683,490, pursuant to the Scheme of Arrangement (Refer Note 25) and assets Rs. 1,954,674,773 aquired under Slump Sale.(2) ** Previous year includes Rs.47,567,308 on transfer of assets pursuant to the Scheme of Arrangement (Refer Note 25)(3) Details of assets given on Operating Lease is given in Note 33.2

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Notes to Financial Statements as at March 31,(Currency: Indian Rupees)

2008 20079. SUNDRY DEBTORS (Unsecured, considered good unless otherwise stated) More than Six Months [Includes doubtful Rs.8,310,057(Rs.Nil)] 315,015,119 18,146,573 Others [Includes doubtful Rs.16,160,689 (Rs.42,288,389)] 93,825,548 414,785,538 TOTAL 408,840,667 432,932,111 Less: Provision for Doubtful Debts 24,470,746 42,288,389 TOTAL 384,369,921 390,643,722

10. CASH AND BANK BALANCES Cash in Hand 1,564,922 67,645 Balance with Scheduled Banks : In Current Account 113,695,520 59,861,543 In Fixed Deposit (Pledged with banks & others) 56,162,663 53,387,532 In Margin Account 28,000,000 - TOTAL 199,423,105 113,316,720

11. LOANS AND ADVANCES (Refer Note 30.5) (Unsecured, considered good unless otherwise stated) Loans 895,507,002 843,167,351 Advance against share application money - to Subsidiary 633,353,285 334,170,285 Other Advances (recoverable in cash or in kind for value to be received) 2,484,915,782 1,901,467,193 Deposits 56,417,501 16,644,794 4,070,193,570 3,095,449,623 Less: Provision for Doubtful Advances 1,226,043,309 1,226,043,309 TOTAL 2,844,150,261 1,869,406,314

12. CURRENT LIABILITIES AND PROVISIONS Current Liabilities (Refer Note 30.3) Creditors for Goods 488,807,521 880,671,831 Creditors for Expenses and Other Liabilities (Refer Note 30.6) 3,819,292,810 3,077,435,056 Interest Accrued but not due 12,317,245 4,019,923 Advances/Deposits Received 7,020,368,994 4,614,841,794 11,340,786,570 8,576,968,604 Provisions For Taxation 14,539,637 8,866,893 For Retirement Benefits 20,801,111 10,073,840 35,340,748 18,940,733

TOTAL 11,376,127,318 8,595,909,337

13. PROFIT AND LOSS ACCOUNT Balance as per Profit and Loss Account 6,650,861,299 2,518,815,400

Less: Adjusted against General Reserves per contra 1,695,856,798 1,695,856,798

TOTAL 4,955,004,501 822,958,602

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2008 200714. SALES AND SERVICES

Income from DTH Subscribers :

Subscription Income 3,288,419,875 1,219,008,658

Lease Rentals 603,614,861 217,848,880

Other DTH Revenue - 1,274,760

Income from Content Providers:

Placement and Active Services - 359,214,740

Teleport Services 112,174,801 104,888,339

Sales 123,228,456 6,915,600

TOTAL 4,127,437,993 1,909,150,977

15. OTHER INCOME

Exchange Difference (Net) 20,868,478 25,162,512

Profit on redumption of units of Mutual Funds 2,486,905 -

Other Income 6,375,956 8,812,910

TOTAL 29,731,339 33,975,422

16. COST OF GOODS SOLD

Opening Stock 11,370,689 4,694,889

Purchases 240,276,947 12,083,741

251,647,636 16,778,630

Less: Closing Stock 47,121,761 11,370,689

TOTAL 204,525,875 5,407,941

17. OPERATING EXPENSES

Transponder Lease 344,861,522 338,307,289

License Fees 406,844,958 156,129,868

Uplink Charges 69,190,102 60,459,416

Programming and Other Costs 2,532,743,455 1,675,833,325

Entertainment Tax 73,803,895 11,754,420

Other Operating Charges 2,853,877 88,895

TOTAL 3,430,297,809 2,242,573,213

18. PERSONNEL COST Salary and Allowances 265,218,203 135,073,407 Contribution to Provident and Other Funds 14,981,781 7,626,543 Staff Welfare 13,653,964 5,160,754 Recruitment and Training Expenses 1,221,981 859,884

TOTAL 295,075,929 148,720,588

Notes to Financial Statements for the year ended March 31,(Currency: Indian Rupees)

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2008 200719. ADMINISTRATION AND OTHER EXPENSES Rent 22,385,502 8,593,128 Rates and Taxes 242,167 952 Electricity Charges 10,623,438 7,234,859 Insurance 3,284,685 1,233,273 Repairs and Maintenance - Plant & Machinery 13,984,845 1,051,928 - Building 3,599,818 2,387,600 - Others 7,767,202 5,419,450 Vehicles Expenses 3,039,842 2,573,440 Legal and Professional Fees 36,270,795 15,811,445 Director Sitting Fees 410,000 40,000 Printing and Stationary 20,068,098 13,090,410 Communication Expenses 37,707,707 14,159,543 Traveling and Conveyance [Directors Rs.787,613 (Rs.206,612)] 44,550,116 29,477,452 Provision for Doubtful Debts & Advances - 57,694,388 Provision for Dimunition in the value of Investments - 124,705,440 Miscellaneous Expenses 38,678,646 17,679,911 Balance Written off (Net) 1,061,334 - Service & Hire Charges 29,812,564 11,517,738 Freight, Cartage & Demurrage 32,963,775 26,656,060 Bad Debts 17,817,643 Less: Transfer from Provision for Bad Debts 17,817,643 - 161,252 Loss on sale/ discard of Fixed Assets 15,099,193 1,235,835

TOTAL 321,549,727 340,724,104

20. SELLING AND DISTRIBUTION EXPENSES Advertisement and Publicity Expenses 969,073,221 535,334,318 Business Promotion Expenses 20,736,195 8,321,290 Commission 758,438,585 330,069,366 Customer Support Service 279,911,411 155,175,433

TOTAL 2,028,159,412 1,028,900,407

21. FINANCIAL EXPENSES (NET)

Interest on:

- Fixed Loan 258,636,456 63,595,403

- Others 275,495,556 79,460,304

534,132,012 143,055,707

Less : Interest Received (Gross) 64,667,622 57,467,387

[TDS Rs.1,177,012 (Rs.347,519)]

469,464,390 85,588,320

Bank and Other Financial Charges 43,776,845 32,235,226

TOTAL 513,241,235 117,823,546

Notes to Financial Statements for the year ended March 31,(Currency: Indian Rupees)

55

1. SIGNIFICANT ACCOUNTING POLICIES (a) Accounting Convention: i. The Company generally follows mercantile system of accounting and recognizes income and expenditure on accrual basis

except those with significant uncertainties. ii. The financial statements have been prepared under the historical cost convention and in accordance with the accounting

standards referred to in Section 211 (3C) of the Companies Act, 1956. (b) Fixed Assets: I. Intangible fixed assets i. The Company capitalizes Software and related implementaion costs are intangible assets, where it is reasonably

estimated that the software has an enduring useful life. ii. License fees paid by the Company foe acquiring license to operate Direct to Home (DTH) services are capitalize as

intangible asset. II. Tangible fixed assets i. Tangible fixed assets are stated at Cost less accumulated depreciation. Cost includes capital cost, freight, installation

cost, duties and taxes and other incidental expenses incurred during the construction/installation stage attributable to bringing the assets to working condition for its intended use.

ii. All capital costs and incidental expenditure incurred during the pre operational period and advances paid for capital expenditure are shown as Capital work-in-progress.

iii. Customer Premises Equipments are capitalized on activation. (c) Depreciation/Amortization: i. Depreciation on tangible fixed assets is provided on straight line method at the rates and in the manner prescribed in

Schedule XIV to the Companies Act 1956, except customer premises equipments on which depreciation is provided @ 20% based on useful life estimated by the management.

ii. Leasehold Improvements are amortized over the period of primary lease. iii. Computer Software are amortized based on managements estimate of useful life of five years or license period whichever

is shorter. iv. Goodwill on acquisition is amortised over a period of five years. v. License fee is amortized over the period of license. (d) Revenue Recognition: i. Subscription revenue is recognized on the completion of the service. ii. Lease Rentals is recognized as revenue as per the terms of the operating lease agreement. iii. Sale of goods are recognized when risk and rewards of ownership are passed on to the customer, which is generally on

dispatch of goods. iv. Income from other services is recognized on the completion of services. Period based services are accounted

proportionately over the period of service. (e) Investments: i. Investment intended to be held for more than one year from the date of acquisition are classified as long term investment

and are carried at cost. Provision for diminution in value of these investments is made to recognize a decline other than temporary.

ii. Current investments are stated at cost or fair value whichever is lower. (f) Inventories: Inventories of Customer Premises Equipments and Spare Parts are valued at lower of cost or net realizable value. Cost is

determined on weighted average basis. (g) Retirement Benefits: i. Defined Contribution Plan

In respect of retirement benefits in the form of provident fund, the contribution payable by the Company is charged to Profit and Loss account for the year.


Notes to Financial Statements for the year ended March 31, 2008

56

ii Defined Benefit Plan

The Present value of defined benefit obligation and the related current service cost are measured using the projected unit credit methods with actuarial valuation being carried out at each balance sheet date. The defined benefit obligations are not funded.

Leave encashment:

Liability for leave encashment is provided on the basis of actuarial valuation at the balance sheet date.

Gratuity:

Liability for gratuity for the year is provided on the basis of actuarial valuation, as per defined benefit retirement plan covering eligible employees. The plan provides payment, to vested employees on retirement, death or termination of employment of an amount based on the respective employee’s salary and the terms of employment with the Company.

(h) Employees Stock Option Scheme:

In respect of stock option granted pursuant to the Company’s Stock Options Scheme, the intrinsic value of the option is treated as discount and accounted as employee compensation cost over the vesting period.

(i) Foreign Currency Transactions:

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currency are translated at the exchange rate prevailing at the balance sheet date and gains or losses on translation are recognized in Profit and Loss account. Non monetary foreign currency items are carried at cost.

(j) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as a part of such assets. All other borrowing costs are charged to revenue.

(k) Taxes on Income:

Tax expense comprise of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured as the amount expected to be paid to the tax authorities in accordance with Indian Income Tax Act for the period. Deferred Tax is recognized, subject to consideration of prudence, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and measured using relevant enacted tax rates. At the balance sheet date the Company assesses unrealized deferred tax assets to the extent they become reasonably certain or virtually certain of realization, as the case may be.

(l) Operating Lease:

Lease of the assets where all the risk and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments/revenue under operating lease are recognized as an expense/income on accrual basis in accordance with respective lease agreement

(m) Earning Per Share:

Basic earnings per share is computed and disclosed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed and disclosed using the weighted average number of common and dilutive common equivalent share outstanding during the period except where the result would be anti dilutive.

(n) Impairment:

At each Balance Sheet date, the Company reviews the carrying amount of fixed assets to determine whether there is an indication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount of assets is estimated in order to determine the extent of impairment loss. The recoverable amount is higher of the net selling price and value in use, determined by discounting the estimated future cash flows expected from the continuing use of the asset to their present value.

(o) Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes to accounts. Contingent Assets are neither recognized nor disclosed in the financial statements.


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22. BACKGROUND Dish TV India Limited (formerly known as ASC Enterprises Limited) is mainly in the business of providing Direct to Home (DTH) Satellite

Television Service and Teleport Service.23. USE OF ESTIMATES The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amounts

of assets and liabilities, as of the date of the financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from those estimates. Any revision to estimates is recognized prospectively over current and future periods.

24. GOING CONCERN The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The management

believes that it is appropriate to prepare these financial statements on a ‘going concern’ basis, for the following reasons:- 24.1 The Company holds DTH license from Government of India for a considerable long time. 24.2 The Company is the first to launch DTH services in India. This type of business necessitates long gestation period to stand on

its feet. Being first mover, the Company has incurred huge expenses on awareness of the product, brand building on a pan India basis. The benefit of these expenses will accrue in the future years.

24.3 The Promoters are fully seized of the matter and is of the view that going concern assumption holds true and that the Company will be able to discharge its liabilities in the normal course of business. The Company would be able to meet its fund requirements with various funding options including debts. Hence no adjustment is required on account of re-classification of assets and liabilities for the going concern assumption.

25. THE SCHEME OF ARRANGEMENT The Scheme of Arrangement (the Scheme) under Section 391 to 394 read with Section 78, 100 and other applicable provisions of the

Companies Act, 1956 between Zee Entertainment Enterprises Limited (ZEEL) (formerly known as Zee Telefilms Limited), Siti Cable Network Limited (SITI) and New Era Entertainment Network Limited (NE) and Dish TV India Limited (the Company) (formerly known as ASC Enterprises Limited) and their respective shareholders have been sanctioned by the Hon’ble High Court of Judicature at Mumbai and High Court of Judicature at New Delhi vide their respective Order dated January 12, 2007 and December 18, 2006 and a copy of these orders have been filed with the respective Registrar of Companies on January 17, 2007 and January 19, 2007 respectively. The Scheme has been given effect in the financial statements for the year ended March 31, 2007 except actual allotment and reorganization of share capital which have been given effect in financial statements of the current year.

