20901171 zee entertainment ltd ar 2k8-2k9 cover...

CONTENTS

Chairman’s Message

Channels

Viewership

Network

People

The Way Forward

Notice of Annual General Meeting

Certification on Financial Statementsof the Company

Directors’ Report

Statement Pursuant to Section 212

Corporate Governance Report

Shareholders Information

Management Discussion and Analysis

Auditors’ Report

Standalone Financial Statements

Balance Sheet Abstract and Company’sgeneral business profile

Cash Flow Statement

Last Five Years Financial Highlights

Consolidated Financial Statements

Financial Highlights of Subsidiary Companies

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Board of DirectorsChairmanDirector

DirectorIndependent DirectorIndependent Director

Independent DirectorIndependent Director

Independent DirectorIndependent Director

Auditors :

Company Secretary : M Lakshminarayanan

Senior Management

BankersAxis Bank Ltd.BNP ParibasICICI Bank Ltd.IDBI Bank Ltd.ING Vyasa Bank Ltd.Standard Chartered Bank Ltd.

Registered Office:135, Continental Building, Dr. Annie Besant Road,

Dear Shareholders,

It has been a significant year for the television media industry in India. More than six million households converted to digital pay TV and total households on digital pay TV are estimated at 14 million. It gives me great satisfaction to present the fact that India is the third largest television market in the world and despite the size, is one of the fastest growing markets. TV penetration in India is currently only 5%, and cable and satellite TV penetration is a mere 35%. Going forward consumption growth fuelled by a steady growth in Indian economy would ensure a much greater number of television households.

Your company is one of the foremost players in the television media and entertainment space in the country. Zee’s strong strategic and financial position gives us great confidence in our ability to benefit from this growth opportunity.

A year of turmoil for the global economy

In the financial year 2009, the world economy went through difficult times. The International Monetary Fund (IMF) has stated that the global economy faces its worst crisis since World War II and will shrink by 1.3 per cent in 2009.

In today’s business environment, it is seldom possible for large corporations to be insulated off pressures faced by global macro economy. The comforting part for us is that India is relatively unaffected and trends indicate that the country’s GDP growth will outperform that of many other emerging economies.

Indian media was impacted, though to a relatively lesser extent

While India remained largely unaffected during the first half of the fiscal, we did see the impact of global economic meltdown during the second half. Coming after several years of continued growth, the year brought its own set of challenges. Spends from sectors like real estate and banking and financial services were severely affected and advertising revenue growth of most media companies saw a dramatic slowdown. While the calendar year 2008 witnessed an 18% growth in television advertising spends, the opinion is divided on the expected growth during calendar 2009.

Media and entertainment sector : Entertainment Unlimited

The Indian media and entertainment industry continued to grow in scale and size during the year. Within the media and entertainment sector, television, given its wider spread and ever increasing reach, showed higher growth as compared to other media vehicles. An important trend in the broadcasting industry was the growing preference for digital services.

“The entertainment industry is witnessing a big transformation led by technological advancements, new delivery platforms and growing diversity of content.”

CHAIRMAN’S MESSAGE

3

India now has over 120 million television homes and over 80 million of these homes have cable and satellite connections. Digital pay TV homes have also grown to significant numbers with an estimated 12 million homes on DTH alone as of March 2009. There were several new channels launched during the year both in Hindi and regional languages and the appetite for entertainment continued to grow. The Hindi GEC genre attracted new players owing to its popularity among viewers and advertisers.

The entertainment industry is witnessinga big transformation led by the technological advancements, new delivery platforms and growing diversity of content. Consumer expectations are also changing rapidly. While consumers are spending more on media and entertainment, they also want more control, choice and pricing flexibility. While these changes are posing new challenges for media companies, they also open up new opportunities.

Zee performance, year of consolidation

Fiscal year 2009 saw improvements across a number of key operating metrics. We continued to deliver strong operating results, with most of our businesses performing as per expectations. The year also saw emergence of new competition in the Hindi entertainment space. While Hindi entertainment genre recorded higher viewership, television penetration increased and there was greater adoption of digital television, advertising revenue growth was impacted due to the overall economic slowdown. Zee focused on consolidating its market share across genres and continued to build on its lead in internationalmarkets across the globe.

It has been a very unique year for us and for the industry. On the one hand we witnessed a considerable slowdown in the advertising revenue growth trajectory, particularly during the second half of the fiscal, while on the other we continued to record robust growth in subscription revenues.

From a 30% plus growth in advertising revenues in the first half, we saw the growth fade away during the second half of fiscal 2009. Increased competition also impacted industry margins during the second half offiscal 2009.

During the year the overall revenues of the company grew by 19% over the last year. Of the two primary sources of revenues, advertising revenues grew by 14% over the previous year while the subscription revenues grew by 22%. It was encouraging to note that our subscription revenues earned from various DTH operators increased by 93% over last year.

International subscription contributed 21% to our revenues. The overall operating profits of the company were flat as compared to the previous year and the profit after tax increased by 34% on a yearly basis. We took a series of steps to streamline our operations. Towards the end of the year, we were able to reduce our selling, general and administrative expenses. We have also consciously focused on improving efficiencies in content acquisition, one of the biggest cost elements. With the steps we have taken last year, Zee is now a leaner and more tightly focused company.

CHAIRMAN’S MESSAGE

4ZEEL Annual Report 2008-2009

“We believe that having the right people in the right positions doing the right thingsis critical for success of any enterprise.”

Looking ahead - Committed to sustained growth

Over the past 17 years, we have built a history of delivering growth. Our content businesses are leading players in each of their genres and our strong strategic position gives us great confidence in our ability to succeed in the medium term, despite a weak economic climate. Given the growing television penetration in India and the rapid digitization of distribution through DTH and digital cable, your company would continue to focus on aligning its strategy to take a significant share of emerging subscription revenues.

Zee’s objective is to create long term sustainable shareholder value. During the year, we have taken important steps to move out of areas which were not yielding results and move into areas of greater long term potential. We continue to make judicial investments in our core assets. We plan to build on the success of our businesses by continuing to produce the most compelling content for our consumers. While

the times are difficult, we are hopeful of an early recovery. Collaboration, consolidation and digitization are the key words for the industry in the coming year.

I want to end on a note of thanks to all of our shareholders, employees, customers and partners for the continued support in our journey.

Sincerely,Subhash Chandra

“Zee’s objective is to create long term sustainable shareholder value. During the year, we have taken important steps to move out of areas which were not yielding results and move into areas of greater long term potential.”

Focus on people and human capital

We believe that having the right people in the right positions doing the right things is critical for success of any enterprise. We need a creative and technology savvy leadership team to tap the opportunities. Everyexecutive needs to balance creativity with technology and yet be mindful of the costs. Those who can balance these skill sets would create value in the long term. We continue to work towards enhancing the capabilities of our global workforce.

Your company has taken a series of initiatives to consolidate the talent management initiatives. The Board has recommended issuing of Employee Stock Options Plan (ESOPs) to deserving employees to create a greater degree of ownership. We have also initiated creation of a talent map for all positions which will be synchronized with talent map of employeesholding these positions. These efforts have already started showing positive results in the Company.

Corporate Governance

Sound principles of corporate governance are vital in the long term success of any Company. Our endeavour continues to maintain transparency and secure trustof our investors, employees, customers and publicat large. Your company is in full compliance of the Corporate Governance Code laid down by SEBI and stock exchanges.

A

B

A B: Zee TV’s Dance India Dance is another example of reality shows creating stars out of ordinary people

CHANNELS : GENERAL ENTERTAINMENT

Zee TV, the flagship channel of ZEEL was launched in October 1992 as the first Hindi General Entertainment Channel. Through its strong presence worldwide, Zee entertains over 500 million viewers across 167 ountries.It has moved into a leadership position with strong brand equity. This makes it the largest media franchise servicing the South Asian diaspora. With a consistent rating performance, its market share stands at 19% and it is one of the foremost channels across varying time bands.

Showcasing abundant understanding of Indian culture, Zee TV’s success is reflected in its popularity with its

with the changing preferences of the channels audiencesZee TV launched its portal www.zeetv.com

With a large gamut of segments and a variety of programming, Zee TV has created a range that gives viewers of all demographics and age groups a large choice. Zee’s creatively innovative programming, has

Sa Re Ga Ma Pa, Betiyaan, Dance India Dance have been hugely successful. Recent launches like Choti Bahu, Aap Ki Antara, Pavitra Rishta, Agle Janam Mohe Bitiya Hi Kijo, have became the rave among its diverse audience.

To live up to its innovativeness, Zee launched its fresh programming strategy with the tag line ‘Har Pal Banaye Ek Naya Rishta’ this year. With this leap, the channel highlighted women in her various moods and nuances. The packaging is an amalgamation of the five elements, commemorates the quintessential Zee TV woman and also caters to family values. This is the channel’s step towards consolidating and binding its programmes and bringing to its viewers a palatable mix of drama, thrillers, music and mythology.

In a highly competitive environment, Zee TV continues to hold on its position while other channels in the genre have lost share. Zee TV dominates the General Entertainment Channel space and remains a leader.

CONSISTENTLY DELIVERING RELEVANT AND COMPELLING CONTENT

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CHANNELS : BOLLYWOOD

Zee Cinema was launched in 1995. It is India’s first 24 hours Hindi Movies channel. It also has the distinction

of being India’s first pay channel, with a powerful distribution network spread widely all over India. The

channel boasts of one of the largest libraries having an eclectic mix of programmes, blockbusters and hits.

Since it’s launch, Zee Cinema has been a leader in its channel genre with over 30% market share. In the year gone by, the properties that have captivated audiences

are Dopahar Zee Cinema Par and Shanivaar Ki Raat Sitaron Ke Saath. Innovative offerings such as RokSako Toh Rok Lo and Double Mazaa, which show

appreciated and viewed brands for over five years. Zee Cinema’s sprucing up premiers & specials with an innovative break content has been widely appreciated.

Zee Premier has been specifically designed to address viewers of of a specific demographic. Now movie buffs, addicts and cinema lovers can feast of our library, which

boast of over a collection of exclusive entertainmentand art value. Zee Premier range includes blockbusters

from modern Indian cinema, an industry which has been in a continuous state of evolution with every passing

year. The collection contains the world premiers ofmany award winning movies such as Taare Zameen

Par, Dhool, Dhammal, Jodha Akbar and Race.

Exclusively focused on the action genre, Zee Actionhas a collection of hundreds of movies from the last

three decades. Action lovers have had a blast withblockbusters such as Ghayal, Ghatak, Tahalka, Elane

Jung, Phool aur Kaante, Apradh and Qurbani. Zee Actionhas brought thrill home to millions of viewers. Thematics

like Teen Ka Tashan have brought the action into theliving rooms of these action seekers, a special

experience crafted only on Zee Action.

Zee Classic, boasts of an outstanding library ofIndian cinematic classics. It’s the most popular after

Zee Cinema. Zee Classic was created to air only classics and blockbusters of the yester years, to

revive nostalgic moments and memories.

SUSTAINING LEADERSHIP

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A: A still from Jodha Akbar an award winning Hindi film telecast on Zee Cinema, B: Shanivaar Ki Raat Sitaron Ke Saath is an innovative

property launched by Zee Cinema

A

B

BA

C

A, B & C : Images showcasing the successful telecast of India – Sri Lanka series, the telecast of channels prime propertiesWWE and UEFA Champions League

CHANNELS : SPORTS

DRIVING STRENGTH TO BOUQUET CONSTRUCTTen Sports and Zee Sports combine, have given the viewers a lot of action in the past years and have become a force to reckon with in the sports entertainment business. Popular events like WWE, UEFA Champions and League Football have made inroads into the Indian market. Tennis fans enjoy the grand slams with a series of ATP 500 and a multitude of other events. For the indoor sports fan, the channel has showcased the World Poker Tour and Darting events. Cricket being nothing less than a religion in India, Ten Sports has acquired the rights to five of the ten cricket boards, giving it over 100 days of cricket a year. This is the maximum number of days of cricket across sports channels. The rights to these 5 boards; Sri Lanka, Pakistan, South Africa, West Indies and Zimbabweare with Ten Sports for the next 4 years.

March 2005 saw the launch of Zee Sports, India’s first privately owned sports channel, which has put the ‘coup de grace’ on Zee network’s bouquet.

Four years on the go since it’s inception, Zee Sports has left a blazing trail and has evolved into one of the biggest forces on the sports entertainment front for the Indian audience.

In the last few years Zee Sports has focused not onlyon bringing the international sports action to the Indian viewers, but has taken much of the Indian sports action into the international arena. Some of the biggest criket events from the biggest territorial teams – Pakistan, Srilanka and Zimbabwe have been showcased on this channel. Events such as WWE have made wrestlers like Khalli a super hero in India and a superstar abroad.Indian football that required a much needed boost, is now on the verge of a gigantic leap forward. Besides this, sports fans have a range of adrenalin pumping adventure sports programming as well.

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14

CHANNELS : ENGLISH CONTENT

Zee Trendz is the leading fashion and lifestyle property in India. Following Indian as well as global trends, this channel brings to you the latest in style, fashion, music and people. Some of the

remarkably successful shows that were acquired are:Ultimate Gadgets is a program on audio, video, interactive and communication, bringing the audience the latest on trends and

products, especially designed for the viewers.Music Retro is an introspective retrospect of various styles of

lovers, Music Retro is flowing with reviews and video clips. Power Players profiles the most influential men and women

from fields where power, talent and moral example have touched and transformed lives, around the world.

Zee Studio has brought quality cinema to the discerningIndian audience. Catering primarily to movie buffs among the

of programmes includes a potent mix of Hollyood’s hottest block busters, animation flicks, golden classics, musicals,

comedies and the finest of world cinema. Classics like

telecast rights to the prestigious awards ceremories such as, The Screen Actors Guild Awards ‘09 and Live From The Red

Carpet Academy Awards ‘09.

the most widely viewed English Channel in India, it has garnered a large market share among the English speaking

and viewing audience. Zee has focused on sourcing the best international content which appeals to the young and urban

Indian palate. Some of the most popular shows on this channel are The Best of F.R.I.E.N.D.S., Gossip Girl, Sex and the City, The

Tonight Show, The Big Bang Theory and many alike. The only

events like the World Music Awards, Emmy’s and leading fashion shows is one of the channels strategic prerogatives. In recent times, Zee Café acquired exclusive live telecast rights to

the most prestigious beauty pageant – Miss World 2008.

BRINGING THE BEST OFINTERNATIONAL CONTENT

TO INDIAN AUDIENCES

A: Much to the delight of its ever growing audience Zee Studio telecasted the movie Ocean’s Twelve B: Grey's Anatomy a new addition

to Zee Café's impressive library

A

B

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CHANNELS : MUSIC, LIFESTYLE & ENTERTAINMENT

ETC Channel Punjabi is specially designed with Punjabi music and religious content at heart. A market leader for almost a decade, it has excelled both in numbers and programming. It received an overwhelming response from the viewers for a two hour entertainment extravaganza Garma Garam Dus

Hazar and for a weekly campus fun frenzy – Masti da Funda.

The three major properties of ZEEL in the music genre areETC, etc Channel Punjabi and Zee Muzic.

ETC has etched its unique identity as India’s only Bollywood trade channel. Some of the prime time shows on the channel are:

ETC Bollywood Business : Taran Adarsh interviews directors, producers, corporate heads, actors and everyday celebrities

Bada Parda : Reviews the hottest films of the fortnightStar Giraftar : Showcases stars and their upcoming films,

an indepth look at the films and their charactersETC Xtras : Catch all the superhits on this program

ETC Nautanki : Bollywood’s biggest Suresh Menon gag showETC Karaoke : A unique program with lyrics displayed on screen

Year 2009 saw an exciting development in the field of music for Zee. Now called Zing, the channel presents movies, music and madness to an audience

of fifteen years and above. Some of the channel’s key properties areEye Candy, Face to Face, Chillax Morning, Flix @ 2, After 8 and

Bollywood Chakkar.

STRENGTHENING THE BOUQUET

Zee Jagran forays into the spiritual and religious entertainment genre, aimed at awakening people to realize the spiritual aspects in their life and

hence enriching lives. This lifestyle channel attempts to provide holistic entertainment to the audience through alternate lifestyle programs,

relevant movies and serials. the channel offers content creation standards that puts it above any other channel

in this genre.

Alternate Lifestyle

Another offering by the company in the entertainment genre Zee Smile,brings to its viewers original content and some which is shown on Zee TV.

this inturn provides it a vast viewership.

General Entertainment

A: A show from Zee Jagran highlighting the preachings of the spiritual guru OshoB: A still from etc’s show Star Giraftar

A

B

A

B

A: De Dhakka, a superhit film produced by the production house, B: Gulaal, produced by Zee Motion Pictures was a much critically acclaimed film

19

Zee ventured into the movie production, acquisition and distribution business this year. Zee Motion Pictures is an independently running division of ZEEL and operates with two labels. Zee Motion Pictures (for mainstream films) and Zee Limelight (for modestly budgeted films targeted at niche audiences).

The films division manages and exploit’s multiple revenue streams associated with its films including theatrical distribution, syndication rights on television platforms (cable, satellite, terrestrial and VOD), home entertainment rights, music and audio rights – both domestically and internationally.

The division has established production teams for each of the languages in the regional centres including Mumbai, Chennai, Kolkata and Hyderabad with a national team in Mumbai.

The company’s focus is on the development, production, distribution and marketing of films in Hindi and regional languages like Marathi, Telugu, Tamil, Kannada and Bengali.

In the first full year of operations, the company released 15 films. Some of the films are Oh My God, Gulaal, Dhudgus, De Dhakka, Olot Palot, Tomar Janya and Masth.

FILM PRODUCTION & DISTRIBUTION

INDIAN FILMED ENTERTAINMENT

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In 1996, Zee became the first Indian broadcaster tostep into international markets by launching in UK. The network today spans over 167 countries, entertaining a

diverse audience of 500 Million viewers. The major regions are USA, Europe, Middle East (MENAP), Asia

Pacific and Africa.

Each market has a dedicated business team keeping a tap on the pulse of the region. A customized beam delivers specifically crafted content catering to the

current tastes, likes and needs of the market.

Being a pioneer in the South Asian market, Zee enjoys the first mover advantage. The niché channel offering and

gives the network a formidable stance. Some of the recent offerings include local language launches in

Malaysia, Indonesia, Russia and Middle East amongother countries. The existing library content is being

dubbed or subtitled for these markets and has met with significant success.

International subscription is a key contributor to the company’s revenues contributing over 21% of the

INTERNATIONAL BUSINESS

DELIGHTING INDIANSACROSS THE WORLD

Regions highlighting Zee’s global reach

A: B:C:

A

B

C

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ZEE LEARN – the Education division of ETC is an integrated education entity specializing in designof pedagogical content, running, franchising

and vocational institutes. It has its presence in 3 business verticals:

KIDZEE

in more than 300 cities. Out of these 480, were already operational.

Consistent with our strategy to lead innovation in the category, Kidzee introduced a new child centric methodology iLLUMETM in October, 2008 under Project Dolphin. Project Dolphin is a game

franchisee and the franchisor and the new iLLUMETM

methodology. iLLUMETM is unique to Kidzee & gives us a competitive advantage as the only TM pedagogy

Technology

Mobile VAS Services, 57575 was the first service to

live interaction capabilities to play and interact while watching the show.

Through 57575, Zee aims to integrate and extend high quality and engaging content, applications and services to its customers. Being the first to realize, adapt and integrate innovative ideas and solutions that lead the mobile world, 57575 is a platform that has a penetration

SHAPING A BETTER TOMORROW

EDUCATION & TECHNOLOGY

Zee Schools

Zee Schools clocked impressive growth in expanding its footprint across India.

Leading the much needed innovation in the school segment, the company developed and rolled out a TM. Litera OctaveTM ensures a child’s best understanding of a concept through his/her own unique learning style. It is a holistic approach to achieving real understanding

the education division has entered into an arrangement for rendering infrastructure, content and other services for a school in Mumbai.

Youth Vocational Institutes

The company caters to the Youth Segment through its vocational training institutes Zee Institute of Creative Arts (ZICA) andThe company has successfully developed and implemented the franchisee model of its ZICA institute at Bhuvneshwar and plans to add more such institutes in India.

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Being a network on the cutting edge of the home entertainment business, Zee has made sure that the

customer is the starting point in every decision that is taken. In the process, the network has created content

with a large number of options. Naturally, this means moving with the times.

Boundaries have been pushed. Dedicated channels have been set up for specific cultures. Zee has developed a

bouquet of region specific channels to bring into the fold, masses of people. Bridging thereby the fractured lines of

geographical divides.

As a network, Zee has focused on reaching out to various target groups across different markets and the network’s strategy to offer different genres has helped

the conglomerate in growing into India’s leading viewership based broadcaster.

The mechanics of programming have evolved from just being a mere concept. Today, it is a strategic

model of high value. Zee has created new content, channel diversity and viewer loyalty resulting in a large

subscriber base. This has had a fallout of lasting impact. Viewers of every age group can now indulge in total entertainment. Now everyone, everywhere holds the

key to entertainment unlimited.

Today, Zee’s strategic focus is on becoming India’s leading broadcaster on viewership.

Source: TAM Media Research, All Universe, All Markets of India,

Total Network Cumulative Average Weekly

Channel Shares; CY 2009 : Q1 nos.

20

15

10

5

02005 2006 2007

7.6

TV 18

Sony 7.2

Sun

Zee 12.2

14.4 14.516

16.6

7.17.6

12.2

14.7

15.1 ZeeStarSun

TV 18Sony

15.1

2008

VIEWERSHIP

We’ve grown by becoming a bigger and more important part of our viewers' lives. Zee continues to create content, that stands out in a crowd.

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THE WAY FORWARD

“At Zee, we are putting in place a strategic framework for sustained profitable growth

through a strong portfolio of brands across the entertainment spectrum.”

Punit GoenkaChief Executive Officer

Leading broadcaster in India and overseas for South East Asian content

First mover advantage across genres Widest offering of channels by a single broadcaster

in the country Across genres, our channels are either leaders or

strong contenders for the leadership position Diversified revenue streams : advertising and

subscription Diversified customer base : across 167 countries Operating the largest pay TV distribution platform in

the country, Zee Turner Large network gives tremendous leverage

with advertisers Cost conscious approach towards business Affiliate companies have leading presence across the

media value chain cable and distribution,

amongst others

Inspire creativity Continue to run our business as best in class, with

viewer satisfaction as the ultimate goal. Enhance our leadership position in the genres

we compete. Continuous innovation to stay ahead of the curve

and seize growth opportunities Invest in the business in a focused, disciplined

way and achieve superior financial performance. To use the strong cash flows of our business to

improve returns to shareholders Reaffirm our commitment to highest level of

integrity and professionalism throughout our business.