25.1 Pursuant to the Scheme, Direct Consumer Services undertaking (DCS) of ZEEL including investment made by ZEEL in SITI and the entire business and whole of the undertaking of the transferor Companies i.e. SITI and NE have been transferred to and vested in the Company on appointed date i.e. April 1, 2006 on going concern basis. The assets and the liabilities of DCS undertaking of ZEEL at book value and of SITI and NE at fair value accounted on Purchases Method as per ‘Accounting Standard-14’ have been transferred to and vested in the Company as under:-

Particulars DCS undertaking of ZEEL SITI NEA) Total Assets 1,711,952,382 1,011,848,726 1,141,414,519

B) Total Liabilities 326,344,525 1,436,432,541 1,131,594,945

Surplus/(Deficit) (A-B) 1,385,607,857 (424,583,815) 9,819,574

25.2 Reorganization of Share Capital Pursuant to the Scheme, effect for allotment, cancellation, reduction of share capital had been considered in the financial

statements for the year ended March 31, 2007 and the resultant amount of Rs. 287,464,847 was taken to Share Capital Suspense. The actual allotment of shares after reorganization of share capital have been taken place during the current year.

26. SECURED / UNSECURED LOANS Secured Loans: 26.1 Short Term Loan Rs.Nil (Rs.750,000,000) was secured by hypothecation by way of First pari passu charge on all the current

assets including goods, stocks and all other such article and book debts, receivables, investments, present and future, corporate guarantee of a related party.

26.2 Bridge Loan of Rs. 604,780,715 (Rs. 604,780,715) is secured by hypothecation of all movable properties including movable Plant and machinery, machinery spares, tools and accessories, book debts etc., present and future, and corporate guarantee of a related party and pledge of certain shares held by the promoters in the Company.



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26.3 Cash Credit of Rs. 75,872,009 (Rs. 75,725,609) is secured by first pari passu hypothecation charge on moveable fixed assets of the Company and pledge of shares by related parties.

26.4 Vehicle loans are secured against hypothecation of vehicles (ROC charge not registered) (amount repayable within a year Rs. 2,637,922).

Unsecured Loans: 26.5 Foreign currency arrangement of buyer credit from bank for capital expenditure Rs.351,714,000 (Rs. Nil) is against guarantee

of a related party. 26.6 Loan from bank Rs. 800,000,000 (Rs. Nil) is ranking pari passu in all respect with all other, present and future, senior, unsecured

and unsubordinated obligation of the Company. A reserve account is maintained to provide cover for three months interest on outstanding loan. Related party of the Company is required to provide negative pledge of shares of the Company held by them.

26.7 Loan from Bank Rs. NIL (Rs.250,000,000) was backed by corporate guarantee from a related party.27. TAXES ON INCOME 27.1 In view of the loss incurred no provision for current tax is made. 27.2 In accordance with the Accounting Standards-22 on “Accounting for Taxes on Income” issued by The Institute of Chartered

Accountants of India, deferred tax assets and liability should be recognized for all timing difference in accordance with the said standard. However, considering the present financial position and requirements of the accounting standard regarding certainty/virtual certainty, the same is not provided for. The same will be reassessed at a subsequent Balance Sheet date and will be accounted for in the year of certainty / virtual certainty in accordance with the aforesaid accounting standard.

28. INVESTMENTS 28.1 Investments in subsidiaries are carried at cost as the projects undertaken by such companies are under implementation and

also keeping in view long-term involvement and relationship with these companies. 28.2 Detail of current investments (Mutual Funds) bought and sold during the current year:

Particulars No. of Units Face Value Total Purchase Cost

DSP Merrill Lynch Liquid Plus Institutional Plan Growth 46,817.128 1,000 50,000,000DSP ML Strategic Bond Fund- Institutional - Growth 248,783.746 1,000 250,000,000DSP Merrill Lynch Liquidity Fund- Institutional Growth 90,119.870 1,000 100,000,000DSP Merrill Lynch Liquidity Fund- Institutional Growth 134,693.365 1,000 150,000,000DSP Merrill Lynch Liquidity Fund- Institutional Growth 71,836.461 1,000 80,000,000DSP Merrill Lynch Cash Plus Fund-Regular-Growth 19,691.288 1,000 20,000,000

29. CAPITAL WORK IN PROGRESS 29.1 Capital Work in Progress comprises of equipments [including customer premises equipment (CPE)], capital goods in transit

and capital advances. The CPE are subject to physical verification and reconciliation. 29.2 Includes goods in transit Rs. 447,758,162 (Rs. 361,460,373). 29.3 Includes capital advances of Rs. 128,206 (Rs. 1,655,842).30. OTHERS DISCLOSURES 30.1 Previous year figures have been regrouped, rearranged and recasted wherever considered necessary to confirm to current

year presentation. Figures in brackets pertain to previous year. The current year figures are not comparable with previous year figures as previous year figures includes transfer of undertaking pursuant to the Scheme of Arrangement (Refer Note 25).

30.2 The assets, license and agreements etc. transferred pursuant to the Scheme of Arrangement (Refer Note 25) are in the process of registration/transfer in the name of the Company.

30.3 As per the information available with the Company none of the creditors have confirmed that they are registered under the ‘Micro and Small’ Enterprises Development Act, 2006.

30.4 Prior period expenses/income included in the respective expense heads are as under:



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Particulars 2008 2007A. IncomeLease Rentals - (222,033)Total Income - (222,033)B. ExpensesProgramming and Other Cost 124,262 -Electricity Charges 14,112 2,731Communication Expenses 110,476 1,200,256Legal and Professional Fees - 90,000Miscellaneous Expenses 1,714,914 49,175Business Promotion Expenses - 2,557,246Advertisement and Publicity Expenses 4,481,148 89,456Commission 8,695,650 1,223,221License Fees - 7,935Traveling and Conveyance 139,825 41,952Repairs and Maintenance - Plant and Machinary 890,370 -Interest (56,301) -Entertainment Tax 346,629 -Total Expenses 16,461,085 5,261,972Net-Income/(Loss) (16,461,085) (5,484,005)

30.5 Loans and Advances 30.5.1 Advance against share application money Rs. 633,353,285 (Rs. 334,170,285) given to wholly owned subsidiary

company is considered good as the project undertaken by the subsidiary is under implementation and also in view of long term involvement and relationship with the subsidiary.

30.5.2 The approval of Reserve of Bank of India is yet to be obtained for advances Rs. 1,203,430,395 relating to multi mission satellite system project considered as doubtful in earlier years.

30.5.3 Other advance includes Rs. 395,511,900 (Rs. Nil) receivable from a subsidiary. 30.6 Creditors for Expenses and Other Liabilities 30.6.1 Includes Rs. 926,694 (Rs. 676, 446,144) due to Subsidiary Companies. 30.6.2 Includes Rs. 393,118,987 (Rs. 350,999,096) due to Zee Entertainment Enterprises Limited on account of transaction

between the appointed date and effective date pursuant to the Scheme of Arrangement (Refer Note 25). 30.7 As per the advice received and in term of DTH License agreement the Company has provided license fees on its revenue from

DTH subscribers. 30.8 Remuneration to the Directors 30.8.1 No commission is paid / payable to any director and hence the computation of profits under Section 198/349 of the

Companies Act, 1956 is not required. Remuneration to the Managing Director is paid as per the approval dated 20th September, 2007 of the Central Government of India as given below:

Particulars 2008 2007Salary and Allowances 5,181,000 1,225,613Contribution to Provident Fund 288,000 68,129Perquisites 705,000 169,045Total 6,174,000 1,462,787

Note: Salary and allowances includes basic salary, house rent allowance and leave travel allowance but exclude leave encashment and gratuity.

30.8.2 Directors Sitting fees paid to non-executive directors Rs. 410,000 (Rs. 40,000)



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30.9 Auditors Remuneration

Particulars 2008 2007(Included in Legal and Professional Expenses and is net of service tax)Statutory Audit Fees 12,00,000 8,00,000Tax Audit Fees 3,00,000 1,50,000Certification 1,917,745 675,509

Tax Representation 245,750 123,000

Management Consultancy 279,120 -

30.10 Employee Stock Option Plan – ESOP-2007 The Company instituted the Employee Stock Option Plan – ESOP 2007 to grant equity based incentives to its eligible employees.

The ESOP-2007 (“The Scheme”) had been approved by the Board of Directors of the Company at their meeting held on June 28, 2007 and by the shareholders of the Company by way of special resolution passed at their Annual General Meeting held on August 03, 2007, to grant aggregating 4,282,228 options (not exceeding 1% of the issued and paid up equity share capital of the Company as on March 31, 2007), representing one share for each option upon exercise by the employee of the Company at a exercise price determined by the Board/remuneration committee. The Scheme covers grant of options to the specified permanent eligible employees of the Company as well as of its subsidiaries and also to non-executive directors of the Company including independent directors. Pursuant to the Scheme, the Remuneration Committee has on August 21, 2007 granted 3,073,050 options to specified eligible employees of the Company at the market price determined as per the SEBI Guidelines.

The options granted under the Scheme shall vest not less than one year and not more than five years from the date of grant of options. Under the terms of the Scheme, 20% of the options will vest in the employee every year equally. The Option grantee must exercise all vested options within a period of four years from the date of vesting. Once the options vest as per the Scheme, they would be exercisable by the Option Grantee at any time and the shares arising on exercise of such options shall not be subject to any lock-in period.

The movement in the options granted to the Employee during the year is set out below:-

Particulars Grant of OptionsDate of Grant August 21, 2007Market price on date of grant of the options (per share) Rs. 75.20Exercise Price Rs. 75.20Vesting Period Five YearsOptions Granted (Nos.) 3,073,050Option Lapsed (Nos.) 146,900Options Forfeited (Nos.) NIL Options Exercised NILOptions Expired NILOptions Outstanding at end of the period (Nos.) 2,926,150Options exercisable at the end of the period NIL

The Company has granted options to the employees at an exercise price of Rs. 75.20 per share being the latest market price as per SEBI Guidelines. In view of this, there being no intrinsic value (being the excess of the market price of share under ESOS over the exercise price of the option), on the date of grant the Company is not required to account the accounting value of option as per SEBI Guidelines.

30.11 Retirement 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 defined benefit obligations are not funded.



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30.11.1 The reconciliation of opening and closing balances of the present value of the defined obligation as at

Particulars

2008 2007GratuityBenefits

Leave Encashment

Benefits

Gratuity Benefits

Leave Encashment

BenefitsObligation at the year beginning 5,617,175 4,456,665 2,534,324 2,747,207Service Cost 6,123,685 9,168,786 1,881,075 2,264,690Interest Cost 449,374 356,533 202,746 219,777Actuarial (Gain)/Loss (2,989,035) 308,264 1,032,258 797,815Employers Contribution (333,272) (2,357,064) (33,228) (1,572,824)Obligation at the period end 8,867,927 11,933,184 5,617,175 4,456,665

30.11.2 Cost for the period :-

Particulars


Leave Encashment

Benefits

Gratuity Benefits

Leave Encashment

BenefitsService Cost 6,123,685 9,168,786 1,881,075 2,264,690Interest Cost 449,374 356,533 202,746 219,777Net actuarial (gain)/loss (2,989,035) 308,264 1,032,258 797,815Net cost 3,584,024 9,833,583 3,116,079 3,282,282

30.11.3 Actuarial assumptions used :-

Particulars


Leave Encashment

Benefits

Gratuity Benefits

Leave Encashment

BenefitsDiscount Rate 8% 8% 8% 8%Expected Salary Escalation Rate 10% 10% 8% 8%Mortality Table LIC(1994-96)

duly ModifiedLIC(1994-96) duly Modified

LIC(1994-96) duly Modified

LIC(1994-96) duly Modified

B) Defined Contribution Plan:- Contribution to provident and other funds is recognized as an expense in Note 18 of the Profit and Loss Account. 30.12 As at the Balance Sheet date, the Company has following foreign currency payable and receivables which are not hedged by

a derivative instrument or otherwise:-

Particulars2008 2007

Value inUSD $

Value inEuro

Equivalent to INR Rs.

Value inUSD $

Value inEuro

Equivalent toINR Rs.

Receivables 402,476 - 15,917,942 375,000 - 16,098,750Payables 15,417,410 4,500 619,291,678 5,118,551 - 224,448,113

30.13 Debit and Credit balances of parties including of subscribers, distributors and dealers’ are subject to confirmation/reconciliation and effect if any, will be considered on its determination.

31. CAPITAL COMMITMENT Estimated amount of contract remaining to be executed on capital account and not provided for (Net of advance) is Rs. 333,592,048

(Rs. 307,722,738).



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32. CONTINGENT LIABILITY NOT PROVIDED FOR

Particulars 2008 2007Guarantees given by Banks [includes Rs 490,860,000 (Rs. 400,000,000) guaranteed by a related party]

504,615,000 400,105,000

Corporate Guarantees given on behalf of others - 24,000,000Claim against the Company not acknowledged as debt 44,840,319 -Legal cases against the Company Unascertained Unascertained

32.2 The Entertainment Tax Authorities, Noida has raised a demand of Rs. 40,459,628 on account of entertainment tax for the period from November, 2003 to February, 2004. The Company has filed petition against the demand, which is pending. Further, the authorities have intimated a total demand of Rs. 92,019,941 till March, 2007.

32.3 Entertainment Tax demand Rs. 8,835,967 (estimated on the basis of various notices issued from time to time) raised by various Entertainment Tax Authorities of Uttrakhand State have been challenged and the petition is pending before the High Court. The demand has been stayed by the High Court. Notice for further period has been issued wherein the demand has not been quantified.

32.4 The Company has given a guarantee for the performance of the term and conditions of satellite capacity agreement between a subsidiary of the Company namely Agrani Satellite Services Limited and the vendor which is strategically important for the business of the Company.