Advertising 49%

DTH5%

International 21%

Other Sales 10%

Domestic Cable 15%

EQUAL EMPHASIS ON ADVERTISING AND SUBSCRIPTION

Advertising

Subscription

Syndication & Movies

All Figures in Rs BillionSEGMENT WISE GROWTH IN FY 2009

2

4

6

8

10

Advertising

14%

9.3 10.6

20%

DomesticCable

2.8 3.4

DTH

0.6 1.2

93%

FY 2008 FY 2009 YoY Growth %

Other Sales

1.6 2.1

33%

International

3.9 4.5

14%

Particulars (Figures in Rs. Million)

Operating Revenues

Operating Costs

Operating Profits (EBITDA)

Profit Before Tax

Profit After Tax & before Exceptional Items

Profit After Tax for the year

18,354

5,423

5,813

4,186

3,832

FY2008 3Q FY09 4Q FY09 FY2009YoY GrowthFY2009 vs

FY2008

Full Year Audited Numbers: Consolidated; Quarterly Numbers Unaudited

815

825

2Q FY09

5,717

1,488

1,782

1,783

5,456

4,256

1,200

1,132

5,181

3,831

1,350

1,341

21,773

5,480

5,403

5,170

5,122

26%

1%

23%

34%

1Q FY09

5,420

1,442

1,450

1,607

1,601

93%

All Figures

Other Offices

Broadcasting Division

1B, Shah Industrial Estate,Off. Veera Desai Road, Andheri-West, Mumbai - 400 053Tel: 022 67813737Fax: 022 26732030

ETC Networks Ltd

Education Division: Valechha Chamber, Plot No. B-6, 3rd Floor, Off New Link Road, Andheri-West, Mumbai - 400 004 Tel: 022 2674 3900 Fax.: 022 2674 3422

China

Rm 1906 East Tower, Fortune Plaza116 Tiyu East Road, Guangzhou, China - 510620 Tel: +86-20 38931510

Malaysia

Level 16, 1 Sentral Jalan Stesen Sentral 5KL Sentral 50470 Kuala Lumpur. MalaysiaTel: +603 2092 9297Fax: +603 20929201

Zee Entertainment Enterprises Ltd.135, Continental Building, Dr. Annie Besant Road ,Worli, Mumbai-400 018, Maharashtra, India.Tel: 91-22 66971234

Regional Offices

New Delhi

B-10, Essel House,Lawrence Road, Industrial Area,New Delhi-110035Tel: 011 27101145 / 54Fax: 011 27192172

Kolkata

5A/1 & 5A/2,5th Floor,Park Plaza, 71, Park Street,Kolkata-700016Tel: 033 2227 5458 / 5459Fax: 033 22275463

Hyderabad

6-2-929 DB Enclave, Raj Bhavan Road,Khairtabad, Hyderbad-500 004Tel: 040 23320139 / 23320770Fax: 040 23320164

Pune

Swastik Apartment, Gulmohar Lane Of Law College,opp. Nirmiti Showroom,Erandawane, Pune-411 004Tel: 020 25455338Fax: 020 25422049

Chennai

Alpha Centre, Essel House,6th Floor, No.150 & 151, North Usman Road,T- Nagar, Chennai-600 017Tel: 044 2814464Tel Fax: 044 28144963

Bangalore

204, 2nd Floor, H.M. Geneva House, 14,Cunningham Road, Bangalore-560 052Tel: 088 22373183/84/85/86Fax: 088 22373180

South Africa

1st Floor 109 Atrium Terraces,272 Oak Avenue., Ferndale, Randburg, South Africa Tel : +27 117813352Fax No +27 117813347

Singapore

(Singapore Pte. Ltd.)500, Rifle Range Road,# 01-09 Bukit Timah Satellite,Earth Station, Singapore-588 397Tel: +65 64669331Fax: +65 6468837

United Kingdom

Unit 7;Belvue Business Centre.Belvue Road, Northoit.Middlesex, UB5 5QQLondon, United Kingdom.Tele Fax: +44 020 8841 9550

Mauritius

2nd floor, Ebene House, 33,Cybercity Ebene, MauritiusTel: +230 464 2222 / 6666Fax No: +230 464 4040

Noida

Zee Studio, Filmcity 19,Sector 16-A, Noida 201301

International Offices

USA

Suite no - 200,701 Highlander Blvd, Arlington,TX 76015, USATele: +81 78044600Fax: +81 78044696

ZEEL Annual Report 2008-200933

NOTICENotice is hereby given that the Twenty-Seventh Annual General Meeting of the Members of Zee Entertainment Enterprises Limited will be held at Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai 400 018 on Tuesday, the 18th day of August, 2009, at 11.00 a.m., to transact the following businesses:

ORDINARY BUSINESS:1. To receive, consider and adopt the Audited Balance Sheet as at March 31, 2009, the Profit & Loss Account of the

Company for the financial year ended on that date and the Reports of the Auditors and Directors thereon.2. To declare dividend on equity shares for the financial year ended March 31, 2009.3. To appoint a Director in place of Mr. Subhash Chandra, who retires by rotation, and being eligible, offers himself

for re-appointment.4. To appoint a Director in place of Mr. B. K. Syngal, who retires by rotation, and being eligible, offers himself for

re-appointment.5. To appoint a Director in place of Dr. M. Y. Khan, who retires by rotation, and being eligible, offers himself for

re-appointment.6. To appoint M/s. MGB & Co., Chartered Accountants, Mumbai as Auditors of the Company to hold such office

from the conclusion of this meeting until the conclusion of the next Annual General Meeting at a remuneration to be determined by the Board of Directors of the Company.

SPECIAL BUSINESS:

7. To consider and if thought fit, to pass, with or without modification, the following resolution as a Special Resolution.

“Resolved that pursuant to Section 163 and other applicable provisions, if any, of the Companies Act, 1956 (the Act), approval and consent of the Company is hereby accorded for maintaining the Register & Index of Members, Register & Index of Debenture holders, if any, Share and/or Debenture Transfer Register, and copies of all Annual Returns prepared under Section 159 of the Act, together with copies of certificates and documents required to be annexed thereto under Section 161 of the Act, or any one or more of them, at the offices of the Company’s Registrar and Share Transfer agents M/s. Sharepro Services (India) Private Limited, at 13AB, Samhita Warehousing Complex, Second Floor, Sakinaka Telephone Exchange Lane, Off Andheri-Kurla Road, Sakinaka, Andheri (East), Mumbai - 400 072 and/or at 912, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai - 400 021, instead of the Registered office of the Company.”

8. To consider and if thought fit, to pass, with or without modification, following resolution as a Special Resolution.

“Resolved that in accordance with the provisions of Section 81(1A), and other applicable provisions, if any, of the Companies Act, 1956 (“the Act”), the provisions contained in the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the “SEBI Guidelines”) or any statutory modification(s) or re-enactment of the Act or the SEBI Guidelines, the Articles of Association of the Company and the Listing Agreements entered into by the Company with the Stock Exchanges where the securities of the Company are listed and subject to such other approval(s), permission(s) and sanction(s) as may be necessary, consent of the Company be and is hereby accorded to the Board of Directors (hereinafter referred to as “the Board” which term shall include any ‘Remuneration Committee’ or ‘Employee Stock Option Committee’ of the Board), to introduce and implement an Employee Stock Option Scheme (‘ZEEL-ESOP 2009’ or ‘the Scheme’), and to grant, offer, issue and allot in one or more tranches at any time to or to the benefit of such employees of the Company and Directors of the Company, whether Whole-time Directors or otherwise, as may be decided by the Board, Options under ZEEL ESOP-2009 exercisable & convertible into equity shares (hereinafter referred to as ‘the securities’) of the Company not exceeding in the aggregate 5% of the issued, subscribed and paid-up capital of the Company as on March 31, 2009 i.e. up to 21,700,355 equity Shares of Re. 1/- each of the Company (or such other adjusted number of shares for any bonus, consolidation or other re-organisation of the capital structure of the Company as may be applicable from time to time), at such price, in such manner, during such period and on such terms and conditions as may be determined by the Board in accordance with the SEBI Guidelines or any other applicable provisions as may be prevailing at that time.

Resolved further that,

a) the Board be and is hereby authorised to formulate, evolve, decide upon and bring into effect the scheme on such terms and conditions as contained in the Explanatory Statement to this Notice and to make any modification(s), change(s), variation(s), alteration(s), or revision(s) in the terms and conditions of the Scheme from time to time including but not limited to amendments with respect to vesting period/ schedule, exercise price/period, eligibility criteria or to suspend, withdraw, terminate or revise the Scheme;

ZEEL Annual Report 2008-2009 34

b) the Non-Executive Directors of the Company including Independent Directors, be granted up to a maximum of 200,000 Options per annum and up to a maximum of 1,000,000 Options in the aggregate under the scheme;

c) the securities may be allotted in accordance with the scheme either directly or through a trust which may be set up in any permissible manner and that the scheme may also envisage for providing any financial assistance to the trust to enable to acquire, purchase or subscribe to the securities of the Company;

d) any new equity shares to be issued and allotted upon exercise of options from time to time under ZEEL ESOP-2009 shall rank pari passu inter se in all respects with the then existing Equity Shares of the Company;

e) the Board be and is hereby authorised to take requisite steps for listing of the securities allotted under ZEEL ESOP-2009 on the Stock Exchanges where the securities of the Company are listed; and

f) for the purpose of giving effect to this resolution, the Board be and is hereby authorised on behalf of the Company to do all such acts, deeds, matters and things, as may be necessary or expedient and to settle any questions, difficulties or doubts that may arise in this regard at any stage including at the time of listing of securities without requiring the Board to secure any further consent or approval of the Members of the Company to the end and intent that they shall be deemed to have given their approval thereto expressly by the authority of this resolution.”

9. To consider and if thought fit, to pass, with or without modification, following resolution as a Special Resolution.“Resolved that the benefits of Employees Stock Option Scheme, “ZEEL ESOP 2009” proposed under Resolution No. 8 contained in this Notice be extended to the employee and/or Director of any present and future subsidiary/holding companies of the Companies, on such terms and conditions as may be decided by the Board Directors of the Company.”

10. To consider and if thought fit, to pass, with or without modification, following resolution as a Special Resolution.“Resolved that pursuant to provisions of Section 31 and other applicable provisions, if any, of the Companies Act, 1956 (including any amendment or re-enactment thereof), the Articles of Association of the Company be and are hereby altered with immediate effect as follows:

Substitution of existing Article 95 with the following: Article 95 - Every deed or other instrument, to which the Seal of the Company is required to be affixed, shall

be executed either by a Director or Company Secretary or any person authorised by the Board or Board Committee.

Insertion of a new Article 7A after Article 7 Article 7A - Subject to the provisions of Sections 80, 81, 85 to 90 and other applicable provisions of

Companies Act, 1956, including applicable rules, any new shares shall be issued upon such terms and conditions and with such rights and privileges as the Board shall determine, in particular any such shares may be issued with a preferential or qualified or differential right to voting and/or dividends and/or in the distribution of assets of the Company and subject to the provisions of the said sections of the Act, with special or differential voting rights.

Insertion of a new Article 7B after Article 7A Article 7B - Notwithstanding anything contained in this Articles of Association, the Board of Directors may,

when and if thought fit, buy back such of the Company’s own shares or securities as it may think necessary, subject to such limits, upon such terms and conditions, and subject to such approvals, as may be permitted by law.”

11. To consider and if thought fit, to pass, with or without modification, following resolution as an Ordinary Resolution.“Resolved that in accordance with the provisions of Sections 16, 94 and other applicable provisions, if any, of the Companies Act, 1956, the Authorised Capital of the Company be and is hereby re-organised/altered by converting the existing un-issued Cumulative Redeemable Preference Shares into Equity Shares, resulting in the alteration of Capital clause from Rs. 75,00,00,000 (Rupees Seventy Five Crores Only) divided into 50,00,00,000 (Fifty Crores) Equity Shares of Re 1/- (Rupee One) each and 25,00,000 (Twenty Five Lakhs) Cumulative Redeemable Preference Shares of Rs. 100/- (Rupees One Hundred) each to Rs. 75,00,00,000/- (Rupees Seventy Five Crores only) divided into 75,00,00,000 (Seventy Five Crores) Equity Shares of Re 1/- (Rupee One) each and in consequence thereof the existing Clause V of the Memorandum of Association of the Company relating to share capital be substituted by the following clause :

V. The Authorised Share Capital of the Company is Rs. 75,00,00,000/- (Rupees Seventy Five Crores only) consisting of 75,00,00,000 (Seventy Five Crores) Equity Shares of Re 1/- (Rupees One) each.”



“Resolved that pursuant to Section 31 and other applicable provisions, if any, of the Companies Act, 1956, consequent to re-organisation/alteration of capital clause of Memorandum of Association of the Company by converting existing un-issued Cumulative Redeemable Preference Shares into Equity Shares, the existing Article 3 (a) of the Articles of Association of the Company be substituted by the following Article:

Article 3(a) - The Authorised Share Capital of the Company is Rs 75,00,00,000/- (Rupees Seventy Five Crores only) consisting of 75,00,00,000 (Seventy Five Crores) Equity Shares of Re 1/- (Rupee One) each.”

13. To consider and if thought fit, to pass, with or without modification, following resolution as an Ordinary Resolution.

“Resolved that pursuant to the provisions of Sections 198, 269, 309 read with Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956, and in partial modification of the Members resolution dated 28th September, 2005, consequent to the appointment as the Chief Executive Officer (CEO) of the Company, the remuneration and perquisites payable to Mr. Punit Goenka as Whole-time Director & CEO be and is hereby increased, as detailed in the explanatory statement, effective from August 1, 2008 for the remaining term of his appointment.

Resolved further that,

a) the aggregate of salary, perquisites and allowances of Mr. Punit Goenka, Whole-time Director & CEO in any one financial year shall not exceed the limits prescribed under Sections 198, 309 and other applicable provisions of the Companies Act, 1956 read with Schedule XIII to the said Act as amended from time to time;

b) in the event of loss or inadequacy of profit in any financial year during the currency of tenure of services of the Mr. Punit Goenka, Whole time Director & CEO, the payment of salary, perquisites and other allowances shall be governed by the limits prescribed under Section II of Part II of Schedule XIII of the Companies Act, 1956;

c) the Board or any committee thereof be and is hereby authorized, in its absolute discretion and from time to time, to fix, within the revised range stated in explanatory statement, the salary and the performance bonus or other entitlements of Mr. Punit Goenka.”


“Resolved that pursuant to the provisions of Section 314 and other applicable provisions, if any, of the Companies Act, 1956, consent of the Members of the Company be and is hereby accorded for the re-appointment of, and consequent holding of office or place of profit by Mr. Subhash Chandra, Chairman and Non-Executive Director of the Company, as Chief Executive Officer of Asia TV Limited, UK, a wholly owned foreign subsidiary of the Company for a period of 3 years with effect from April 1, 2009, on such remuneration and other terms, (including any increase or modification in remuneration during the period of appointment as may be approved by Asia TV Limited, UK, from time to time) as detailed in the Explanatory Statement.

Resolved further that the Board of Directors of the Company be and is hereby authorised to agree to, accept and approve any subsequent changes to the terms and conditions of the said appointment of Mr. Subhash Chandra as Chief Executive Officer of Asia TV Limited, UK.”

The Register of Members and Share Transfer Books of the Company will remain closed from Monday, August 10, 2009 to Tuesday, August 18, 2009 (both days inclusive). Share Transfers received in order at the Registered Office of the Company or at the office of the Registrar of the Company, by 5.30 p.m. on August 8, 2009, will be processed for payment of equity dividend, if declared, to the transferees or their mandatees.

Dividend, if approved by Members at the ensuing Annual General Meeting, will be paid to all those shareholders whose name appear in the Register of Members of the Company, after giving effect to all valid share transfers in physical form lodged with the Company or its Registrar on or before August 8, 2009 and in the list of beneficial owners furnished by National Securities Depository Limited and/or Central Depository Services (India) Limited, in respect of shares held in electronic form, as at the end of the business on August 8, 2009.

By order of the Board

Place : Mumbai M. LakshminarayananDate : June 26, 2009 Executive Vice President & Company Secretary

Registered Office:Continental Building,135, Dr. Annie Besant Road, Worli, Mumbai 400 018


NOTES:

1. A member entitled to attend and vote at the meeting may appoint a proxy to attend and vote on a poll on his behalf. A proxy need not be a member of the Company.

Proxies, in order to be effective, must be received at the Registered Office of the Company not less than 48 hours before the commencement of the Annual General Meeting.

2. Corporate Members are requested to send to the Registered Office of the Company, a duly certified copy of the Board Resolution, pursuant to Section 187 of the Companies Act, 1956, authorizing their representative to attend and vote at the Annual General Meeting.

3. Explanatory Statements pursuant to Section 173(2) of the Companies Act, 1956, relating to the Special Businesses to be transacted at the Annual General Meeting, are annexed.

4. Additional information, pursuant to Clause 49 of the Listing Agreement(s) with Stock Exchanges, on Directors recommended by the Board for appointment/re-appointment at the Annual General Meeting forms part of the Report on Corporate Governance in the Annual Report.

5. Members/Proxies should bring their Attendance Slips along with copy of the Annual Report to the Meeting.

6. Members who are holding Company’s shares in dematerialised form are required to bring details of their Depository Account Number for identification.

7. Queries on accounts and operations of the Company, if any, may be sent to the Company Secretary seven days in advance of the meeting so as to enable the management to keep the information ready at the Meeting.

8. Members holding Equity Shares in physical form are requested to notify the change of address/dividend mandate, if any, to the Company’s Registrar and Share Transfer Agent, M/s. Sharepro Services (India) Pvt. Ltd., at 13AB, Samhita Warehousing Complex, Second Floor, Sakinaka Telephone Exchange Lane, Off Andheri-Kurla Road, Sakinaka, Andheri (East), Mumbai - 400 072 and/or at 912, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai - 400 021.

9. Under Section 109A of the Companies Act, 1956, shareholders are entitled to make nomination in respect of shares held by them in physical form. Shareholders desirous of making nominations are requested to send their requests in Form No. 2B in duplicate (which will be made available on request) to M/s. Sharepro Services (India) Pvt. Ltd.

10. Dividend for the financial year ended March 31, 2002, which remains unpaid or unclaimed, will be due for transfer to the Investor Education and Protection Fund of the Central Government (‘IEPF’) in December 2009.

Members who have not encashed their dividend warrant(s) for the financial year ended March 31, 2002, or any subsequent financial year(s), are requested to lodge their claims with the Company’s Registrar and Share Transfer Agent. Members are advised that in terms of provisions of Section 205C of the Companies Act, 1956, once unclaimed dividend is transferred to IEPF, no claim shall lie in respect thereof.

EXPLANATORY STATEMENT UNDER SECTION 173(2) OF THE COMPANIES ACT, 1956

Item No. 7

Your Company has appointed M/s. Sharepro Services (India) Private Limited as its Registrar & Share Transfer Agents (‘R&T agent’). As the R&T agent have been charged with the duty inter alia of maintaining and updating the Register & Index of Members and Shares/Debentures Transfer Register, it will be convenient for them to maintain if these are located at their office(s) at 13AB, Samhita Warehousing Complex, Second Floor, Sakinaka Telephone Exchange Lane, Off Andheri Kurla Road, Sakinaka, Andheri (East), Mumbai - 400 072 and/or at 912, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai - 400 021, rather than at the Registered Office of the Company.

Section 163 of the Companies Act, 1956, permits the Company to maintain its Statutory Registers at any other place within the city, town or village where registered office of the Company is situated, subject to Members approval by way of Special Resolution.

The Board recommends the Special resolution as set out in Item no. 7 for Member’s approval.

None of the Directors of the Company are in any way concerned or interested in this resolution.

Item No. 8 & 9

Employee Stock Options have long been recognised as an effective instrument, to align the interests of the employees with those of the Company and its shareholders, providing an opportunity to the employees to share the growth of the Company and to create long-term wealth in the hands of the employees.


Though your Company has been recognizing the performance and incentivising its employees from time to time, including by way of an ESOP scheme which was launched in 1998 in line with the applicable regulations at that point in time, with a view to reward employees for their contribution; encourage value creation and value sharing with employees, attract and retain best talents, your Board has, at its meeting held on June 26, 2009, subject to your approval approved implementation of an Employees Stock Option Scheme called “ZEEL ESOP 2009,” for the benefit of present and future employees including Executive/Non-Executive Directors of the Company and such other persons including employees/Directors of Holding/Subsidiary companies, now or in future, in accordance with the provisions of prevailing regulations.

To promote the culture of employee ownership, approval of the shareholders is being sought for issue of stock options to the employees of the Company.

The following are the salient features of the Scheme, and various disclosures as required by Clause 6 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the “SEBI Guidelines”):

1. Total number of options to be granted:

A number of options to be granted under the Scheme would equal to and shall not exceed 5% of the issued, subscribed and paid-up equity shares of the Company as on March 31, 2009, i.e. up to 21,700,355 Equity Shares of Re. 1/- each of the Company. It is also proposed to reserve maximum of 1,000,000 options for grant to the Directors (other than Promoter Directors) of the Company from time to time. In the event of any corporate action(s) viz. bonus, consolidation or other re-organisation of the capital structure of the Company, number of options/shares to be issued shall undergo fair, reasonable and appropriate adjustments pursuant to the SEBI Guidelines. Each option when exercised would be converted into one Equity Share of Re. 1/- each fully paid-up.

Any vested option(s) that lapse due to non-exercise or unvested option(s) that get cancelled due to resignation of the employees or otherwise, would be available for being re-granted at a future date.

2. Identification of classes of employees entitled to participate in the Employee Stock Option Scheme:

All employees of the Company, including Executive & Non-Executive Directors, but excluding the Promoters of the Company, as may be decided by the Remuneration Committee from time to time, would be entitled to be granted stock options under the ESOP Scheme.

3. Transferability of employee stock options:

The stock options granted to an employee will not be transferable to any other person and shall not be pledged, hypotheticated, mortgaged or otherwise alienated in any manner. However, in the event of the death of an employee/option holder while in employment, the right to exercise all the vested options granted to him/her till such date shall be transferred to his/her legal heirs or nominees.

4. Requirements of vesting, period of vesting and maximum period of vesting:

The Options granted shall vest, not earlier than one year and not later than five years from the date of grant of options, so long as the employee continues to be in the employment of the Company, as the case may be. Vesting shall happen in one or more tranches, subject to such terms and conditions of vesting as may be decided by the Board/Remuneration Committee including but not limited to certain performance metrics (on the achievement of which the granted options would vest) and the proportion in which options granted would vest.

5. Exercise Price or Pricing Formula:

The Options would be granted at an exercise price equal to the ‘market price’ within the meaning as defined in the SEBI Guidelines i.e. the latest available closing market price (on that stock exchange where there is highest trading volume) on the date prior to the date on which the options are granted to the employees.

6. Exercise Period and the process of Exercise:

The Exercise period would commence from the date of vesting and will expire on completion of four years from the date of vesting of such options. The options will lapse if not exercised within the specified exercise period or such other period as may be decided by the Board.

The options will be exercisable by the Employees by a written application addressed to the designated officer of the Company intimating his intention to exercise the options in such manner, and on execution of such documents, as may be prescribed by the Board/Remuneration Committe from time to time.


7. Appraisal Process for determining the eligibility of the employees to ESOP:

The Company has a formal performance appraisal system established in line with emerging standards, wherein the performance of employees is assessed each year on the basis of various functional and managerial parameters. Stock Options would be granted based on performance linked parameters, value creation, leadership, role/designation of the employee, length of service with the Company, past performance record, future potential of the employee and/or such other criteria that may be determined by the Board/ Remuneration Committee at its sole discretion. The Board/Remuneration Committee may at its sole discretion extend the benefits to a new entrant on such basis as it may deem fit.

8. Maximum number of options to be issued per employee and in aggregate:

The number of options that may be granted to any specific employee under the Scheme will depend upon the rank/designation of the employee and shall be in the aggregate less than 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant of options.

9. Disclosure and Accounting Policies:

The Company shall comply with the disclosure and the accounting policies prescribed under SEBI Guidelines and/or the Accounting Standards.

10. Method of option valuation:

To calculate the employee compensation cost, the Company shall use the Fair Value Method for valuation of the options granted. In case the Company calculates the employee compensation cost using the Intrinsic Value of the stock options, the difference between the employee compensation cost so computed and the cost that shall have been recognised if it had used the Fair Value of the options, shall be disclosed in the Directors’ Report and also the impact of this difference on profits and on EPS of the Company shall also be disclosed in the Directors’ Report.

As the employee stock option scheme provides for issue of shares to be offered to persons other than existing shareholders of the Company, consent of the Members is being sought pursuant to Section 81(1A) and all other applicable provisions, if any, of the Companies Act, 1956 and as per Clause 6(1) of the SEBI Guidelines.