33. OPERATING LEASE 33.1 In respect of assets taken on operating lease:- The Company’s significant leasing arrangements are in respect of operating leases taken for offices, residential premises,

transponder etc. These leases are cancelable operating lease agreements that are renewable on a periodic basis at the option of both the lessee and the lessor. The initial tenure of the lease generally is for 11 months to 120 months. The details of assets taken on operating lease during the year are as under:-

Particulars 2008 2007Lease rental Charges for the period (Net of shared cost) 436,437,126 403,424,137Sub-lease payment received 69,272,219 55,084,339Future Lease Rental obligation payable (Under non-cancelable lease)Not later than one year 39,242,093 141,119,343Later than one year but not later than five years 116,119,823 7,059,771More than five years - -

33.2 In respect of assets given under operating lease:- The Company has leased out assets by way of operating lease and as on 31st March 2008, the gross book value of such

assets, its accumulated depreciation and depreciation for the period is as given below. The total lease income for the year is Rs. 603,614,858 (Rs. 218,070,913).

Particulars 2008 2007Gross Value of the Assets 6,911,747,418 4,721,923,650Accumulated Depreciation 1,715,683,261 460,001,940Depreciation for the year 1,255,681,321 446,090,925

Particulars 2008 2007Future Lease Rental Receivable (Under non-cancelable lease)Not later than one year 737,178,825 455,600,471Later than one year but not later than five years 1,963,927,205 1,447,565,341More than five years - -


32.1


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34 RELATED PARTY DISCLOSURES 34.1 List of parties where control exists:- • Agrani Satellite Services Limited (Wholly Owned Subsidiary) • Integrated Subscribers Management Services Limited ( Wholly owned Subsidiary) • Agrani Convergence Limited (Extent of holding 51%) 34.2 Other Related Parties with whom transactions have taken place during the year and balances outstanding as on last date of

the year:- Smart Talk Private Limited, Essel Corporate Services Private Limited, Essel Agro Private Ltd , Cyquator Technologies Limited

(merged with Pan India Network Infravest Private Limited), Zee Entertainment Enterprises Limited, Pan India Network Infravest Private Limited, Pan India Paryatan Limited, Ayepee Lamitubes Limited, Procall Private Limited, Suncity Projects Private Limited, Afro-Asian Satellite Communication (Gibraltar) Limited, Afro-Asian Satellite Communication (U.K.) Limited, ASC Telecommunication Limited, Asia Today Limited, Asia TV Limited (UK), Zee News Limited, Rupee Finance and Management Private Limited, ITZ Cash Card Limited, Wire and Wireless India Limited, Dakshin Media Gamming Solutions Private Limited, Rama Associates Limited, Zee Turner Limited, Zee Interactive Learning Systems Limited (now known as ETC Networks Limited), Kenlott Gamming Solutions Private Limited, Brio Academic, Zee Foundation, Zee Akash News Private Limited, E City Entertainment (I) Private Limited, Zee Sports Limited, Bhilwara Telenet Services Private Limited, Quick Call Private Limited, ETC Networks Limited, Diligent Media Corporation Limited, Indian Cable Net Company Limited, Intrex Tradex Private Limited, Pan India Network Investment Private Limited, Agrani Telecom Limited, Agrani Satellite Communication (Gib.)Limited, Essel Shyam Communication Limited, Essel Shyam Technology Limited, Churu Trading Company Private Limited.

Directors/Key Management Personnel Mr. Subhash Chandra, Mr. Jawahar Lal Goel, Mr. Ashok Kurien, Mr. B.D.Narang and Mr. Arun Duggal (appointed w.e.f. January 06, 2007), Mr. Pritam Singh (appointed w.e.f. April 27, 2007), Mr. Eric Zinterhofer (appointed w.e.f. October 22, 2007). 34.3 TransactionwithRelatedParties:


Total Amount Amount for Major Parties Total Amount Amount for Major

Parties

(i) With Subsidiary Companies Purchase of Goods & Services- 569,802,513 274,733,182 Integrated Subscribers Management Services Limited 569,802,513 274,733,182 Sales, Services & Recoveries (Net of Taxes) 23,309,896 - Integrated Subscribers Management Services Limited 23,309,896 -

Loan, Advance and Deposit Given (including Share Application Money) 302,183,000 6,636,319

Agrani Satellite Services Limited 302,183,000 6,636,319 Refund Received against Loan, Advance and Deposit Given 3,000,000 - Agrani Satellite Services Limited 3,000,000 - Customer Security transferred by 880,677,618 - Integrated Subscribers Management Services Limited 880,677,618 - Repayment of Loan, Advance and Deposit Taken 325,000 - Agrani Convergence Limited 325,000 - Diminution in the value of Investment - 124,705,440 Agrani Convergence Limited - 124,705,440 (ii) With Other Related Parties: Sales, Services & Recoveries (Net of Taxes) 122,852,010 467,598,932



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Total Amount Amount for

Major Parties Total Amount Amount for Major

Parties Zee Entertainment Enterprises Limited 21,354,832 178,322,015 Zee News Limited 30,084,754 71,144,836 Asia Today Limited 41,957,245 34,896,965 Asia TV Limited (UK) - 24,804,575 Zee Turner Ltd. - - - 73,840,149Others 29,455,180 84,590,392 Purchase of Goods & Services 1,000,367,242 987,774,125 Zee Turner Limited 554,986,614 802,522,247 Zee Entertainment Enterprises Limited 127,367,463 67,452,464 ITZ Cash Card Limited 104,169,574 25,566,444 Essel Agro Private Limited 142,662,558 71,025,412 Others 71,181,033 21,207,558 Rent Paid 13,427,123 4,899,943 Zee Entertainment Enterprises Limited 9,957,057 3,662,364 E-City Entertainment (I) Private Limited 1,151,186 1,237,579 Rama Associates Limited 2,318,880 - Interest Paid 242,554,574 52,012,364 Zee Entertainment Enterprises Limited 197,480,875 49,624,805 Rupee Finance & Management Private Limited 40,143,443 951,369 Others 4,930,256 1,436,190 Donation - 2,500,000 Zee Foundation - 2,500,000 Interest Received 59,289,178 52,818,343 Essel Agro Private Limited 50,217,631 46,017,716 ASC Telecommunication Limited 8,644,633 6,800,627 Others 426,914 - Purchase of Fixed Assets 38,872,627 728,933,910 Wire & Wireless India Limited 38,872,627 2,960,558 Zee Entertainment Enterprises Limited - 725,646,020 Others - 327,332

Loan, Advance and Deposit Taken 7,878,750,000 641,624,604 Zee Entertainment Enterprises Limited 3,177,000,000 326,324,604 Churu Trading Company Private Limited 3,000,000,000 - Wire & Wireless India Limited 21,750,000 105,300,000 Rupee Finance & Management Private Limited 1,680,000,000 210,000,000 Others - - Repayment of Loan, Advance and Deposit Taken 4,631,900,000 290,300,000 Essel Agro Private Limited - 25,000,000 Zee Entertainment Enterprises Limited 2,900,000,000 - Wire & Wireless India Limited - 105,300,000 Rupee Finance & Management Private Limited 1,730,000,000 160,000,000 Others 1,900,000 - Loan, Advance and Deposit Given 26,706,726 417,337,314



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Parties ITZ Cash Card Limited 26,706,726 -Essel Agro Private Limited - 313,645,898 ASC Telecommunication Limited - 94,100,000 Others - 9,591,416

Refund Received against Loan, Advance and Deposit Given

3,300,000 247,393,494

ASC Telecommunication Limited 1,500,000 15,511,319 Essel Agro Private Limited 1,800,000 231,282,175 Others - 600,000 Corporate Guarantee Given - 24,000,000 Procall Private Limited - 20,000,000 Quick Call Private Limited - 1,500,000 Smart Talk Private Limited - 1,500,000 Bhilwara Telenet Services Limited - 1,000,000 Corporate Guarantee received 622,700,000 2,224,030,715 Zee Entertainment Enterprises Limited 622,700,000 2,224,030,715 Release of Corporate Guarantee received 1,000,000,000 -Zee Entertainment Enterprises Limited 1,000,000,000 -Provision for Doubtful Advances - 8,030,768 Brio Academic - 7,950,000 Others - 80,768

Assets & Liabilities Received Pursuant to Scheme of Arrangement

DCS undertaking of Zee Entertainment Enterprises Limited - 1,385,607,857

Total Assets - 1,711,952,382 Total Liabilities - 326,344,525 Siti Cable Network Limited - (424,583,815) Total Assets - 1,011,848,726 Total Liabilities - 1,436,432,541 New Era Entertainment Network Limited - 9,819,574 Total Assets - 1,141,414,519 Total Liabilities - 1,131,594,945

Assets & Liabilities Received pursuant to Slump Sale

Essel Agro Private Limited - (451,177,637) Total Assets - 1,524,900,220 Total Liabilities - 1,975,577,857 Purchase Consideration - 500,000 Salary & Allowances 1,014,833 Jawahar Lal Goel - - 1,014,833 Balance at the end of period: With Subsidiary Companies:



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Parties Investment 1,069,215,480 1,069,215,480 Agrani Satellite Services Limited 944,010,040 944,010,040 Agrani Convergence Limited 124,705,440 124,705,440 Integrated Subscribers Management Services Limited 500,000 500,000

Loan, Deposit and Advances Given (including Share Application Money)

1,028,865,184 334,170,284

Agrani Satellite Services Limited 633,353,285 334,170,285 Integrated Subscribers Management Services Limited 395,511,900 - Creditors for expenses and other liabilities 926,694 676,606,366 Integrated Subscribers Management Services Limited - 675,354,672 Agrani Convergence Limited 926,694 1,251,694 With Other Related Parties: Loan, Deposit and Advances Given 2,536,088,773 2,394,155,181 Afro-Asian Satellite Comm. (UK) Limited 376,881,821 376,881,821 Afro-Asian Satellite Comm. (Gib.) Limited 827,708,050 827,708,050 Agrani Satellite Comm. (Gib.) Limited 3,840,524 3,840,524 ITZ Cash Card Limited 58,720,961 133,128,344 Essel Agro Private Limited 1,109,160,091 899,656,036 ASC Telecommunication Limited 150,680,888 143,982,455 Others 9,096,438 8,957,951 Provision outstanding against advances given 1,216,461,163 1,216,461,163 Afro-Asian Satellite Comm. (UK) Limited 376,881,821 376,881,821

Afro-Asian Satellite Comm. (Gib.) Limited 827,708,050 827,708,050

Others 11,871,292 11,871,292 Loan, Deposit and Advances Taken 3,512,610,228 60,120,791 Suncity Project Limited 2,700,000 2,700,000 Churu Trading Company Private Limited 3,004,065,574 - Kenlott Gaming Solutions Private Limited - 1,900,000 Ayepee Lamitube Limited 1,078,150 1,078,150 Zee Entertainment Enterprises Limited 432,360,984 - Wire & Wireless India Limited 21,750,000 3,806,065 Rupee Finance & Management Private Limited 40,366,648 50,636,576 Others 10,288,872 - Creditors for expenses and other liabilities 2,108,367,548 1,573,331,839 Zee Entertainment Enterprises Limited 850,858,681 730,584,399 Zee Turner Limited 1,182,619,515 800,633,181 Others 74,889,352 42,114,259 Debtors 363,293,613 364,507,920 Asia Today Limited 38,636,845 23,772,474 Asia TV Limited (UK) - 16,473,374 Zee News Limited 34,345,809 46,881,562 Zee Entertainment Enterprises Limited 193,104,959 193,321,888



67




Parties Others 97,206,000 84,058,622 Corporate Guarantee Given - 24,000,000 Procall Private Limited - 20,000,000 Quick Call Private Limited - 1,500,000 Smart Talk Private Limited - 1,500,000 Bhilwara Telenet Services Limited - 1,000,000 Corporate Guarantee Received 1,846,730,715 2,224,030,715 Zee Entertainment Enterprises Limited 1,846,730,715 2,224,030,715

Note:- 1) Major parties denote who account for more than 10% or more of the aggregate for that category of transaction. 2) Details of managerial remuneration is disclosed in Note 30.8 3) * Also refer note 32.4

35. ADDITIONAL INFORMATION PURSUANT TO PART II OF SCHEDULE VI OF THE COMPANIES ACT, 1956: 35.1 The Company is in the business of providing services, which is not subject to any license, hence licensed capacity is not given.

Further, the nature of business is such that the installed capacity is not quantifiable. 35.2 The details of Opening Stock, Purchases, Sales and Closing Stock of goods traded are as under:

Quantitative Details 2008 2007

Particulars Unit Quantity Amount Quantity Amount

Opening Stock

Cable

Dish/Connectors/Switches

DVR

LNB

Set Top Boxes

Spare Parts

Metre

No.

No.

No.

No.

7,612

113

388

113

100

-

61,452

48,924

3,727,332

38,513

178,254

7,316,214

144

168

485

6

-

-

948

30,845

4,659,166

3,930

-

-

Total 11,370,689 4,694,889

Purchases#

Cable


VGA Box

LNB/Amplifier

Set Top Boxes

Spare Parts

Electronic Equipments

# Including transfer from capital work in progress

Metre

No.

No.

No.

No.

No.