As per Clause 6(3) of the SEBI Guidelines, a separate special resolution is required to be passed if the benefits of the Scheme are to be extended to employees/Directors of subsidiary or holding company, existing now or formed or acquired in future.

The Board recommends the Special resolutions as set out in Item Nos. 8 & 9 for the Member’s approval.

None of the Directors of the Company are in any way concerned or interested in this resolution, except to the extent of any option that may be offered or securities that may be issued to them under the Scheme.

Item No. 10

As per the existing Article 95 of the Articles of Association of the Company, every deed or agreement on which the Common Seal of the Company needs to be affixed shall be executed by a duly constituted attorney or by a Director of the Company. This creates administrative inconvenience. For operational convenience, it is therefore proposed to alter Article 95 of the Articles of Association, whereby the Common Seal of the Company can be affixed on any deed or agreement executed by any Director or Company Secretary or any officer authorised by the Board or any Board Committee.

Further with a view to take any future benefit of recent amendments to Companies Act, 1956, permitting buy-back of shares by insertion of Section 77A and also issuance of shares with Differential Voting Rights pursuant to amendment to the Companies Act, 1956, it is proposed to include appropriate enabling provisions in the Articles of Association by inserting Article 7A & 7B after existing Article 7 to the Articles of Association of the Company.

As per provisions of Section 31 of the Companies Act, 1956, any alteration(s) to the Articles of Association of the Company would require approval of Members through a Special Resolution.

The Board recommends the Special resolution as set out in Item No. 10 for the Member’s approval.


Item No. 11 & 12

The Authorised Share Capital of the Company currently is Rs. 75 crores consisting of 50 crores Equity Shares of Re. 1 each and 25 lakhs Cumulative Redemable Preference Shares of Rs. 100/- each. The paid up capital of the


Company as on date is Rs. 43.40 crores comprising of 434,007,111 Equity Shares of Re. 1 each. To facilitate any capital infusion by way of issuance of further shares any time in future, including issue of shares to employees upon conversion of the Stock Options from time to time, it is considered appropriate to alter the existing capital clause by converting the Preference Shares into Equity Shares. Therefore, Clause V of the Memorandum of Association and Article 3(a) of the Articles of Association of the Company are proposed to be altered such that the Authorised Share Capital of the Company after alteration shall be Rs. 75,00,00,000 (Rupees Seventy Five Crores only) consisting of 75,00,00,000 (Seventy Five Crores) Equity Shares of Re. 1 each.

Pursuant to the provisions of Section 94 and other applicable provisions of the Companies Act, 1956, any alteration to the authorized share capital would require approval of the shareholders and the proposed amendments to the Memorandum & Articles of Association of the Company are consequential in nature.

The Board recommends the resolutions as set out in Item Nos. 11 and 12 for the Member’s approval as Ordinary and Special resolution respectively.


Item No. 13

Mr. Punit Goenka, was appointed as Whole-time Director of the Company for a period of 5 years with effect from January 1, 2005, which was approved by the Members’ resolution passed at 23rd Annual General Meeting held on September 28, 2005. The said appointment was made at the remuneration and perquisite as detailed in the explanatory statement to aforesaid resolution. Thereafter consequent to resignation of Mr. Pradeep Guha as Chief Executive Officer of the Company, the Board of Directors at its meeting held on July 23, 2008 appointed Mr. Punit Goenka as Whole-time Director & Chief Executive officer of the Company with effect from August 1, 2008 and consequent to such additional responsibility assigned, the remuneration payable to Mr. Punit Goenka was revised as per details mentioned herein:

a) Basic Salary:

The Basic Salary of Mr. Punit Goenka shall be Rs. 16,75,000 per month, with the authority to the Board of Directors to determine any increase from time to time within in the scale of Rs. 16,75,000 to Rs. 25,00,000 per month. The annual increment will be merit based.

b) Perquisites & Allowances:

In addition to the basic salary payable, Mr. Goenka shall be entitled to perquisites and allowances like:

i. Company maintained accommodation or House Rent Allowance in lieu thereof subject to a maximum of 50% of Basic Salary as per rules of the Company.

ii. Personnel allowance of Rs. 2,25,000/- per month with annual increase as may be determined by the Board, subject to a ceiling of 25% of Basic Salary.

iii. Medical reimbursements, leave travel allowance (subject to a maximum of one month basic salary in a year), club fees, personel accident & medical insurance, use of chauffeur driven Company car, telecommunication facilities at residence and such other perquisites and allowances in accordance with rules of the Company.

iv. Company’s contribution to provident fund, gratuity and leave encashment as per the rules of the Company; and

v. Annual performance bonus/incentive, if any, based on the performance criteria as laid down by or approved by the Board.

Perquisites shall be evaluated as per Income Tax Rules, wherever applicable. In the absence of any such rules, perquisites shall be evaluated at actual cost.

c) Overall Remuneration:

The aggregate of salary, perquisites and allowances in any one financial year shall not exceed the limits prescribed under Sections 198, 309 and other applicable provisions of the Companies Act, 1956, read with Schedule XIII to the said Act for the time being in force.

d) In the event of loss or inadequacy of profit in any financial year during the currency of tenure of services of the Whole-time Director & CEO, the payment of salary, perquisites and other allowances shall be governed by the limits prescribed under Section II of Part II of Schedule XIII of the Companies Act, 1956.


The revised remuneration as detailed hereinabove shall be effective from August 1, 2008 and shall be valid till the expiry of current tenure of appointment of Mr. Punit Goenka as Whole-time Director i.e. upto December 31, 2009.

Members may note that after the aforesaid revision, in view of the recent economic downturn affecting the economy, in line with the cost rationalization efforts and salary cuts effected in the Company, the remuneration payable to Mr. Punit Goenka was also reduced effective April 1, 2009 to which Mr. Goenka has agreed to. Consequently, the remuneration payable to Mr. Punit Goenka stands reduced to Rs. 18.05 Lakhs per month. Your Board, however, seeks to reserve the right of increasing the same appropriately within the overall ceiling approved by the Members.

The Board recommends Resolution No. 13, for the approval of the Members.

None of the Directors of the Company, except Mr. Punit Goenka, his father Mr. Subhash Chandra and relative Mr. Laxmi N. Goel, are concerned or interested in this resolution.

Item No. 14

Members of the Company, at the 24th Annual General Meeting held on December 28, 2006, had approved appointment of Mr. Subhash Chandra, Chairman of your Company, as Chief Executive Officer of Asia T.V. Limited, UK, a wholly owned foreign subsidiary of your Company engaged in the business of broadcasting television channels in United Kingdom, Europe, Russia and other overseas countries, for a period of three (3) years with effect from April 1, 2006 at an annual remuneration of £. 50,000 (Fifty Thousand Sterling Pounds). The said appointment expired on March 31, 2009.

Since Mr. Subhash Chandra has been re-appointed as Chief Executive Officer of Asia TV Limited, UK, effective April 1, 2009 the Board at its meeting held on June 26, 2009, took note of aforesaid appointment at same remuneration of £. 50,000 (Fifty Thousand Sterling Pounds), excluding performance bonus and perquisites, as per the corporate policy of Asia TV Limited, UK, for a further period of 3 years with effect from April 1, 2009, subject to the Members approval.

Pursuant to the provisions of Section 314 of the Companies Act, 1956, this appointment of Mr. Subhash Chandra in Asia TV Limited, UK, shall be construed as an office or place of profit and is required to be approved by the Members of the Company by way of a Special Resolution.

Your Board is of opinion that Mr. Chandra’s experience and entrepreneurial skill will benefit overseas broadcasting operations, managed by Asia TV Limited, UK and its stakeholders and hence your Board recommends the Special resolution no. 14 for the approval of the Members.

None of the Directors, other than Mr. Subhash Chandra himself, Mr. Laxmi Narain Goel being brother and Mr. Punit Goenka being son of Mr. Subhash Chandra, are in any way concerned or interested in this resolution.

By order of the Board

Place : Mumbai M. LakshminarayananDate : June 26, 2009 Executive Vice President & Company Secretary

Registered Office:Continental Building,135, Dr. Annie Besant Road,Worli, Mumbai 400 018


CERTIFICATION ON FINANCIAL STATEMENTS OF THE COMPANY

We, Punit Goenka, Whole-time Director & CEO, Hitesh Vakil, Director-Finance of Zee Entertainment Enterprises Limited (‘the Company‘), certify that:

(a) We have reviewed the financial statements and the cash flow statement of the Company for the year ended March 31, 2009 and that to the best of our knowledge and belief:

i) these statements do not contain any materially untrue statement or omit any material fact or contain statement that might be misleading;

ii) these statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.

(b) To the best of our knowledge and belief, no transactions entered into by the Company during the year ended March 31, 2009 are fraudulent, illegal or violative of the Company’s Code of Conduct.

(c) We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of the internal control systems of the Company pertaining to financial reporting and have disclosed to the Auditors and Audit Committee deficiencies in the design or operation of such internal controls, if any, of which we are aware and steps taken or proposed to be taken to rectify these deficiencies.

(d) During the year:

i) there has not been any significant change in internal control over financial reporting;

ii) there have not been any significant changes in accounting policies; and

iii) there have been no instances of significant fraud of which we are aware that involve management or other employees having significant role in the Company’s internal control system over financial reporting.

Hitesh Vakil Punit GoenkaDirector- Finance Whole-time Director & CEO

Date : June 26, 2009Place : Mumbai


DIRECTORS’ REPORTTo the Members ofZee Entertainment Enterprises Ltd.,Your Directors take pleasure in presenting the Twenty Seventh Annual Report together with the Audited Statement of Accounts of the Company for the year ended March 31, 2009.RESPONSIBILITY STATEMENTIn terms of and pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors, in relation to the Annual Statement of Accounts for financial year 2008-2009, state and confirm that:a) the Accounts had been prepared on a going

concern basis and in such preparation the applicable accounting standards had been followed with proper explanation relating to material departures;

b) your Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year, and of the profit of the Company for that year; and

c) your Directors had taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 as amended, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

FINANCIAL RESULTSThe Financial Performance of your Company for the year ended March 31, 2009 is summarized below:

(Rs. Thousands)Particulars Year ended

31.03.2009Year ended 31.03.2008

Sales & Services 12,102,425 10,419,923Other Income 1,050,920 1,019,293Total Income 13,153,345 11,439,216Total Expenses 9,391,441 6,869,997Profit before Tax & Exceptional Items

3,761,904 4,569,219

Less: Exceptional ItemProvision for diminution in value of Investment (25,806) 25,806Provision for Taxation (net) 690,264 1,592,203Profit after Tax 3,097,446 2,951,210Add: Balance brought forward

7,209,482 5,571,728

Amount available for appropriations

10,306,928 8,522,938

Appropriations:Dividend 868,014 868,014Tax on Dividend 145,441 145,442General Reserve 400,000 300,000Balance carried forward 8,893,473 7,209,482

DIVIDENDYour Directors are pleased to recommend a dividend of Rs. 2 per equity share of Re. 1/- each, for the financial year 2008-09. The total outflow for this purpose would be Rs. 1013.45 million, which includes a dividend of Rs. 868.01 million and tax on dividend of Rs. 145.44 million.BUSINESS OVERVIEWIn a year which saw huge inflow of new entrants into the Media & Entertainment space, your Company continued to be the benchmark for existing and new players with its offerings and consequently affinity developed with viewers and advertisers alike.Zee TV ended the year with a strong push towards leadership in the Hindi general entertainment genre on the back of a slew of successful new launches including ‘Choti Bahu’, ‘Dance India Dance’ and ‘Shree’. ‘Choti Bahu’ helped extend primetime by developing the slot and is the leader in the evening 7:30 p.m. slot. ‘Dance India Dance’ saw unprecedented participation and viewer response from even smaller markets across the country. Premier programmes as ‘Sa Re Ga Ma Pa’ - the No.1 talent reality show on TV, family serials including ‘Shree’, ‘Maayka’, ‘Ghar Ki Lakshmi…Betiyaan’, ‘Dulhan’ continued their success amongst viewers.As a market leader in the Hindi movie genre, Zee Cinema continued to excite viewers consistently with its line-up of movies. This year, the most successful franchisee of ‘Shanivaar Ki Raat, Amitabh Ke Saath’ transformed into ‘Shanivaar Ki Raat, Sitaaron Ke Saath’. The promise of showing the biggest movies and premieres in Hindi cinema, on Saturday nights drew a strong viewer interest. During the summer break, Zee Cinema launched ‘Dopahar Zee Cinema Par’, a film festival for kids with Darsheel Safary as the brand ambassador, growing the brand significantly.Zee café maintained its success by bringing the best of the English series & sitcoms into India including the ‘Old School Omnibus’ which has been a huge hit with the India viewers. Zee café also created original content on the channel to further strengthen its offering to the discerning Indian audience. Zee studio’s first mover initiatives including subtitling of movies in English helped it to generate strong viewer preference.Despite the effects of recession on the advertising industry at large, your Company’s market presence and affinity with viewers built through initiatives as summarized above has helped it to garner and grow advertising revenues at the expense of competition.In addition to a strong presence in cable households, exciting offerings across multiple channels has helped your Company to expand its presence in households serviced by digital platforms. This is expected to positively impact subscription revenues.


SUBSIDIARIES AND NEW VENTURESOverseas SubsidiariesDuring the year, Asia Today Ltd., Mauritius, a wholly owned overseas subsidiary of your Company, acquired the balance 40% equity stake in Asia Business Broadcasting (Mauritius) Limited, a Company registered in Mauritius and divested its entire 100% holding in Pan Asia Infrastructure Limited, Mauritius.Additionally with a view to comply with the regulatory requirements for Russian Broadcasting Operations, Asia TV Ltd., UK, an overseas subsidiary of your Company created/acquired an indirect subsidiary called ‘OOO Zee CIS Holdings Limited’ in Russia during the year.New VentureTo capitalize on the opportunities and synergies, your Company ventured into the film production and distribution business, with launch of two labels – Zee Motion Pictures and Zee Limelight for mainstream and niche films, respectively and for the purpose, created/acquired the following direct/in-direct subsidiaries during the year:– ZES Holdings Limited, Mauritius– Zee Entertainment Studios Limited, British Virgin

Islands– ZES Mauritius Limited, Mauritius– ZES International Limited, United Kingdom– Zee Motion Pictures Private Ltd., IndiaMinistry of Corporate Affairs, Government of India has, vide its letter Nos. 47/301/2009-CL-III dated April 28, 2009 and June 6, 2009, granted exemption to the Company from applicability of provisions of Section 212(1) of the Companies Act, 1956 relating to attachment of the accounts of its subsidiaries to its Annual Accounts for financial year ended March 31, 2009. Accordingly, the annual accounts of the subsidiaries for current financial year are not being attached with the Annual Report of the Company. Financial highlights of the subsidiaries are disclosed in the Annual Report and the Accounts of the subsidiary companies are available for inspection by any Member of the Company who may be interested. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.SHARE CAPITALDuring the financial year 2008-09, your Company had issued, allotted and listed 440,346 Equity Shares of Re. 1/- each upon conversion of 154 Foreign Currency Convertible Bonds (FCCBs) of US $ 10,000 each issued in 2004, resulting in the increase in Paid up share capital of the Company to 434,007,111 equity shares of Re. 1 each. Subsequently, in April 2009, as per the terms of issuance of FCCBs, your Company has redeemed and repaid 379 FCCBs aggregating US $ 3.79 million which were outstanding on the date of redemption.

PUBLIC DEPOSITSDuring the year, your Company has neither accepted nor renewed any Deposits under Section 58A and Section 58AA of the Companies Act, 1956, read with Companies (Acceptance of Deposits) Rules, 1975.CORPORATE GOVERNANCEYour Company has been benchmarking itself with well-established Corporate Governance practices besides strictly complying with the requirements of Clause 49 of the Listing Agreement including the recent amendments. During the year, your Company has put in place a formalized system of Corporate Governance by initiating implementation of a Corporate Governance Manual which sets out the structure, processes and practices of governance within the Company and its subsidiaries. Given the emerging pivotal role of Independent Directors in bringing about good governance, your Company continues its efforts in optimum utilization of their expertise and involving them in all critical decision making processes. A separate report on Corporate Governance together with the Statutory Auditors’ Certificate on compliance is attached to this Annual Report and also a Management Discussion and Analysis Statement.CORPORATE SOCIAL RESPONSIBILITYCorporate Social Responsibility (CSR) of all Essel Group Companies, including your Company, has been unified and centralized at the group level. The CSR policy at Essel Group is based on the belief that a business cannot succeed in a society that fails and therefore it is imperative for business houses, to invest in the future by taking part in social-building activities.CSR is a very broad concept and includes an obligation by every corporate to consider the interests of the societyby taking responsibility for the impact of its activities on customers, suppliers, employees, shareholders, communities and other stakeholders.During the year under review, a number of social activities have been undertaken both by the individual companies and the Group as a whole including:• Adoption of school(s)/village(s) in tribal areas

through Ekal Vidyalaya Foundation, an NGO that works to bring about basic literacy and health awareness amongst the tribal and rural population of India. Zeel has also sought to increase awareness of the work being done by Ekal through its television channels and help it achieve its goal of eradicating illiteracy from tribal India by 2011.

• The Essel Group is a strong supporter of the Global Vipassana Foundation. Vipassana is a 2,500 year old non-sectarian, rational process of mental purification through self-observation which has been propagated by the Group to bring about spiritual well being and peace within the individual and the society as a whole. The Group is also actively involved in the ‘Global Vipassana Pagoda’,


an architectural marvel which has the potential to be called the 8th wonder of the world. The land for the site was donated by the Group and a large amount of contribution both financially and in terms of time and expertise has been made over the years. The website www.globalpagoda.org is also designed and hosted by the Group.

• The Essel Group also supports the Global Foundation for Civilizational Harmony, a body dedicated to bringing together all the religions and cultures of the world on a common platform, resolve existing disputes amongst them and help create a peaceful and harmonius society. A large amount of contribution in terms of time and effort has been made to this cause by the Essel Group. The website www.gfchindia.com has been designed and hosted by the Group.

EMPLOYEES STOCK OPTION SCHEME

With a view to reward employees for their contribution; encourage value creation and value sharing with employees; & attract and retain best talents, your Board has proposed, subject to your approval, introduction and implementation of an Employee Stock Option Scheme, for allotment of stock options equivalent to 5% of paid up equity share capital to the employees/Directors of the Company and/or its present and future holding/subsidiary companies. Detailed proposal, seeking Members approval, in this regard, forms part of notice of ensuing Annual General Meeting.

DIRECTORS

Due to reason of ill-health, Mr. D. P. Naganand resigned and ceased to be a Non- Executive Independent Director of your Company effective March 16, 2009. Your Directors would like to record their appreciation of the services rendered by Mr. Naganand.

Messrs Subhash Chandra, B. K. Syngal and M. Y. Khan, Directors, retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment. Your Board has recommended their re-appointment.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Accounting Standard AS 21 – Consolidated Financial Statements, read with Accounting Standard AS 23 – Accounting for Investments in Associates, and Accounting Standard 27 – Financial Reporting of Interests in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report.

AUDITORS

Statutory Auditors M/s. MGB & Co., Chartered Accountants, Mumbai, retire at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company is into the business of Broadcasting of General Entertainment Television Channels. Since these activities does not involve any manufacturing activity, most of the Information required to be provided under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is not applicable.

However the information as applicable are given hereunder:

Conservation of EnergyYour Company, being a service provider, requires minimal energy consumption and every endeavour has been made to ensure optimal use of energy, avoid wastages and conserve energy as far as possible.

Technology AbsorptionIn its endeavour to deliver the best to its viewers and business partners, your Company has been constantly active in harnessing and tapping the latest and best technology in the industry.

Foreign Exchange Earnings and OutgoParticulars of foreign currency earnings and outgo during the year are given in Schedule 18B Note 13(d) to the Notes to the Accounts forming part of the Annual Report.

PARTICULARS OF EMPLOYEES

Information as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in an annexure forming part of this report.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to place on record their appreciation of the dedication and commitment of employees at all levels that has contributed to the success of your Company and remain in the forefront of media and entertainment business. Your Directors thank and express their gratitude for the support and co-operation received from the Central and State Governments – mainly the Ministry of Information & Broadcasting and the Department of Telecommunication – and other stakeholders including viewers, producers, vendors, financial institutions, banks, investors, service providers as well as regulatory and governmental authorities.

On behalf of the Board

Subhash ChandraChairman

Place: MumbaiDate: June 26, 2009


Information as per Section 217(2A) of the Companies Act, 1956 and Companies (Particulars of Employees) Rules, 1975 and forming part of the Directors’ Report for the year ended March 31, 2009

ANNEXURE TO DIRECTORS’ REPORT

Sr. No.

Name Age Designation Total Remuneration

(Rs.)

Qualification Exp.in

Yrs.

Date of Commence-

ment of Employment

Previous Employment

1 Ajay Bhalwankar 38 Sr. Vice President - Programming

7,142,190 M.A. 17 14-May-01 Tara Channel

2 Anil Anand 46 Sr. Vice President - Programming

3,777,259 B.Com., PGD in Marketing 25 20-Nov-00 Reliance Industries Ltd. (Infocom Division)

3 Ashish Sehgal 40 Sr. Vice President - Sales 6,065,181 B.Com, LLB 12 11-Jan-06 Star India Pvt. Ltd.4 Bharat Ranga 40 Chief Operating Officer

- International Operations 15,199,658 B.Com, MBA 19 4-Mar-98 Modi Korea

Telecommunication5 Gaurav Bahal 35 Vice President - Operations 4,842,375 Dip. in Broadcast Journalism 14 17-Apr-07 ESPN6 Himanshu Mody 31 Director - Programming 9,584,376 Msc - Finance University

Strath Clyde Glasgow7 1-Apr-05 Essel Corporate

Resources Pvt. Ltd.7 Hitesh Vakil 49 Director - Finance & Operations 11,151,905 B.Com, ACA. 24 1-Oct-95 Tips & Toes Cosmetics8 Indranil Chakravarti 37 Head - Strategy & Business

Development 8,400,847 BBA, CPA 13 2-May-05 JP Morgan Plc.

9 Ishwar Jha 36 CEO - DMCL 8,689,981 B.Com, PGDCA 16 9-Aug-04 Sony Music Entertainment

10 Jitesh Rajdeo 36 Sr. Vice President - Sales 5,860,304 B.Com, MMM 14 1-Jan-02 Econnect India Ltd.11 Joy Chakraborthy 42 Chief Revenue Officer 36,479,503 B.Sc, MMM 17 9-Mar-05 Star India Pvt. Ltd.12 M. Lakshminarayanan 46 Executive Vice President &

Company Secretary 6,495,432 B.Com, ACS 26 19-Jan-06 BPL Power Projects

13 Mohan Gopinath 37 Sr. Vice President - Programming

5,933,773 B.Com., MMS 12 19-Dec-96 Nil

14 Nitin Vaidya 48 Chief Operating Officer - National Channels

12,033,960 B.Sc 23 19-Apr-01 Broadcast Worldwide

15 Punit Goenka 34 Whole-time Director & CEO 26,267,096 B.Com 12 1-Jan-05 ASC Enterprise Limited16 Rajib Chatterjee 37 Sr. Vice President - Zee Bangla 7,751,839 B.Com 17 27-Sep-04 Eenadu Network17 Rudolf D’sa 40 Sr. Vice President - Operations 5,071,976 B.A. 18 16-Oct-92 Lady London Pvt. Ltd.18 Sanjoy Chatterjee 42 Sr. Vice President - Sales 4,860,686 B.Com 18 25-Apr-05 Sony Entertainment

Television19 Santosh Shendye 44 Head - Inhouse Production 3,522,997 B.A. 18 20-Nov-92 Full Lights20 Sujay Kutty 40 Sr. Vice President -

Programming 5,304,659 B.Com 17 10-Dec-01 Sony T.V.