1,288,867

64,551

27,634

108,223

68,287

-

186

7,281,603

23,312,275

78,479,563

11,275,536

108,091,406

4,763,471

7,073,093

142,416

210

-

763

657

-

-

1,019,023

64,237

-

352,324

1,198,231

9,449,926

-

Total 240,276,947 12,083,741



68

Quantitative Details 2008 2007Particulars Unit Quantity Amount Quantity AmountSales and Services

Cable

Dish/Connectors/Switches*

DVR

LNB/Amplifier

Set Top Boxes

VGA Box

Spare Parts

Electronic Equipment

Metre

No.

No.

No.

No.

No.

No.

1,288,867

64,512

5

108,223

68,287

6,652

-

186

5,837,391

13,718,160

52,051

9,068,007

68,012,334

11,330,348

7,813,757

7,396,408

134,948

265

97

656

557

-

-

-

1,167,770

69,753

1,125,208

477,827

1,249,781

-

2,854,305

-Total 123,228,456 6,944,644Closing Stock

Cable


DVR

LNB/Amplifier

Set Top Boxes

VGA Box

Spare Parts

Metre

No.

No.

No.

No.

No.

7,612

152

383

113

100

20,982

34,478

2,583,982

3,679,299

9,505

99,598

35,738,629

4,976,270

7,612

113

388

113

100

-

61,452

48,924

3,727,332

38,513

178,254

7,316,214

Total

* Includes transfer to Capital Work in Progress

No. -

47,121,761

- 162

11,370,689

29,044

35.3 Other Information:

Particulars 2008 2007A. CIF Value of Imports

Capital Equipments

Trading Goods including spare parts

1,954,633,622

107,387,255

1,971,063,330

7,352,731B. Expenses in Foreign Currency

Content Fees

Transporter Teleport Charges

Uplinking Charges

Business Promotion Expenses

Traveling Expenses

Other Expenses

32,337,364

28,344,376

-

-

576,891

161,489

20,510,319

33,041,250

2,040,500

48,846

846,603

-C. Income in Foreign Exchange

Teleport Services 41,304,310 45,543,340

36. EARNING PER SHARE (EPS)

Particulars 2008 2007Profit/(Loss) After Tax (4,132,045,899) (2,518,815,400)Weighted Average number of Equity Shares of Re 1 each (Nos.) 428,222,803 428,222,803Basic and diluted earning per share (9.65) (5.88)



69

Note:- (a) Weighted average number of equity shares for the previous year includes equity shares to be allotted on record date pursuant

to the Scheme of Arrangement. (Refer Note 25). (b) Potential conversion of the stock option granted is anti- dilutive and accordingly has not been considered in the calculation of

diluted earning per share. 37. SEGMENT INFORMATION AS PER AS-17 The Company follows AS-17 “Segmental Reporting” relating to the reporting of financial and descriptive information about their operating

segments in financial statements. The Company’s reportable operating segments have been determined in accordance with the internal management structure, which

is organized based on the operating business segments as described below. The geographical segment is not relevant as exports are insignificant.

Direct to Home Services (DTH) - Uplink of satellite television signals to be received by the customer directly in the home. This segment derives revenue by way of Subscription, Lease Rentals, Placement and Active Services and Other Incomes.

Trading - Trading in electronics and other equipments. Teleport Services - Facility for uplink signals.

(a) Business Segment (March 31, 2008)

Description DTH Trading Teleport Services

Unallocated Total

Segment Revenue External Sales 3,892,034,736 123,228,456 112,174,801 - 4,127,437,993Inter-Segment Sales - - - - -Total Revenue 3,892,034,736 123,228,456 112,174,801 - 4,127,437,993Segment Results (3,541,979,371) (81,297,419) (33,412,164) - (3,656,688,954)Operating Profit/(Loss) before interest and Tax

(3,541,979,371) (81,297,419) (33,412,164) - (3,656,688,954)

Interest Expenses - - - - 534,132,012Interest Income - - - - 64,667,622Profit / (Loss) Before Tax - - - - (4,126,153,344)Current Taxes-FBT/Wealth Tax - - - - 5,794,413Provision for earlier years - - - - 98,142Profit / (Loss) After Tax - - - - (4,132,045,899)(b) Other segment InformationSegment Assets 8,704,154,419 58,830,647 256,731,827 3,095,879,290 12,115,596,183Segment Liabilities 16,634,849,756 - 7,528,124 - 16,642,377,880Capital Expenditure 2,564,120,757 - - - 2,564,120,757Depreciation/Amortisation 1,454,953,600 - 35,519,088 - 1,490,472,688Non cash expenditure other than Depreciation/Amortisation

15,099,193 - - - 15,099,193


Segment RevenueExternal Sales 1,797,347,038 6,915,600 104,888,339 - 1,909,150,977 Inter-Segment Sales - - - -Total Revenue 1,797,347,038 6,915,600 104,888,339 - 1,909,150,977Segment Results (2,421,443,832) 1,507,658 (10,782,583) - (2,430,718,757)



70

Description DTH Trading Teleport Services Unallocated Total

Operating Profit/(Loss) before interest and Tax

(2,421,443,832) 1,507,658 (10,782,583) - (2,430,718,757)

Interest Expenses - - - - 143,055,707 Interest Income - - - - 57,467,387 Profit / (Loss) Before Tax - - - - (2,516,307,077)Current Taxes-FBT/Wealth Tax - - - - 2,508,323 Provision for earlier years - - - - -Profit / (Loss) After Tax - - - - (2,518,815,400)

b) Other segment Information

Segment Assets 7,298,929,097 11,370,689 293,040,051 2,348,844,739 9,952,184,576 Segment Liabilities 10,321,989,892 - 24,930,482 - 10,346,920,374 Capital Expenditure* 5,892,956,755 - 212,062,837 - 6,105,019,592 Depreciation/Amortisation 539,906,074 - 35,377,603 - 575,283,677 Non cash expenditure other than Depreciation/Amortisation

50,980,223 - - 132,655,440 183,635,663

*Capital Expenditure includes assets received pursuant to the Scheme of Arrangement.







71

Balance Sheet Abstract and Company’s General Business Profile

I. REGISTRATION DETAILS

Registration No. State Code

Balance Sheet Date

Day Month Year

II. CAPITAL RAISED DURING THE YEAR (AMOUNT IN THOUSANDS)

Public Issue Rights Issue

Bonus Issue Private Placement

III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. THOUSANDS)

Total Liabilities Total Assets

SOURCES OF FUNDS

Paid up Capital Reserves & Surplus

Secured Loans Unsecured Loans

Defrred Tax Liability


Net Fixed Assets Investments

Net Current Assets (-) Miscelleneous Expenditure

Accumulated Loss

IV. PERFORMANCE OF COMPANY (AMOUNT IN RS. THOUSANDS)

Turnover Total Expenditure

Profit/(Loss) Before Tax(-) Profit/(Loss) After Tax(-)

Earning per Share in Rs. Dividend Rate (%)

V. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF COMPANY (As Per Monetary Terms)

Item Code No. (ITC Code)

Product Description DTH Services, Trading & Transponder Teleport Activity

For and on behalf of the Board

Jawahar Lal Goel B. D. Narang Managing Director Director

Rajeev K. Dalmia Jagdish Patra Chief Financial Officer Company SecretaryPlace : NoidaDate : July 28, 2008

1 0 1 8 3 6

3 1 0 3 2 0 0 8

N I L

N I L

N I L

N I L

5 6 9 4 4 7 3

4 2 8 2 2 2

5 6 9 4 4 7 3

N I L

6 8 3 8 6 8 4 5 8 2 3 8 3

7 6 9 6 0 2 1

7 9 0 1 0 6 3

4 1 5 7 1 6 9

4 9 5 5 0 0 5

N I L

9 4 4 5 1 0

4 1 2 6 1 5 3

- 9 . 6 5

N A

8 2 8 3 3 2 3

4 1 3 2 0 4 6

N I L

N I L

5 5

(Rs. in ‘000)

72

Cash Flow Statement for the year ended March 31,

2008 2007A. CASH FLOW FROM OPERATING ACTIVITIES Net Profit/(Loss) before taxation (4,126,153,344) (2,516,307,077) Adjustments for : Depreciation /Amortization 1,490,472,689 575,283,677 Provision for Doubtful Debts & Advances - 57,694,388 Provision for Diminution in the value of Investment - 124,705,440 (Profit)/Loss on sale/discard of Fixed Assets 15,099,193 1,235,835 Profit on Sale of Investments (2,486,905) - Exchange Adjustments (Net) (3,454,760) (3,208,281) Interest Expenses 534,132,012 143,055,707 Interest Income (64,667,622) (57,467,387) Operating Profit/(Loss) before working capital changes (2,157,058,737) (1,675,007,698) Adjustments for : (Increase)/Decrease in Inventories (35,751,072) (6,623,439) (Increase)/Decrease in Trade and Other Receivables (605,421,469) (652,115,406) Increase/(Decrease) in Trade and Other Payables 2,769,702,676 4,165,910,429 Cash Generated from Operations (28,528,603) 1,832,163,886 Direct Taxes Paid (Net) 11,632,714 7,169,519 Net Cash flow from Operating Activities (40,161,317) 1,824,994,367

B. CASH FLOW FROM INVESTING ACTIVITIES Purchases of Fixed Assets/CWIP (2,578,978,750) (3,372,577,476) Proceeds from Sale of Fixed Assets 322,865 429,526 Purchases of Investments (650,000,000) - Proceeds from Sale of Investments 652,486,904 - Security Received against Capital goods - 50,559,749 Loan Repaid by Others 3,300,000 190,832,756 Loan given to Others - (201,600,000) Refund of Share Application Money given to Subsidiaries 3,000,000 100,000,000 Advance Against Share Application Money given to Subsidiaries (302,183,000) (70,000,000) Advacne Against Share Application Money given - (6,636,319) Interest received 8,914,848 4,649,045 Net Cash Flow from Investing Activities (2,863,137,133) (3,304,342,719)

C. CASH FLOW FROM FINANCING ACTIVITIES Interest Paid (383,587,693) (131,392,358) Proceeds from Long Term Borrowing 351,714,000 - Repayment of Vehicle Loan (3,967,872) (4,001,774) Proceeds from Short Term Borrowing 9,676,546,400 1,915,435,851 Repayment of Short Term Borrowing (6,651,300,000) (260,000,000)

Net Cash Flow from Financing Activities 2,989,404,835 1,520,041,719 Net Cash Flow during the year (A+B+C) 86,106,385 40,693,367 Cash and Cash Equivalents received pursuant to the Scheme - 13,261,777 Cash and Cash Equivalents at the beginning of the year 113,316,720 59,361,576 Cash and Cash Equivalents at the end of the year 199,423,105 113,316,720 Cash and Cash Equivalents at the end of the year comprises of : Cash in Hand 1,564,922 67,645 Balances with Scheduled Banks in Current Accounts 113,695,520 59,861,543 Balances with Scheduled Banks in Deposit Accounts (Pledge with Banks) 56,162,663 53,387,532 Balances with Scheduled Banks in Margin Accounts 28,000,000 -

Total Cash and Cash Equivalents 199,423,105 113,316,720

Notes : 1) Previous year’s figures have been regrouped, rearranged and recasted wherever considered necessary. The Current year figures are not comparable with previous

years figures as Previous year figures includes transfer of undertakings pursuant to Scheme of Arrangement (Refer Note 25) and business acquired. 2) Assets and Liabilities received pursuant to the Scheme (Refer Note 25) and business acquired are not considered in above Cash Flow Statement being non cash

transactions.



For and on behalf of MGB & Co. (Rajeev K Dalmia) (Jagdish Patra)Chartered Accountants Chief Financial Officer Company Secretary



73

Auditors’ ReportToThe Board of Directors Dish TV India Limited

1. We have audited the attached Consolidated Balance Sheet of Dish TV India Limited (“the Company”) and its subsidiaries (“the Group”) as at March 31, 2008, the Consolidated Profit and Loss Account and Consolidated Cash Flow Statement for the year ended on that date. These financials statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

3. The financial statements of the subsidiary with total assets (net) of Rs. 717,270,329 (Rs. 42,997,907) as at March 31, 2008 and total revenues (net) of Rs. 25,004,916 (Rs.7,102,431) for the year ended on that date have not been audited by us. The financial statements of the subsidiary has been audited by other auditor whose report has been furnished to us and our opinion in so far as it relates to the amounts included in respect of the subsidiary, is based solely on the report of the other auditor.

4. We draw reference to Note 26 regarding the Scheme of Arrangement sanctioned by the High Court of Judicature at Bombay on January 12, 2007 and High Court of Judicature at New Delhi on December 18, 2006, effect of which has already been given in the financial statements for the year ended March 31, 2007 except re-organization and actual allotment of share capital which has been given effect to these financial statements.

5. Cash Flow Statement does not have figures for corresponding previous year ended March 31, 2007 as the Company prepared the Consolidated Financial Statement of the group for the first time for the year ended March 31, 2007.

6. We report that the Consolidated Financial Statements have been prepared by the Group in accordance with the requirements of the Accounting Standard (AS) 21 “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India and on the basis of the separate audited financial statements of the Company and its subsidiaries.

7. Based on our audit and on consideration of the reports of other auditor on separate financial statements of the subsidiary, and on the basis of information and explanations given to us, we are of the opinion that the attached Consolidated Financial Statements, subject to matters stated in (5) above, give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) In the case of the Consolidated Balance Sheet, of the consolidated state of affairs of the Group as at March 31, 2008;

(b) In the case of the Consolidated Profit and Loss Account, of the consolidated results of operations of the Group for the year ended on that date.

(c) In the case of Consolidated Cash Flow Statement, of the consolidated cash flows of the Group for the year ended on that date.



Place: MumbaiDated: June 18, 2008

74






Consolidated Balance Sheet as at March 31,

Notes 2008 2007SOURCES OF FUNDS

Shareholders’ FundsShare Capital 2 428,222,803 428,222,803Reserves and Surplus 3 - -

428,222,803 428,222,803Loan FundsSecured Loans 4 684,003,261 1,444,967,354Unsecured Loans 5 4,761,165,574 485,097,726

5,445,168,834 1,930,065,080Deferred Tax Liability (Refer Note 28.3) 7,885,920 6,857,971

TOTAL 5,881,277,557 2,365,145,854


Fixed AssetsGross Block 6 9,119,469,678 6,580,023,774Less : Depreciation/Amortization upto date 2,313,562,186 742,888,739

Net Block 6,805,907,492 5,837,135,035Captial Work-in-Progress 2,793,245,265 2,447,684,983

9,599,152,757 8,284,820,018

Investments 7 25,500 25,500

Current Assets, Loans and AdvancesInventories 8 58,316,913 11,762,339Sundry Debtors 9 403,181,196 418,392,509Cash and Bank Balances 10 511,450,026 127,772,394Loans and Advances 11 1,876,085,180 1,555,116,232

2,849,033,315 2,113,043,474Less: Current Liabilities and Provisions 12Current Liabilities 11,665,103,128 9,009,876,295Provisions 40,552,042 20,312,202

11,705,655,170 9,030,188,497Net Current Assets (8,856,621,855) (6,917,145,023)

Profit and Loss Account 13 5,138,721,155 997,445,359

TOTAL 5,881,277,557 2,365,145,854


75

Consolidated Profit and Loss Account for the year ended March 31, Notes 2008 2007INCOME

Sales and Services 14 4,122,454,205 1,916,253,400

Other Income 15 39,306,525 46,190,493

4,161,760,730 1,962,443,893

EXPENDITURE

Cost of Goods Sold 16 202,324,986 5,407,941

Operating Expenses 17 3,331,749,154 2,202,080,893

Personnel Cost 18 420,423,472 220,133,221

Administration and Other Expenses 19 438,817,597 294,881,322

Selling and Distribution Expenses 20 1,818,931,101 899,337,592

Financial Expenses (Net) 21 513,192,370 117,869,722

Depreciation/Amortization 6 1,570,328,787 623,625,999

8,295,767,467 4,363,336,690

Profit/(Loss) Before Tax (4,134,006,737) (2,400,892,797)

Provision for Taxation - Current Tax - -

- Deferred Tax (Refer Note 28.3) 1,027,949 (2,903,037)

- Wealth Tax 50,911 57,856

- Fringe Benefit Tax 6,092,057 2,660,784

- Short Provision for earlier years 98,142 -

Profit/(Loss) After Tax (4,141,275,796) (2,400,708,400)

Balance Brought Forward (2,693,302,157) (3,561,186,931)

Less: Transfer to Restructuring Account (Refer Note 26) - 3,268,593,174

Balance Carried to Balance Sheet (6,834,577,953) (2,693,302,157)

Basic and Diluted Earnings Per Share of Re. 1 (Refer Note 36) (9.67) (5.61)







76

2008 20072. SHARE CAPITAL (Refer Note 26) Authorized 730,000,000 Equity Shares of Re 1 each 730,000,000 730,000,000

Issued, Subscribed and Paid-up 428,222,803 (715,687,650) equity shares of Re. 1 each fully paid up 428,222,803 715,687,650

Of the above 249,300,890 Equity Shares of Re. 1 each fully paid up were alloted for consideration other than cash pursuant to the Scheme of Arrangement (Refer Note 26)

Share Capital Suspense - (287,464,847) TOTAL 428,222,803 428,222,803

3. RESERVES AND SURPLUS Securities Premium : (Refer Note 26) As per Last Balance Sheet - 3,728,245,250 Less: Transferred to Restructuring Account - 3,728,245,250 - - General Reserves: (Refer Note 26) As per Last Balance Sheet 1,695,856,798 - Transfer from Restructuring Account pursuant to the Scheme - 1,698,096,658 Less: Adjustment pursuant to transitional provisions as per AS-15 - 2,239,860 1,695,856,798 1,695,856,798

Less: Debit balance in Profit and Loss Account per contra 1,695,856,798 1,695,856,798

- - TOTAL - -

4. SECURED LOANS (For Security and other details Refer Note 27) Short Term Loan from Bank - 750,000,000 Bridge Loan from Bank 604,780,715 604,780,715 Cash Credit from Bank 75,872,009 75,725,609 Vehicle Loan 3,350,537 7,454,180 Interest accrued and due - 7,006,850 TOTAL 684,003,261 1,444,967,354

5. UNSECURED LOANS (Refer Note 27) Term Loan from Bank 351,714,000 - Short Term Loan from Bank 800,000,000 250,000,000 Inter Corporate Deposit 3,458,483,000 233,383,000 Interest accrued and due 150,968,574 1,714,726 TOTAL 4,761,165,574 485,097,726


Notes to Consolidated Balance Sheet as at March 31,

77

6. FIXED ASSETS (AT COST)


Particulars GROSS BLOCK DEPRECIATION / AMORTIZATION NET BLOCK

As at01.04.2007 Additions* Sale/

AdjustmentAs at

31.03.2008Up to

01.04.2007For The Year**

Sale/ Adjustment

Up to31.03.2008

As at31.03.2008

As at31.03.2007

Intangible Assets

Goodwill 451,177,637 - - 451,177,637 22,558,882 90,235,527 - 112,794,409 338,383,228 428,618,755

Licence fees 100,000,000 - - 100,000,000 35,000,000 10,000,000 - 45,000,000 55,000,000 65,000,000

Software 174,181,263 1,476,232 - 175,657,495 28,037,244 42,248,475 - 70,285,719 105,371,776 146,144,019

Total (A) 725,358,900 1,476,232 - 726,835,132 85,596,126 142,484,002 - 228,080,128 498,755,004 639,762,774

Tangible Assets

Plant and Machinery 1,086,889,538 295,921,654 - 1,382,811,192 189,083,324 164,146,190 - 353,229,514 1,029,581,678 897,806,214

Consumer Premises Equipments

4,702,919,004 2,189,823,766 - 6,892,742,770 454,106,696 1,253,716,241

- 1,707,822,937 5,184,919,833 4,248,812,308

Computers 19,313,311 13,945,889 - 33,259,200 5,475,170 4,255,971 - 9,731,141 23,528,059 13,838,141 Office Equipments 9,080,554 28,843,980 - 37,924,534 1,700,558 1,036,132 - 2,736,690 35,187,844 7,379,996

Furniture and Fixtures 6,278,062 7,915,975 - 14,194,037 1,166,877 760,296 - 1,927,173 12,266,864 5,111,185

Vehicles 24,688,175 - 614,439 24,073,736 3,061,090 2,617,450 50,375 5,628,165 18,445,571 21,627,085

Leasehold Improvements 5,496,230 2,132,847 - 7,629,077 2,698,898 1,707,540 - 4,406,438 3,222,639 2,797,332

Total (B) 5,854,664,874 2,538,584,111 614,439 8,392,634,546 657,292,613 1,428,239,820 50,375 2,085,482,058 6,307,152,488 5,197,372,261

Current Year (A+B) 6,580,023,774 t2,540,060,343 614,439 9,119,469,678 742,888,739 1,570,723,822 50,375 2,313,562,186 6,805,907,492 5,837,135,035

Previous Year 878,205,110 5,725,009,416 23,190,752 6,580,023,774 79,648,935 671,762,878 8,523,074 742,888,739 5,837,135,035


2008 20077. INVESTMENTS Long Term (At Cost) - Unquoted (Non-Trade) NSC VIII issue 25,500 25,500 (Pledge with Sales Tax Authorities)

25,500 25,500

Aggregate Book value of unquoted investments 25,500 25,500

8. INVENTORIES (As taken,valued and certified by the management) Stock in Trade 58,316,913 11,762,339

TOTAL 58,316,913 11,762,339

9. SUNDRY DEBTORS (Unsecured, considered good unless otherwise stated) More than Six Months [(Include doubtful of Rs.18,788,469 (Rs.13,161,188)] 341,720,260 56,397,146 Others [Includes doubtful Rs.16,160,689 [(Rs.42,288,389)] 96,410,094 417,444,940

TOTAL 438,130,354 473,842,086

Less: Provision for Doubtful Debts 34,949,158 55,449,577

TOTAL 403,181,196 418,392,509

Notes:

(1) * Previous year includes transfer of assets Rs. 422,683,490, pursuant to the Scheme of Arrangement (Refer Note 26) and assets Rs. 1,954,674,773 aquired under Slump Sale.

(2) ** Previous year includes Rs.47,567,308 on transfer of assets pursuant to the Scheme of Arrangement (Refer Note 26)

(3) Details of assets given on Operating Lease is given in Note 34.2

(4) Depreciation for the year includes Rs.395,035 (Rs.569,571) taken to pre-operative expenses (Refer Note 30.4 )

78



2008 200710. CASH AND BANK BALANCES Cash in Hand 1,633,710 183,072 Balance with Scheduled Banks : In Current Account 125,405,918 63,564,790 In Short Term Deposit Account 289,210,111 - In Fixed Deposit [Pledged with banks & others Rs. 67,014,663 (Rs.64,019,532)] 67,019,663 64,024,532 In Margin Account 28,000,000 - Cheques in hand 180,624 - TOTAL 511,450,026 127,772,394

11. LOANS AND ADVANCES (Unsecured, considered good unless otherwise stated) Loans 901,507,002 849,767,351 Other Advances (recoverable in cash or in kind for value to be received) 2,138,611,064 1,914,639,496 Deposits 62,010,421 16,752,694 3,102,128,489 2,781,159,541 Less: Provision for Doubtful Advances 1,226,043,309 1,226,043,309 TOTAL 1,876,085,180 1,555,116,232

12. CURRENT LIABILITIES AND PROVISIONS Current Liabilities Creditors for Goods 491,025,136 886,017,159 Creditors for Expenses and Other LTiabilities 4,140,396,313 3,138,253,120 Interest Accrued but not due 12,317,246 4,019,923 Advances/Deposits Received 7,021,364,433 4,981,586,093 11,665,103,128 9,009,876,295 Provisions For Taxation 18,227,731 9,322,892 For Retirement Benefits 22,324,311 10,989,310 40,552,042 20,312,202

TOTAL 11,705,655,170 9,030,188,497

13. PROFIT AND LOSS ACCOUNT Balance as per Profit and Loss Account 6,834,577,953 2,693,302,157 Less: Adjusted against General Reserves per contra 1,695,856,798 1,695,856,798

TOTAL 5,138,721,155 997,445,359

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2008 200714. SALES AND SERVICES Income from DTH Subscribers : Subscription Income 3,288,419,875 1,219,008,658 Lease Rentals 603,614,861 217,848,880 Other DTH Revenue - 1,274,760 Income from Content Providers: Placement and Active Services - 359,214,740

Teleport Services 112,174,801 104,888,339 Sales 114,227,808 6,915,600 Call Center Charges 4,016,860 5,721,085 Other Services - 1,381,338

TOTAL 4,122,454,205 1,916,253,400

15. OTHER INCOME Exchange Difference (Net) 27,790,286 25,722,563 Profit on redumption of units of Mutual Funds 2,486,905 - Other Income 9,029,335 20,467,930

TOTAL 39,306,525 46,190,493

16. COST OF GOODS SOLD Opening Stock 11,762,339 5,086,539 Purchases 248,879,560 12,083,741 260,641,899 17,170,280

Less: Closing Stock 58,316,913 11,762,339

TOTAL 202,324,986 5,407,941

17. OPERATING EXPENSES Transponder Lease 344,861,522 338,307,289 License Fees 406,844,958 156,129,868 Uplink Charges 69,190,102 60,459,416 Programming and Other Costs 2,339,111,148 1,584,964,409 Entertainment Tax 73,803,895 11,754,420 Other Operating Charges 97,937,529 50,465,491

TOTAL 3,331,749,154 2,202,080,893

18. PERSONNEL COST

Salary and Allowances 381,066,840 199,766,596

Contribution to Provident and Other Funds 23,124,372 12,400,052

Staff Welfare 14,099,334 5,477,896

Recruitment and Training Expenses 2,132,926 2,488,677 TOTAL 420,423,472 220,133,221

Notes to Consolidated Profit and Loss Account for the year ended March 31,

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2008 2007

19. ADMINISTRATION AND OTHER EXPENSES Rent 29,801,713 9,310,128 Rates and Taxes 442,483 36,441 Electricity Charges 13,154,429 8,844,617 Insurance 3,383,579 1,254,732 Repairs and Maintenance - Plant & Machinery 13,984,845 1,051,928 - Building 3,599,818 2,387,600 - Others 9,462,843 6,084,008 Vehicles Expenses 3,078,832 2,608,178 Legal and Professional Fees 42,976,764 20,960,786 Director Sitting Fees 410,000 40,000 Printing and Stationary 20,276,505 13,211,752 Communication Expenses 120,737,815 61,756,740 Traveling and Conveyance 57,933,564 39,739,346 Freight, Cartage & Demurrage 33,265,210 26,656,060 Service & Hire Charges 29,812,564 11,517,738 Miscellaneous Expenses 39,331,918 18,146,211 Bad Debts 21,504,607 Less: Transfer from Provision for Bad Debts 20,500,419 1,004,188 161,252 Provision for Doubtful Debts & Advances - 57,694,388 Premilinary Expenses written off - 16,415 Balance Written off (Net) 1,061,334 - Loss on sale/discard of Fixed Assets 15,099,193 13,403,002