21 Tarun Mehra 41 Executive Vice President 7,892,817 BE, MMS 15 7-Jan-05 Shaw Wallace22 Anjana Kshetry 43 Sr. Vice President - Sales 4,584,372 B.Com., Mass. Comm. 20 7-Apr-00 Modi Entertainment23 Laxmi Shetty 41 Sr. Vice President - MIS 5,836,152 B.Sc, DMM 21 1-Jun-05 Bennett Coleman & Co.24 Priyanka Datta 37 Sr. Vice President - Sales 5,688,574 MA 15 1-May-02 SAB T.V.25 Shekhar Kadav 46 Sr. Vice President - I.T. 3,581,552 B.Com 21 1-Apr-04 Freelancer26 Anurag Bedi 32 Vice President - Sales 4,010,178 HSC, Degree in Nautical Sci 8 5-Feb-07 Star India Pvt. Ltd.27 Vijay Anand

Kondapaneni33 Executive Assistant 4,180,857 B.Sc, PGD in Adv. & Comm. 11 2-Jan-06 Star India Pvt. Ltd.

28 Mehul Shah 38 Vice President - Accounts 3,565,212 M.Com, C.A., MFM 13 11-Mar-02 Biopas India Corp Ltd.29 Sushruta Samanta 38 Vice President - Strategy &

Business Development(International Markets)

2,697,548 B.E, PGDMM 12 25-Mar-08 Starcom

30 Mukund Cairae 38 Executive Vice President - International Business

4,518,553 MBA 9 1-Jul-04 Nil

31 Vijay Sanil 31 Dy. Vice President - Sales 3,355,377 B.Sc., PGDBM 9 10-Jun-04 Nil32 Siju Prabhakaran 35 Dy. Vice President - Sales 3,345,177 B.TECH., M.B.A. 11 27-Sep-04 Hangama T.V.33 Akash Chawla 32 Vice President - Marketing 3,592,814 B.COM, MMS 8 23-May-05 S-group Tam34 Sanjeev Lamba 48 Director - Marketing & Sales

(Movies) 12,985,440 BA / MBA 27 30-Jan-08 The Weinstien Company

35 Utpal Das 43 Sr. Vice President - Commercial 3,069,005 BE Mech & Master in Intl Bizz 20 11-Jun-08 Bennette Coleman Ltd.


Sr. No.

Name Age Designation Total Remuneration

(Rs.)

Qualification Exp.in

Yrs.

Date of Commence-

ment of Employment

Previous Employment

36 Shaswati Saradar 37 Vice President - Marketing 3,352,854 * BA, PGD in Adv & PR 14 18-Aug-08 Maruti Suzuki India Ltd.37 Priya Mishra 37 Creative Head 2,081,934 * BA, MA 7 1-Sep-08 Freelancer38 Sunita Uchil 40 Vice President - Sales 2,008,406 * BA PGD Advt. & PR 15 5-Sep-08 Shamal Media Services

Sharjha UAE39 J. Shekar 46 Vice President - Sales 1,680,590 * B.E., 24 1-May-08 BPL LTD.40 Rahul Kumar Shaw 36 Head of Sales - Sports Business 441,937 * B.Com 9 5-Mar-09 Inx News Pvt. Ltd.41 Dilip Roy 50 President - Human Resources 7,653,616 * B.A., PGDHR in Ind.

Relations (Xlri)27 9-Apr-08 Jubliant Organosys Ltd.

42 Pawan Jailkhani 39 Sr. Vice President - Sales 5,276,456 B.Sc. 15 2-Jan-95 The Pioneer Ltd.43 Pradeep Guha 57 CEO 34,306,567 * B.A., Aamp (Asian Institute

of Mgmt-Manila)31 15-Jan-05 Bennett Coleman & Co.

44 Irshwin Balvani 56 Executive Vice President - Zee Music

12,149,991 * B.A. DMM 32 1-Jul-05 Bennett Coleman & Co.

45 Sanghamitra Ghosh 53 Director - Hr 9,292,654 * B.Sc, PGD 23 1-Apr-03 Zee Interactive Learning Systems Ltd.

46 Sharada Sunder 42 Sr. Vice President - Commercial 2,911,757 * B.Com, C.A. 18 11-May-05 Bennett Coleman & Co.47 Romila Sharma 44 Sr. Vice President -

Programming 2,198,459 * B.A., Dip. in Hot Mgt. 15 20-Mar-06 Sony Entertainment

Television48 Sheetal Mehra 37 Vice President - Sales 1,809,543 * B.A, PGD, DMM 14 2-Jan-06 Radio Mirchi49 Vaishali Kasturia 39 Vice President - Programming 2,674,303 M.Sc, MMS , Dip. JOUR. 16 20-Mar-97 Shogun Network50 Simran Hoon 38 Sr. Vice President - Sales 624,047 * B.A., PGDMM 15 28-Mar-05 Star India Pvt. Ltd.51 Deepender Sehajpal 37 Vice President - Marketing 3,003,190 B.Sc, MBA 11 9-Mar-07 Self Employed52 Rajan Dange 44 Sr. Editor 2,635,462 HSC 21 2-Feb-93 Bombino Video 53 Sachin Rumde 33 Dy. Vice President - Operations 2,595,201 BE, MMS 9 1-Jun-00 Nil54 Samir Kadam 37 Dy. Vice President - Sales 1,972,020 * Bcom 14 1-Dec-05 Etc Networks Ltd.55 Santosh R. Pillai 36 Dy. Vice President - Marketing 2,801,808 PGD in Advt & Comm Mgt. 12 1-Mar-07 Madison Creative56 Shanti Miranda 38 Dy. Vice President - Finance 2,533,585 B.Com, MFM 17 11-Oct-93 Elbee Services Ltd.57 Roy Tauro 37 Dy. Vice President - IT 2,417,582 B.Sc 13 24-Jul-98 Activa58 Gunjarav Nayak 33 Dy. Vice President - Sales 3,165,665 B.Com, PGDBM 10 1-Sep-01 Sai Service Station59 Ashish P. Golvalkar 33 Dy. Vice President - Non-Fiction

Content 2,565,096 B.Sc 11 9-Apr-01 Broadcast World

Wide Ltd.60 Archana Agarwal 43 Dy. Vice President - Sales 2,743,061 M.Com 20 2-Dec-02 Media Consultant61 Rajneesh Gupta 35 Dy. Vice President - Sales 2,445,050 B.Com., MBA. 10 1-Aug-98 Nil62 Samrat Ghosh 32 Dy. Vice President - Sales 2,969,425 B.Sc., PGDBA 8 26-Dec-00 Nil63 Monali Ghosh 36 Dy. Vice President - Sales 3,210,109 M.A., MMM 13 15-Apr-05 Bennett Coleman & Co.64 Deepti Verma 27 Dy. Vice President - Channel

Placement 2,811,510 B.Com, MBA 6 2-Nov-05 Raj Homes Pvt. Ltd.

65 Jay Sampat 34 Dy. Vice President - Marketing 2,575,505 B.E., MS, CFA 10 15-Feb-06 Sony Entertainment Television

* Indicates remuneration is for part of the year.

Notes : 1. All appointments are contractual and terminable by notice on either side.

2. None of the Employees, except Mr. Punit Goenka are related to any of the Directors.

3. Remuneration includes Salary, Allowances, Company’s Contribution to Provident Fund, Medical Benefits, Leave Travel Allowance & Other Perquisites and benefits valued on the basis of the provisions of Income Tax Act,1961.


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REPORT ON CORPORATE GOVERNANCE

Company’s Governance Philosophy

Corporate Governance, which assumes great deal of importance at Zee Entertainment Enterprises Limited (ZEEL), is intended to ensure value creation for all its stakeholders. ZEEL believes that the governance process must ensure adherence and enforcement of the principles of sound Corporate Governance with the objectives of fairness, transparency, professionalism, trusteeship and accountability, while facilitating effective management of the businesses and efficiency in operations. The Company is committed to achieve and maintain highest standards of Corporate Governance on an ongoing basis. In its endeavour to improve in all aspects of Corporate Governance, ZEEL’s Board has approved and implemented a comprehensive Corporate Governance Manual during the year which contains guidelines covering decision making authority levels, the policies and processes which provide an effective and flexible governance framework in the Company realizing the need to ensure an effective mechanism of checks and balances with transparency and accountability as the hallmark.

Board of Directors

a) Composition and Category of DirectorsZEEL has a balanced Board with combination of Executive and Non-Executive Directors, to ensure independent functioning. Non-Executive Directors include independent professionals with experience in business, finance, taxation, technology and media. Independent Directors of the Company provide appropriate annual certifications to the Board confirming satisfaction of the conditions of their being independent as laid down in Clause 49.

Composition of the Board as on March 31, 2009

Category of Directors No. of Directors Percentage to total No. of Directors

Executive Directors 1 10%Non-Executive Independent Directors 6 60%Other Non-Executive Directors 3 30%Total 10 100%Particulars of Directors, their attendance at the Annual General Meeting and Board Meetings held during the financial year 2008-09 and also their other directorships held in Public Companies (excluding Foreign Companies and Section 25 Companies) and membership of other Board Committees (excluding Remuneration Committee) as at March 31, 2009 are as under:

Name of Director Category Attendance at

No. of Directorship

of other companies

No. of membershipsof Board Sub- Committees

Board Meetings (Total 7

Meetings)

26th AGM held on 23.07.08

Ashok Kurien Promoter – Non-Executive 6 Yes 2 1B. K. Syngal Independent – Non-Executive 4 No 3 4#D. P. Naganand Independent – Non-Executive 6 Yes NA NAGulam Noon Independent – Non-Executive 2 Yes – –Laxmi N. Goel Promoter – Non-Executive 4 Yes 7 1M. Y. Khan Independent – Non-Executive 6 Yes 1 –N. C. Jain Independent – Non-Executive 6 Yes 2 –Rajan Jetley Independent – Non-Executive 2 No 1 1R. Vaidyanathan Independent – Non-Executive 7 Yes 2 –Subhash Chandra Promoter – Non-Executive 7 Yes 6 1Punit Goenka Promoter – Executive 7 Yes 14 1

#Resigned as Director w.e.f March 16, 2009

b) Board Meetings & ProceduresDuring the financial year under review, 7 meetings of the Board were held on April 15, 2008, June 16, 2008, July 23, 2008, July 30, 2008, October 21, 2008, December 5, 2008 and January 21, 2009. The intervening period between


any two Board Meetings were well within the maximum time gap of 4 months prescribed under Clause 49 of the Listing Agreement. The annual calendar of meetings is broadly determined at the beginning of each year.

Meetings of the Company are governed by a structured agenda. The Meetings are generally held at the Registered and Corporate Office of the Company at Continental Building, 135, Dr. Annie Besant Road, Worli, Mumbai 400 018. The Company Secretary in consultation with Chairman/Whole-time Director & Chief Executive Officer finalises agenda of the Board meetings. All major agenda items, backed up by comprehensive background information, are sent well in advance of the date of the Board meetings to enable the Board to take informed decision. Any Board member may, in consultation with the Chairman, bring up any matter for consideration by the Board. Head of Department of Finance & Accounts is normally invited to the Board meetings to provide necessary insights into the working of the Company and for discussing corporate strategies.

The Board periodically reviews Compliance Reports in respect of various laws and regulations applicable to the Company.

c) Brief profile of the Directors of the Company to be appointed/re-appointed at the Annual General Meeting B. K. Syngal, 69, is a Non-Executive Independent member of Board of the Company. He was the Vice-Chairman of BPL Communications Limited and Chairman of Internet, broadband and technology solutions businesses at the BPL Innovision Business Group at Bangalore. Mr. Syngal was also the Chairman and Managing Director (1991-98) of VSNL Ltd. Mr. Syngal is regarded as the father of Internet and data services in India, which propelled the growth of software exports from India. In the international telecom arena, he has held the positions of Chairman, Commonwealth Telecommunications Organisation (CTO) London, Councillor for India INMARSAT Council, London, Vice Chairman and Director, ICO Boards, Chairman of Governance Committee ICO, Cayman Islands and Governor, INTELSAT Board, Washington DC. He has been recipient of many industry awards including Telecom Man of the Decade award by Wisitex Foundation, India, Partners in Progress award by Maharashtra State Government for his contributions in telecommunications both in India and abroad, and he was one of the fifty Stars of Asia, chosen by Business Week magazine for the year, 1998.