TOTAL 438,817,597 294,881,322

20. SELLING AND DISTRIBUTION EXPENSES Advertisement and Publicity Expenses 969,073,221 535,334,318 Business Promotion Expenses 20,745,386 8,362,642 Commission 758,600,910 330,069,366 Customer Support Service 70,511,584 25,571,266

TOTAL 1,818,931,101 899,337,592

21. FINANCIAL EXPENSES (NET) Interest on: - Fixed Loan 258,636,456 71,311,992 - Others 275,514,499 72,032,108 534,150,955 143,344,100 Less : Interest Received (Gross) 65,404,457 58,225,618 468,746,498 85,118,482 Bank and Other Financial Charges 44,445,872 32,751,240

TOTAL 513,192,370 117,869,722

Notes to Consolidated Profit and Loss Account for the year ended March 31,


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1. SIGNIFICANT ACCOUNTING POLICIES (a) Accounting Convention: i. The Group generally follows mercantile system of accounting and recognizes income and expenditure on accrual basis

except those with significant uncertainties. ii. The financial statements have been prepared under the historical cost convention and in accordance with the accounting

standards referred to in Section 211 (3C) of the Companies Act, 1956. (b) Fixed Assets: I. Intangible fixed assets i. The Group capitalizes Software and related implementaion costs are intangible assets, where it is reasonably

estimated that the software has an enduring useful life. ii. License fees paid for acquiring license to operate Direct to Home (DTH) services are capitalize as intangible

asset. II. Tangible fixed assets i. Tangible fixed assets are stated at Cost less accumulated depreciation. Cost includes capital cost, freight, installation

cost, duties and taxes and other incidental expenses incurred during the construction/installation stage attributable to bringing the assets to working condition for its intended use.

ii. All capital costs and incidental expenditure incurred during the pre operational period and advances paid for capital expenditure are shown as Capital work-in-progress.

iii. Customer premises equipments are being capitalized on activation. (c) Depreciation/Amortization: i. Depreciation is provided on tangible fixed assets including leased assets at the rates adopted in the accounts of respective

subsidiaries as permissible under law, on straight line method from the time they are available for use, so as to write off their cost over estimated useful life of the assets.

ii. Leasehold Improvements are amortized over the period of primary lease. iii. Goodwill on acquisition is amortised over a period of five years. iv. Computer Software are amortized based on managements estimate of useful life of five years or license period whichever

is shorter. v. License fee is amortized over the period of license. (d) Revenue Recognition: i. Subscription revenue is recognized on the completion of the services. ii. Lease Rentals is recognized in terms of the operating lease agreements. iii. Income from other services are recognized on the completion of services. Period based services are accounted

proportionately over the period of service. iv. Sale of goods are recognized when risk and rewards of ownership are passed on to the customer, which is generally on

dispatch of goods. (e) Investments: i. Investment intended to be held for more than one year from the date of acquisition are classified as long term investment

and are carried at cost. Provision for diminution in value of these investments is made to recognize a decline other than temporary.

ii. Current investments are stated at cost or fair value whichever is lower. (f) Inventories: Inventories are valued at lower of cost or net realizable value and cost is determined on weighted average basis. (g) Retirement Benefits: i. Defined Contribution Plan In respect of retirement benefits in the form of provident fund, the contribution payable by the Company is charged to Profit

and Loss account for the year.


Notes to Consolidated Financial Statements as at March 31, 2008

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ii. Defined Benefit Plan

The Present value of defined benefit obligation and the related current service cost are measured using the projected unit credit methods with actuarial valuation being carried out at each balance sheet date. The defined benefit obligations are not funded except in case of two Indian subsidiaries.

Leave encashment:

Liability for leave encashment is provided on the basis of actuarial valuation at the balance sheet date.

Gratuity:

Liability for gratuity for the year is provided on the basis of actuarial valuation, as per defined benefit retirement plan covering eligible employees. The plan provides payment, to vested employees retirement, death or termination of employment of an amount based on the respective employee’s salary and the terms of employment with the Company. In case of two Indian Subsidiaries, the gratuity benefit is provided through annual contribution to a fund managed by the Life Insurance Corporation of India (LIC).

(h) Employees Stock Option Scheme:

In respect of stock option granted pursuant to the Company’s Stock Options Scheme, the intrinsic value of the option is treated as discount and accounted as employee compensation cost over the vesting period.

(i) Foreign Currency Transactions:

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currency are translated at the exchange rate prevailing at the balance sheet date and gains or losses on translation are recognized in Profit and Loss account. Non monetary foreign currency items are carried at cost.

(j) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as a part of such assets. All other borrowing costs are charged to revenue.

(k) Taxes on Income:

Tax expense comprise of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured as the amount expected to be paid to the tax authorities in accordance with Indian Income Tax Act for the period. Deferred Tax is recognized, subject to consideration of prudence, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and measured using relevant enacted tax rates. At the balance sheet date the Company assesses unrealized deferred tax assets to the extent they become reasonably certain or virtually certain of realization, as the case may be.

(l) Operating Lease:

Lease of the assets where all the risk and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments/revenue under operating lease are recognized as an expense/income on accrual basis in accordance with respective lease agreement.

(m) Earning Per Share:

Basic earnings per share is computed and disclosed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed and disclosed using the weighted average number of common and dilutive common equivalent share outstanding during the period except where the result would be anti dilutive.

(n) Impairment:

At each Balance Sheet date, the Company reviews the carrying amount of fixed assets to determine whether there is an indication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount of assets is estimated in order to determine the extent of impairment loss. The recoverable amount is higher of the net selling price and value in use, determined by discounting the estimated future cash flows expected from the continuing use of the asset to their present value.

(o) Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes to accounts. Contingent Assets are neither recognized nor disclosed in the financial statements.


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22. BACKGROUND Dish TV India Limited (herein referred to as “the parent company”, “the company” or “Dish”) along with its subsidiaries (collectively

known as “the Group”) encompassing the Direct to Home (DTH) Satellite Television Service which includes teleport service, customer support, transponder space leasing etc.

The group derives revenue mainly from subscription from customers, lease rent on customer premises equipment and teleport services.

23. USE OF ESTIMATES The preparation of the CFS in accordance with the Generally Accepted Accounting Principles requires the management to make estimates

and assumption that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from those estimates. Any revision to estimates is recognized prospectively in the current and future periods.

24. GOING CONCERN The accompanying CFS has been prepared assuming that the Company will continue as a going concern. The management believes

that it is appropriate to prepare these financial statements on a ‘going concern’ basis, for the following reasons: 24.1 The Company hold DTH license from Government of India for a considerable long time. 24.2 The Company is the first to launch DTH services in India. This type of business necessitates long gestation period to stand in

its feet. Being first mover, the Company has incurred huge expenses on awareness of the product, brand building on a pan India basis. The benefit of these expenses will accrue in the future years.

24.3 The Promoters are fully seized of the matter and is of the view that going concern assumption holds true and that the company will be able to discharge its liabilities in the normal course of business. The Company would be able to meet its fund requirements with various funding options including debts. Hence no adjustment is required on account of re-classification of assets and liabilities for the going concern assumption.

24.4 In the case of one subsidiary, its management has decided in earlier years to close the major part of the business operations of the subsidiary. In view of the closure plan, the fixed assets, current assets, loans & advances have been carried at estimated net realizable value.

25. BASIS OF CONSOLIDATION 25.1 The Consolidated Financial Statements (CFS) of the Group are prepared under the historical cost convention in accordance

with Generally Accepted Accounting Principles in India and the Accounting Standard (AS) 21 on “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India (ICAI), to the extent possible in the same format as that adopted by the parent company for its separate financial statements by regrouping, recasting or rearranging figures wherever considered necessary. The significant inconsistencies in accounting policies are disclosed wherever applicable and no adjustment are made in CFS for such inconsistencies.

The consolidation of the financial statements of the parent company and its subsidiaries is done to the extent possible on line to line basis by adding together like items of assets, liabilities, income and expenses. All significant intra group transactions, balances and unrealized inter company profits have been eliminated in the process of consolidation.

25.2 The parent company and its subsidiaries prepare its financial statements under the historical cost convention, in accordance with Generally Accepted Accounting Principles (GAAP) prevalent in India.

25.3 The CFS includes the financial statements of the parent company and the subsidiaries (all Indian companies) as listed in the table below. Subsidiaries are consolidated from the date on which effective control is acquired and are excluded from the date of transfer/disposal.

Name of the Subsidiaries Extent of holding %Integrated Subscribers Management Services Limited 100.00Agrani Convergence Limited 51.00Agrani Satellite Services Limited 100.00

25.4 Minority interest in subsidiary represents the minority shareholders proportionate share of the net assets and net income.26. THE SCHEME OF ARRANGEMENT The Scheme of Arrangement (the Scheme) under Section 391 to 394 read with Section 78, 100 and other applicable provisions of

the Companies Act, 1956 between Zee Entertainment Enterprises Limited (ZEEL) (formerly known as Zee Telefilms Limited), Siti Cable Network Limited (SITI) and New Era Entertainment Network Limited (NE) and Dish TV India Limited (the Company) (formerly



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known as ASC Enterprises Limited) and their respective shareholders have been sanctioned by the Hon’ble High Court of Judicature at Mumbai and High Court of Judicature at New Delhi vide their respective Order dated January 12, 2007 and December 18, 2006 and a copy of these orders have been filed with the respective Registrar of Companies on January 17, 2007 and January 19, 2007 respectively. The Scheme has been given effect in the financial statements for the year ended March 31, 2007 except actual allotment and reorganization of shares capital which have been given effect in financial statements of the current year.

26.1 Pursuant to the Scheme, Direct Consumer Services undertaking (DCS) of ZEEL including investment made by ZEEL in SITI and the entire business and whole of the undertaking of the transferor Companies i.e. SITI and NE have been transferred to and vested in the Company on appointed date i.e. April 1, 2006 on going concern basis. The assets and the liabilities of DCS undertaking of ZEEL at book value and of SITI and NE at fair value accounted on Purchases Method as per Accounting Standard-14 have been transferred to and vested in the Company as under:-

Particulars DCS undertaking of ZEEL SITI NEA) Total Assets 1,711,952,382 1,011,848,726 1,141,414,519

B) Total Liabilities 326,344,525 1,436,432,541 1,131,594,945

Surplus/(Deficit) (A-B) 1,385,607,857 (424,583,815) 9,819,574

26.2 Reorganization of Share Capital

Pursuant to the Scheme, effect for allotment, cancellation, reduction of share capital had been considered in the financial statements for the year ended March 31, 2007 and the resultant amount of Rs. 287,464,847 was taken to Share Capital Suspense. The actual allotments of shares after reorganization of share capital have been taken place during the current year.

27. SECURED/ UNSECURED LOANS

Secured Loans:

27.1 Short Term Loan Rs.Nil (Rs.750,000,000) was secured by hypothecation by way of first pari passu charge on all the current assets including goods, stocks and all other such article and book debts, receivables, investments, present and future, corporate guarantee of a related party.

27.2 Bridge Loan of Rs. 604,780,715 (Rs. 604,780,715) is secured by hypothecation of all movable properties including movable plant and machinery, machinery spares, tools and accessories, book debts etc., present and future, and corporate guarantee of a related party and pledge of certain shares held by the promoters in the Company.

27.3 Cash Credit of Rs. 75,872,009 (Rs. 75,725,609) is secured by first pari passu hypothecation charge on moveable fixed assets of the Company and pledge of shares by related parties.

27.4 Vehicle loans are secured against hypothecation of vehicles (ROC charge not registered) (amount repayable within a year Rs. 2,637,922).

Unsecured Loans:

27.5 Foreign currency arrangement of buyer credit from bank for capital expenditure Rs.351,714,000 (Rs. Nil) is against guarantee of a related party.

27.6 Loan from bank Rs. 800,000,000 (Rs. Nil) is ranking pari passu in all respect with all other, present and future, senior, unsecured and unsubordinated obligation of the company. A reserve account is maintained to provide cover for three months interest on outstanding loan. Related party of the Company is required to provide negative pledge of shares of the Company held by them.

27.7 Loan from Bank Rs. NIL (Rs.250,000,000) was backed by corporate guarantee from a related party.

28. TAXES ON INCOME

28.1 In view of the losses incurred by the Company and its subsidiaries, no provision for current tax is made.

28.2 In accordance with the Accounting Standards-22 on “Accounting for Taxes on Income” issued by The Institute of Chartered Accountants of India, deferred tax assets and liability should be recognized for all timing difference in accordance with the said standard. However considering the present financial position and requirements of the accounting standard regarding certainty/virtual certainty, the same is not provided for by the group except by one subsidiary.

28.3 The component of the deferred tax balance in respect to one subsidiary are as under:-



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Particulars 2008 2007Deferred Tax AssetsFiscal Allowances carried forward 9,23,55,280 63,232,296Total 9,23,55,280 63,232,296Deferred Tax LiabilitiesDepreciation 10,02,41,200 70,090,267Total 10,02,41,200 70,090,267Deferred Tax Balances (Net)- Liability 78,85,920 6,857,971

29. INVESTMENTS Detail of current investments (Mutual Funds) bought and sold during the current year:

Particulars No. of Units Face Value Total Purchase Cost

DSP Merrill Lynch Liquid Plus Institutional Plan Growth 46,817.128 1,000 50,000,000DSP ML Strategic Bond Fund- Institutional - Growth 248,783.746 1,000 250,000,000DSP Merrill Lynch Liquidity Fund- Institutional Growth 90,119.870 1,000 100,000,000DSP Merrill Lynch Liquidity Fund- Institutional Growth 134,693.365 1,000 150,000,000DSP Merrill Lynch Liquidity Fund- Institutional Growth 71,836.461 1,000 80,000,000DSP Merrill Lynch Cash Plus Fund-Regular-Growth 19,691.288 1,000 20,000,000

30. CAPITAL WORK IN PROGRESS 30.1 Capital Work in Progress comprises of equipments [including customer premises equipment (CPE)], capital goods in

transit, capital advances and pre-operative project expenses (to be eventually allocated to fixed assets on commencement of commercial production). The CPE are subject to physical verification and reconciliation.

30.2 Includes goods in transit Rs. 447,758,162 (Rs. 361,460,373). 30.3 Includes capital advances of Rs. 128,206 (Rs. 1,655,842). 30.4 Includes preoperative expenses of Rs.1,259,771,320 (Rs.1,249,268,084) related to one of the subsidiaries which is

implementing the satellite service project, as per detail given below. All the expenses for implementing the satellite project are taken to preoperative expenses. These are to be eventually allocated to fixed assets, on commencement of commercial operations.

Particulars 2008 2007Expenditure up to Previous Year 1,249,268,084 1,239,376,230Salary and Allowances 7,600,274 5,200,579Contribution to Provident and Other Funds 339,216 305,944Staff Welfare Expenses 101,258 129,648Rent 510,363 546,323Rates and Taxes 12,300 -Insurance 18,037 18,842Communication Expenses 122,863 129,739Electricity Charges 71,945 95,350Printing and Stationery 45,095 56,443Repairs and Maintenance-Others - 2,171Legal and Professional Expenses 3,167,468 9,979Traveling and Conveyance Expenses 1,133,384 701,704Depreciation 395,035 569,571Loss on Sale/Discard of Fixed Assets - 150,998Miscellaneous Expenses (Net) (71,046) 232,743



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Particulars 2008 2007Remuneration to Auditors

For Audit FeesFor Other Matter

173,03440,786

112,360159,344

Other Financial Charges 2,434,212 1,897,340 Business Promotion Expenses 24,600 55,205 Provision for Fringe Benefit Tax 82,481 79,912 Provision for Income Tax 2,934,059 - 1,268,403,448 1,249,830,426Less: Interest Received 8,632,128 562,342 Total 1,259,771,320 1,249,268,084

31. OTHERS DISCLOSURES 31.1.1 Previous year figures have been regrouped, rearranged and recasted wherever considered necessary to confirm to current year

presentation. Figures in brackets pertain to previous year. The current year figures are not comparable with previous year figures as previous year figures includes transfer of undertaking pursuant to the Scheme of Arrangement (Refer Note 26).

31.1.2. Previous year was first year of consolidation hence cash flow statement for the previous year was not prepared. Accordingly there is no figure for corresponding previous year in cash flow statement.

31.2 Prior period expenses/income included in the respective expense heads are as under:

Particulars 2008 2007A. IncomeExchange Fluctuation - 560,051Lease Rentals - (222,033)Total Income - 338,018B. ExpensesProgramming and Other Cost 124,262 -Other Operating Charges 11,228,299 -License Fees - 7,935Electricity Charges 14,112 2,731Communication Expenses 107,293 1,200,256Professional Fees - 90,000Miscellaneous Expenses 1,714,914 49,175Business Promotion Expenses - 2,557,246Advertisement and Publicity Expenses 4,481,148 89,456Commission 8,695,650 1,223,221Traveling and Conveyance 139,825 42452Repairs and Maintenance-Plant & Machinery 890,370 -Interest (56,301) -Entertainment Tax 346,629 -Total Expenses 27,686,201 5,262,472Net-Income/(Loss) (27,686,201) (4,924,454)

31.3 As per the advice received and in terms of DTH license agreement, the Company has provided license fee on its revenue from DTH subscriber.

31.4 The assets, licenses and agreements etc. transferred pursuant to the Scheme of Agreement (Refer Note 26) are in the process of registration/transfer in the name of the Company.

31.5 Debit and Credit balances of parties including subscribers, distributors and dealers’ are subject to confirmation/ reconciliation and effect if any, will be considered on its determination.



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31.6 On the approval of Reserve of Bank of India is yet to be obtained for advances Rs. 1,203,430,395 relating to multi mission satellite system project considered as doubtful in earlier year.

31.7 Employee Stock Option Plan –ESOP-2007 The Company instituted the Employee Stock Option Plan – ESOP-2007 to grant equity- based incentives to its eligible

employees. The ESOP-2007 (“The Scheme”) had been approved by the Board of Directors of the Company at their meeting held on June 28, 2007 and by the shareholders of the Company by way of special resolution passed at their Annual General Meeting held on August 03, 2007, to grant aggregating 4,282,228 options (not exceeding 1% of the issued and paid up equity share capital of the Company as on March 31, 2007), representing one share for each option upon exercise by the employee of the Company at a exercise price determined by the Board/remuneration committee. The Scheme covers grant of options to the specified permanent eligible employees of the Company as well as of its subsidiaries and also to non-executive directors of the Company including independent directors. Pursuant to the Scheme, the Remuneration Committee has on August 21, 2007 granted 3,073050 options to specified eligible employees of the Company at the market price determined as per the SEBI Guidelines.

The options granted under the Scheme shall vest not less than one year and not more than five years from the date of grant of options. Under the terms of the Scheme, 20% of the options will vest in the employee every year equally. The Option grantee must exercise all vested options within a period of four years from the date of vesting. Once the options vest as per the Scheme, they would be exercisable by the Option Grantee at any time and the shares arising on exercise of such options shall not be subject to any lock-in period.

The movement in the options granted to the Employee during the year is set out below:-

Particulars Grant of OptionsDate of Grant August 21, 2007Market price on date of grant of the options (per share) Rs.75.20Exercise Price Rs.75.20Vesting Period Five YearsOptions Granted (Nos.) 3,073,050Option Lapsed (Nos.) 146,900

Options Forfeited (Nos.) NILOptions Exercised NILOptions Expired NIL Options Outstanding at end of the period (Nos.) 2,926,150Options exercisable at the end of the period NIL

The Company has granted options to the employees at a exercise price of Rs. 75.20 per share being the latest market price as per SEBI Guidelines. In view of this, there being no intrinsic value (being the excess of the market price of share under ESOS over the exercise price of the option), on the date of grant the Company is not required to account the accounting value of options as per SEBI Guidelines

32. CAPITAL COMMITMENT Estimated amount of contract remaining to be executed on capital account and not provided for (Net of advance) is

Rs. 445,392,675 (Rs.452, 307,175).33. CONTINGENT LIABILITY NOT PROVIDED FOR

Particulars 2008 2007

Guarantees given by Banks #[Includes Rs. 490,860,000 (Rs. 400,000,000) guarantee by a related party]

605,640,000 501,110,000

Corporate Guarantees given on behalf of others - 24,000,000

Claim against the Company not acknowledged as debt (Refer Note 33.5) 47,984,590 99,144,271

Legal cases against the Company Unascertained Unascertained


33.1


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33.2 The Entertainment Tax Authorities, Noida has raised a demand of Rs. 40,459,628 on account of entertainment tax for the period from November, 2003 to February, 2004. The Company has filed petition against the demand, which is pending. Further the authorities have intimated a total demand of Rs. 92,019,941 till March, 2007.

33.3 Entertainment Tax demand Rs. 8,835,967 (estimated on the basis of various notices issued from time to time) raised by various Entertainment Tax Authorities of Uttrakhand State have been challenged and the petition is pending before the High Court. The demand has been stayed by the High Court. Notice for further period has been issued wherein the demand has not been quantified.

33.4 The Company has given a guarantee for the performance of the term and conditions of satellite capacity agreement between a subsidiary of the Company namely Agrani Satellite Services Limited and the vendor which is strategically important for the business of the Company.

33.5 One of the subsidiary company has received a demand notice from Sales Tax Authorities amounting to Rs. 96,000,000 against which the Sales Tax Authorities had recovered Rs. 2,231,244 directly by attaching company’s bank account. This liability was disputed by the Company and appeal filed before the appellate authorities and the said demand was cancelled by them. The Sales Tax Department issued refund orders for the amount recovered by them, which is under process.

34. OPERATING LEASE 34.1 In respect of assets taken on operating lease: The Group’s significant leasing arrangements are in respect of operating leases taken for offices, residential premises,

transponder etc. These leases are cancelable operating lease agreements that are renewable on a periodic basis at the option of both the lessee and the lessor. The initial tenure of the lease generally is for 11 months to 120 months. The details of assets taken on operating lease during the period are as under:

Particulars 2008 2007Lease rental Charges for the period (Net of shared cost) 443,853,337 404,096,137Sub-lease payment received 69,272,219 55,084,339Future Lease Rental obligation payable(Under non-cancelable lease)Not later than one year 48,314,693 141,119,343Later than one year but not later than five years 156,127,078 7,059,771More than five years 38,800,275 -

34.2 In respect of assets given under operating lease: The Group has leased out assets by way of operating lease and as on 31st March, 2008, the gross book value of such assets,

its accumulated depreciation and depreciation for the period is as given below. The total lease income for the period is Rs.603,614,861(Rs. 217,848,880).

Particulars 2008 2007Gross Value of the Assets 6,911,747,418 4,721,923,650Accumulated Depreciation 1,715,683,261 460,001,940Depreciation for the year 1,255,681,321 446,090,925

Particulars 2008 2007Future Lease Rental Receivable(Under non-cancelable lease)Not later than one year 737,178,825 455,600,471Later than one year but not later than five years 1,963,927,205 1,447,565,341More than five years - -

35. RELATED PARTY DISCLOSURES 35.1 List of parties where control exists • Agrani Satellite Services Limited. (Wholly Owned Subsidiary) • Integrated Subscribers Management Services Limited ( Wholly Owned Subsidiary) • Agrani Convergence Limited. (extent of holding 51%)



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35.2 Other Related Parties with whom transactions have taken place during the year and balances outstanding as on last date of the year:-

Smart Talk Private Limited, Essel Corporate Services Private Limited, Essel Agro Private Limited , Cyquator Technologiets Limited (now merged with Pan India Network Infravest Private Limited), Zee Entertainment Enterprises Limited, Pan India Network Infravest Private Limited, Pan India Paryatan Limited, Ayepee Lamitubes Limited, Rupee Finance & Management Private Limited, Procall Private Limited, Suncity Projects Limited, Afro-Asian Satellite Communication (Gibraltar) Limited, Afro-Asian Satellite Communication (U.K.) Limited, ASC Telecommunication Limited, Asia Today Limited, Asia TV Limited, Zee News Limited, Brio Academic, Zee Foundation, ITZ Cash Card Limited, Wire and Wireless India Limited, Dakshin Media Gamming Solutions Private Limited, Rama Associates Limited, Zee Turner Limited, Zee Interactive Learning Systems Limited(now known as ETC Networks Limited), Kenlott Gamming Solutions Private Limited, Zee Akash News Private Limited, E City Entertainment Private Limited, Zee Sports Limited, Bhilwara Telenet Services Private Limited, Quick Call Private Limited, ETC Networks Limited, Diligent Media Corporation Limited, Indian Cable Net Limited, PAN India Network Investment (P) Limited., Zee Multi-Media Worldwide Mauritus Limited, Interactive Tradex Private Limited, Ganjam Trading Co. Private Limited, Agrani Satellite Communication (Gib.)Limited, Essel Shyam Communication Limited, Essel Shyam Technology Limited, Churu Trading Company Private Limited, Agrani Telecom Limited.

Directors/Key Management Personnel Mr. Subhash Chandra, Mr. Jawahar Lal Goel, Mr. Ashok Kurien, Mr. B.D.Narang and Mr. Arun Duggal (all appointed w.e.f. January 06, 2007), Mr. Pritam Singh (appointed w.e.f. April 27, 2007 ) Mr. Eric Zinterhofer (appointed w.e.f. October 22, 2007) 35.3 Transaction with Related Parties:


TotalAmount

Amount forMajor Parties

TotalAmount

Amount for Major Parties

With Other Related Parties: Sales, Services & Recoveries (Net of Taxes) 126,110,426 472,662,850 Zee Entertainment Enterprises Limited 21,354,832 178,322,015 Zee News Limited 30,084,754 71,144,836 Asia Today Limited 41,957,245 34,896,965 Asia TV Limited - 24,804,575 Zee Turner Limited 637,313 74,521,483 Others 32,076,282 88,972,976 Purchase of Goods & Services 1,002,581,936 987,774,125 Zee Turner Limited 554,986,614 802,522,247 Zee Entertainment Enterprises Limited 129,582,157 67,452,464 ITZ Cash Card Limited 104,169,574 25,566,444 Essel Agro Private Limited 142,662,558 71,025,412 Others 71,181,033 21,207,558 Rent Paid 14,099,123 5,571,943 Zee Entertainment Enterprises Limited 10,629,057 4,334,364 E-City Entertainment (I) Private Limited 1,151,186 1,237,579 Rama Associates Limited 2,318,880 - Interest Paid 242,554,574 52,012,364 Zee Entertainment Enterprises Limited 197,480,875 49,624,805 Rupee Finance & Management Private Limited 40,143,443 951,369



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TotalAmount


TotalAmount


Others 4,930,256 1,436,190 Donation - 2,500,000 Zee Foundation - 2,500,000 Interest Received 59,289,178 52,818,343 Essel Agro Private Limited 50,217,631 46,017,716 ASC Telecommunication Limited 8,644,633 6,800,627 Wire & Wireless India Limited 426,914 - Purchase of Fixed Assets 38,872,627 728,933,910 Wire & Wireless India Limited 38,872,627 2,960,558 Zee Entertainment Enterprises Limited - 725,646,020 Others - 327,332 Sale of Fixed Assets - - 596,151 Agrani Telecom Limited - 596,151 Loan, Advance and Deposit Taken 7,879,090,000 642,127,830 Zee Entertainment Enterprises Limited 3,177,000,000 326,324,604 Churu Trading Company Private Limited 3,000,000,000 - Wire & Wireless India Limited 21,750,000 105,300,000 Rupee Finance & Management Private Limited 1,680,000,000 210,000,000 Others 340,000 503,226 Repayment of Loan, Advance and Deposit Taken

4,632,015,000 292,248,860

Essel Agro Private Limited - 25,000,000 Zee Entertainment Enterprises Limited 2,900,000,000 -Wire & Wireless India Limited - 105,300,000 Rupee Finance & Management Private Limited 1,730,000,000 160,000,000 Others 2,015,000 1,948,860 Loan, Advance and Deposit Given 27,381,062 423,640,989 Intrex India Limited 26,706,726 - Essel Agro Private Limited - 313,645,898 ASC Telecommunication Limited - 94,100,000 Others 674,336 15,895,091 Refund Received against Loan, Advance and Deposit Given

4,096,207 250,878,245

ASC Telecommunication Limited 1,500,000 15,511,319 Essel Agro Private Limited 1,800,000 231,282,175 Others 796,207 4,084,751 Amount Written Off 456,024 - Zee Turner Limited 456,024 - Corporate Guarantee Given - 24,000,000 Procall Private Limited - 20,000,000 Quick Call Private Limited - 1,500,000



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Particulars 2008 2007

TotalAmount


TotalAmount


Smart Talk Private Limited - 1,500,000 Bhilwara Telenet Services Limited - 1,000,000 Corporate Guarantee received 622,700,000 2,224,030,715 Zee Entertainment Enterprises Limited 622,700,000 2,224,030,715 Release of Corporate Guarantee received 1,000,000,000 - Zee Entertainment Enterprises Limited 1,000,000,000 - Provision for Doubtful Advances - 8,030,768 Brio Academic - 7,950,000 Others - 80,768

Assets & Liabilities Received Pursuant to Scheme of Arrangement DCS undertaking of Zee Entertainment Enterprises Limited

- 1,385,607,857

Total Assets - 1,711,952,382 Total Liabilities - 326,344,525 Siti Cable Network Limited - - (424,583,815) Total Assets - 1,011,848,726 Total Liabilities - 1,436,432,541 New Era Entertainment Network Limited - 9,819,574 Total Assets - 1,141,414,519 Total Liabilities - 1,131,594,945 Assets & Liabilities Received pursuant to Slump Sale Essel Agro Private Limited - (451,177,637) Total Assets - 1,524,900,220 Total Liabilities - 1,975,577,857 Purchase Consideration - 500,000 Remuneration to Key Management Personnel

61,74,000 1,462,787

Jawahar Lal Goel (Managing Diretor) 61,74,000 1,462,787Salary & Allowances - 1,014,833 Jawahar Lal Goel - 1,014,833 Balance at the end of period: With Other Related Parties: Loan, Deposit and Advances Given 2,540,505,488 2,399,134,909 Afro-Asian Satellite Comm. (UK) Limited 376,881,821 376,881,821 Afro-Asian Satellite Comm. (Gib.) Limited 827,708,050 827,708,050 Agrani Satellite Comm. (Gib.) Limited 3,840,524 3,840,524 ITZ Cash Card Limited 58,720,961 133,128,344 Essel Agro Private Limited 1,109,160,091 899,656,036 ASC Telecommunication Limited 150,680,888 143,982,455 Others 13,513,153 13,937,679



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TotalAmount


TotalAmount


Provision outstanding against advances given

1,216,461,163 -

Afro-Asian Satellite Comm. (UK) Limited 376,881,821 - Afro-Asian Satellite Comm.(Gib.) Limited 827,708,050 - Others 11,871,292 - Loan, Deposit and Advances Taken 3,698,130,941 245,408,006 Suncity Project Limited 2,700,000 2,700,000 Churu Trading Company Private Limited 3,004,065,574 - Kenlott Gaming Solutions Private Limited - 1,900,000 Ayepee Lamitube Limited 1,078,150 1,078,150 Zee Entertainment Enterprises Limited 432,382,802 - Wire & Wireless India Limited 21,750,000 3,806,065 Rupee Finance & Management Private Limited 40,366,648 50,636,570 Ganjam Trading Co. Private Limited 178,783,000 178,783,000 Others 17,004,767 6,504,221 Creditors for expenses and other liabilities 2,122,495,619 1,587,604,879 Zee Entertainment Enterprises Limited 862,981,201 739,969,149 Zee Turner Limited 1,182,619,515 800,633,181 Others 76,894,903 47,002,549 Debtors 386,541,354 375,699,888 Asia Today Limited 38,636,845 23,772,474 Asia TV Limited - 16,473,374 Zee News Limited 34,345,809 46,881,562 Zee Entertainment Enterprises Limited 193,104,959 193,321,888 Others 120,453,741 95,250,590 Corporate Guarantee Given - 24,000,000 Procall Private Limited - 20,000,000 Quick Call Private Limited - 1,500,000 Smart Talk Private Limited - 1,500,000 Bhilwara Telenet Services Limited - 1,000,000 Corporate Guarantee Received 1,846,730,715 2,224,030,715

Zee Entertainment Enterprises Limited 1,846,730,715 2,224,030,715

Note: 1) Major parties denote who account for 10% or more of the aggregate for that category of transaction.

36. EARNING PER SHARE (EPS)

Particulars 2008 2007Profit/(Loss) After Tax (4,141,275,794) (2,400,708,400)Weighted Average Number of Equity Shares of Re 1 each (Nos.)* 428,222,803 428,222,803Basic and Diluted earning per share (9.67) (5.61)

Note:- a) * Weighted average number of equity shares for the previous year includes equity shares to be allotted on record date pursuant

to the Scheme. (Refer Note 26)



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b) Potential conversion of the stock option granted is anti- dilutive and accordingly has not been considered in the calculation of diluted earning per share.

37. SEGMENT INFORMATION AS PER AS-17 The Group follows AS-17 “Segmental Reporting” relating to the reporting of financial and descriptive information about their operating

segments in financial statements. The Group’s reportable operating segments have been determined in accordance with the internal management structure, which is

organized based on the operating business segments as described below. The geographical segment is not relevant as exports are insignificant.

Direct to Home Services (DTH)-Uplink of satellite television signals to be received by the customer directly in the home. This segment derives revenue by way of Subscription, Lease rentals, Placement & Active Services and Other Incomes.

Trading- Trading in electronics and other equipments. Teleport Services – Facility for uplink signals. Subscriber Management Services – Providing conditional access services, customer support services and related activities. Transponder Services – Acquisition of Transponders for DTH Services and leasing to external parties.


Description DTH Trading Teleport Services

Subscriber Management

Services

Transponder Services

Unallo-cated Elimination Total

Segment Revenue - External Sales 3,892,034,736 114,227,808 112,174,801 4,016,860 - - - 4,122,454,205 Inter Segment Sales - 23,066,896 - 569,802,799 - - (592,869,695) - Total Revenue 3,892,034,736 137,294,704 112,174,801 573,819,659 - - (592,869,695) 4,122,454,205 Segment Results (3,541,979,371) (89,146,649) (33,412,164) (722,055) - - - (3,665,260,239)Operating Profit/(Loss) before interest & Tax

(3,541,979,371) (89,146,649) (33,412,164) (722,055) - - - (3,665,260,239)

Interest Expenses - - - - - - - 534,150,955 Interest Income - - - - - - - 65,404,457 Profit / (Loss) Before Tax

- - - - - (4,134,006,737)

Current Taxes-FBT/Wealth Tax

- - - - - 6,142,968

Deferred Tax - - - - - - 1,027,949

Income Tax Provision written off

- - - - - 98,142

Profit / (Loss) After Tax - - - - (4,141,275,796)

(b) Other segment Information

Segment Assets 8,704,154,419 93,501,039 256,731,827 867,155,327 1,566,516,130 3,095,879,290 (2,135,726,461) 12,448,211,571

Segment Liabilities 16,634,849,756 184,155,038 7,528,124 880,387,336 643,006,091 - (1,191,216,421) 17,158,709,924

Capital Expenditure 2,564,120,757 - - 310,957,332 10,542,536 - - 2,885,620,625

Depreciation/Amortisation

1,454,953,601 7,911 35,519,088 79,848,187 - - - 1,570,328,787

Non cash expenditure other than Depreciation/Amortisation

15,099,193 - - - - - - 15,099,193



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Description DTH TradingTeleport Services

Subscriber Management

Services

Transponder Services

Unallocated Elimination Total

Segment Revenue

External Sales 1,797,347,038 6,915,600 104,888,339 7,102,423 - - - 1,916,253,400

Inter Segment Sales 274,733,198 - - (274,733,198) -

Total Revenue 1,797,347,038 6,915,600 104,888,339 281,835,621 - - (274,733,198) 1,916,253,400

Segment Results (2,421,444,332) (3,182,171) (10,782,583) (5,070,668) - - 124,705,439 (2,315,774,315)

Operating Profit/(Loss) before interest & Tax

(2,421,444,332) (3,182,171) (10,782,583) (5,070,668) - - 124,705,439 (2,315,774,315)

Interest Expenses - - - - - - - 143,344,100

Interest Income - - - - - - - 58,225,618

Profit / (Loss) Before Tax

- - - - - - - (2,400,892,797)

Current Taxes-FBT/Wealth Tax

- - - - - - - (2,718,640)

Deferred Tax - - - - - - - 2,903,037

Profit / (Loss) After Tax - - - - - - - (2,400,708,400)

(b) Other segment Information

Segment Assets 7,298,929,097 46,348,198 293,040,051 1,118,068,307 1,264,337,958 2,348,844,736 (1,971,679,355) 10,397,888,992

Segment Liabilities 10,321,989,892 196,349,154 24,930,482 1,110,183,416 340,827,918 - (1,027,169,314) 10,967,111,548

Capital Expenditure* 5,892,956,755 - 212,062,837 236,928,431 9,891,854 - - 6,351,839,877

Depreciation/Amortisation

539,906,074 2,326,930 35,377,603 46,015,392 - - - 623,625,999

Non cash expenditure other than Depreciation/Amortisation

50,980,223 12,167,167 - 16,415 - 7,950,000 - 71,113,805

*Capital Expenditure includes assets received pursuant to the Scheme of Arrangement.







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AmountA. CASH FLOW FROM OPERATING ACTIVITIES Net Profit/(Loss) before taxation (4,134,006,737) Adjustments for : Depreciation /Amortization 1,570,328,787 Loss on sale/discard of Fixed Assets 15,099,193 Profit on sale of Investments (2,486,905) Exchange Adjustments (Net) (3,454,762) Interest Expenses 534,150,955 Interest Income (65,404,457) Operating Profit/(Loss) before working capital changes (2,085,773,925) Adjustments for : (Increase)/Decrease in Inventories (46,554,574) (Increase)/Decrease in Trade and Other Receivables (225,959,587) Increase/(Decrease) in Trade and Other Payables 2,661,719,271 Cash Generated from Operations 303,431,185 Direct Taxes Paid (Net) 25,581,923 Net Cash Flow from Operating Activities 277,849,262

B. CASH FLOW FROM INVESTING ACTIVITIES Purchases of Fixed Assets/ CWIP (2,897,067,043) Proceeds from Sale of Fixed Assets 322,865 Direct Taxes Paid for Investing purpose (Net) (2,663,834) Purchases of Investments (650,000,000) Proceeds from Sale of Investments 652,486,905 Loan Repaid by Others 3,900,000 Interest received 9,599,355

Net Cash Flow from Investing Activities (2,883,421,752)

C. CASH FLOW FROM FINANCING ACTIVITIES Interest Paid (383,606,635) Proceeds from Long Term Borrowing 351,714,000 Repayment of Vehicle Loan (4,103,643) Proceeds from Short Term Borrowing 9,676,546,400 Repayment of Short Term Borrowing (6,651,300,000)

Net Cash Flow from Financing Activities 2,989,250,122

Net Cash Flow during the year (A+B+C) 383,677,632 Cash and Cash Equivalents at the beginning of the year 127,772,394

Cash and Cash Equivalents at the end of the year 511,450,026

Cash and Cash Equivalents at the end of the year comprises of : Cash in Hand 1,633,710 Balances with Scheduled Banks in Current Accounts 125,405,918 Balances with Scheduled Banks in Short Term Deposit Accounts 289,210,111 Balances with Scheduled Banks in Margin Accounts 28,000,000 Balances with Scheduled Banks in Deposit Accounts (Pledge with Banks & Others) 67,019,663 Cheques in hand 180,624

Total Cash and Cash Equivalents 511,450,026

Notes :Figures for corresponding previous year ended March 31, 2007 are not given as the Company presented consolidated financial statement for the group first time for the year ended March 31, 2007.

Consolidated Cash Flow Statement for the year ended March 31, 2008 (Currency: Indian Rupees)

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




Auditors’ Report - DishTV

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