Apart from the Company, Mr. Syngal holds directorships in Sonata Software Ltd., Sonata Information Technology Ltd. and Wire and Wireless (India) Ltd.

Mr. Syngal does not hold any shares in the Company.

Dr. M. Y. Khan, 65 is a Science graduate from University of Kashmir and Doctorate of Philosophy in Business Management (PHD) from Burkes University in UK. Mr. Khan has been the Chairman of J & K Bank in the past, he was also a Director on the Board of Bharat Hotels, as well as Advisor for Berenson & Company, New York. Prior to joining J & K Bank, Dr. Khan spearheaded J & K Agro Industries Development Corporation as a Managing Director. He was also heading J&K Tourism Development Corporation for 5 years as Managing Director. Dr. Khan had been nominated Member of the Chattisgarh Economic Advisory Committee; Government of India, Member of the Banking and Financial Institutions Committee of FICCI and Member of the Managing Committee of Indian Banking Association, Mumbai, during his tenure with J & K Tourism Development Corporation. Dr. Khan is the recipient of several prestigious awards like “Udyog Rattan” award, “Pride of India & IMM” award, for excellence as top professional manager, “Excellence Award” by Institute of Economic Studies, “Star Achievers Award” among several others.

Apart from the Company, Mr. Khan, holds directorships in Steel Authority of India Ltd.

Mr. Khan does not hold any shares in the Company.

Subhash Chandra, 58, is the Non-Executive Chairman of the Board and promoter of Essel Group of Companies. His industry leading businesses include television networks and film entertainment, cable systems, satellite communications, theme parks, flexible packaging, family entertainment centers and online gaming. Mr. Chandrahas been the recipient of numerous honorary degrees, industry awards and civic honours, including being named ‘Global Indian Entertainment Personality of the Year’ by FICCI for 2004, ‘Business Standard’s Businessman of the Year’ in 1999, ‘Entrepreneur of the Year’ by Ernst & Young in 1999 and ‘Enterprise CEO of the Year’ by International Brand Summit. The Confederation of Indian Industry (CII) chose Mr. Chandra as the Chairman of the CII Media Committee for two successive years.

Mr. Chandra has made his mark as an influential philanthropist in India. He set up TALEEM (Transnational Alternate Learning for Emancipation and Empowerment through Multimedia), an organisation which seeks to provide access to quality education and to promote research in various disciplines relating to health & family life, social & cultural anthropology, communication and media. He is also the trustee for the Global Vippassana Foundation a trust set up for helping people in spiritual upliftment.


Apart from the Company Mr. Chandra holds directorship in six (6) other Indian Public Limited Companies viz. Agrani Satellite Services Ltd., Dish TV India Ltd., Essel Infraprojects Ltd., Essel Propack Ltd., Wire and Wireless (India) Ltd. and Zee News Ltd.

Mr. Chandra does not hold any shares in the Company in his personal capacity.

d) Code of Conduct

The Board of Directors has approved and adopted a Code of Conduct for Members of the Board and Senior Management of the Company. The Code is circulated to all the members of the Board and Senior Management personnel and the compliance of the same is affirmed by them annually. The Code has also been posted on Company’s corporate website viz. www.zeetelevison.com

A declaration affirming compliance with the Code of Conduct by the members of the Board and Senior Management is given below:

Declaration

I confirm that the Company has obtained from all Directors and Senior Management of the Company their affirmation of compliance with the ‘Code of Conduct for Members of the Board and Senior Management’ of the Company for the financial year ended March 31, 2009.

Punit Goenka Whole-time Director & CEO Mumbai, June 26, 2009

Board Committees

a) Audit CommitteeThe Board has constituted an Audit Committee, comprising of five (5) members as on March 31, 2009, four (4) of whom are Independent Directors, with Mr. N. C. Jain, a Non-Executive Independent Director as its Chairman. During the year under review, Mr. D. P. Naganand resigned as Audit Committee Member with effect from March 16, 2009.

The Composition of the Audit Committee as on March 31, 2009, which complies with the requirements of Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement(s) is as under:

Name of Directors Category

Mr. N. C. Jain Non-Executive – Independent

Mr. Ashok Kurien Promoter – Non-Executive

Mr. B.K. Syngal Non-Executive – Independent

Mr. Rajan Jetley Non-Executive – Independent

Prof. R. Vaidyanathan Non-Executive – Independent

The role and the powers of the Audit Committee are as per guidelines set out in Clause 49 of the Listing Agreement and provisions of Section 292A of the Companies Act, 1956. The Committee meets periodically and reviews:

accounting and financial reporting process of the Company

audited and un-audited financial results

internal audit reports, risk management policies and report on internal control systems of the Company

discusses the larger issues that are of vital concern to the Company including adequacy of internal controls, reliability of financial statements/other management information, adequacy of provisions for liabilities and whether the audit tests are appropriate and scientifically carried out in accordance with Company’s business and size of operations.

The Audit Committee also reviews adequacy of disclosures and compliance with all relevant laws. In addition to these, in compliance with requirements of Clause 49 of the Listing Agreement, the Audit Committee reviews


operations of Subsidiary Companies viz. its financial statements, significant related party transactions, statement of investments and minutes of meetings of its Board and Committees.

During the year under review, five (5) Meetings of the Audit Committee were held viz.

Sr. No. Date of Meeting Attendance

No. of Independent Directors No. of Non-Independent Directors

1 14.04.08 3 1

2 16.06.08 3 –

3 23.07.08 3 1

4 20.10.08 5 1

5 21.01.09 4 1

Statutory Auditor, Internal Auditor and Chief Financial Officer of the Company are invitees to all meetings of the Committee and the Company Secretary is the Secretary to the Audit Committee.

b) Remuneration Committee and Policy

The Remuneration Committee of the Company comprises of five (5) Non-Executive Directors, three of whom are Independent Directors. Mr. N. C. Jain, Non-Executive Independent Director is Chairman of the Committee and other members are Mr. B. K. Syngal, Non-Executive Independent Director, Mr. Rajan Jetley, Non Executive Independent Director, Mr. Ashok Kurien, Non-Executive Director and Mr. Laxmi N. Goel, Non-Executive Director. The Company Secretary is the Secretary to the Committee.

The terms of reference of the Remuneration Committee, inter alia, consists of reviewing the overall compensation policy, service agreements and other employment conditions of Executive Director(s). The recommendations of the Remuneration Committee are considered and approved by the Board of Directors, subject to the approval of the shareholders.

The Executive Director(s) is/are entitled to Performance Incentive for each financial year as may be determined by the Board on the recommendation of Remuneration Committee.

During the year under review, Remuneration Committee met on three occasions, viz. on June 16, 2008, July 30, 2008 and October 20, 2008.

Details of the remuneration paid to Mr. Punit Goenka, Whole-time Director & CEO of the Company during the year ended March 31, 2009 is as under:

Particulars Amount (Rs.)

Salary & Allowances 21,181,847

Perquisites 3,177,279

Employer’s Contribution to Provident Fund 1,908,000

Total 26,267,126

Remuneration payable to Non-Executive DirectorsNon-Executive Directors are entitled to sitting fees of Rs. 10,000/- per meeting, for attending the meetings of the Board and Committees thereof other than Share Transfer and Investors Grievance Committee, the limits for which have been approved by the Shareholders.

Additionally, as approved by the Members and the Central Government, the Non-Executive Directors are entitled to remuneration by way of Commission for each financial year up to an aggregate limit of 1% of net profits of the Company. The commission payable is determined by the Board based inter alia on the performance of and regulatory provisions, applicable to the Company. As per the current remuneration policy, the Company pays equal amount of commission to Non-Executive Directors on pro rata basis.

Details of the remuneration of the Non-Executive Directors of the Company for Financial year 2008-2009 are as under:


Sr. No. Name of Director Sitting Fees Commission Total

1 Subhash Chandra 70,000 1,180,000 1,250,000

2 Laxmi N. Goel 60,000 1,180,000 1,240,000

3 Ashok Kurien 120,000 1,180,000 1,300,000

4 D. P. Naganand 100,000 1,131,000 1,231,000

5 N. C. Jain 130,000 1,180,000 1,310,000

6 B. K. Syngal 90,000 1,180,000 1,270,000

7 Rajan Jetley 50,000 1,180,000 1,230,000

8 Gulam Noon 20,000 1,180,000 1,200,000

9 M. Y. Khan 60,000 1,180,000 1,240,000

10 R. Vaidyanathan 120,000 1,180,000 1,300,000

Total 820,000 11,751,000 12,571,000

Disclosure with respect to Non-Executive Directors on other pecuniary relationship – None

c) Share Transfer and Investors Grievance CommitteeThe Share Transfer and Investors Grievance Committee of the Board comprises of Mr. Ashok Kurien, Non-Executive Director as Chairman and Mr. N. C. Jain, Non-Executive Independent Director as Member. The Company Secretary is the Secretary of the Committee.

Terms of reference of the Share Transfer and Investor Grievance Committee is to supervise and ensure efficient transfer of shares and proper and timely attendance of investors’ grievances. The Committee has delegated the power of approving transfer, transmission, rematerialisation, dematerialization etc. of shares of the Company to the officials of the Secretarial Department.

Mr. M. Lakshminarayanan, Executive Vice President & Company Secretary is the Compliance Officer of the Company.

During the year under review, Share Transfer and Investors Grievance Committee met four (4) times on April 3, 2008, July 3, 2008, October 6, 2008 and January 5, 2009. These meetings were attended by all Committee members.

Details of number of requests/complaints received and resolved during the year ended March 31, 2009, are as under:

Nature of Correspondence Received Replied/Resolved

Pending

Non-receipt of Dividend Warrant(s) 61 61 –Non-receipt of Certificates (Sub-division) 6 6 –Non-receipt of Certificates (Demerger) 10 10 –Non-receipt of Shares after transfer 1 1 –Letter received from SEBI 5 5 –Non-receipt of Annual Report 26 26 –Total 109 109 –

d) Finance Sub-Committee With a view to facilitate monitoring and expediting fund raising process, the Board of Directors of the Company had constituted a Finance Sub-Committee of the Board comprising of Mr. N. C. Jain, Non-Executive Independent Director as Chairman and Mr. Ashok Kurien, Non-Executive Director and Mr. Punit Goenka, Whole-time Director & CEO as its Members.

Main function of the Finance Sub-Committee is to consider and approve financing facilities offered and/or sanctioned to the Company by various Banks and/or Indian Financial Institutions from time to time, in the form of Term Loans, Working Capital facilities, Guarantee Facilities, etc., including the acceptance of terms and conditions of such facilities being offered.


During the year under review Finance Sub-Committee met seven times on July 15, 2008, July 25, 2008, September 13, 2008, September 17, 2008, September 23, 2008, December 19, 2008 and January 6, 2009 which were attended by all members.

In addition to the above, your Board has constituted a Corporate Management Committee comprising of Senior Executives including Whole-time Director and CEO of the Company. Main functions of the Committee is to review, approve and/or grant authorities for managing day-to-day affairs of the Company within the limits delegated by the Board.

General Meetings

The 27th Annual General Meeting of the Company for the financial year 2008-09 will be held on Tuesday, August 18, 2009 at 11.30 a.m. at Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai 400 018.

Details of Annual General Meetings held during last 3 years are as follows:

Meeting Day, Date and Time of the Meeting Venue26th AGM Wednesday, July 23, 2008 at 11.30 a.m. Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road,

Worli, Mumbai 400 018.25th AGM Friday, August 17, 2007 at 11.30 a.m. Auditorium, ‘A’ Wing, Ground Floor, National Stock Exchange

of India Limited, Exchange Plaza, Plot No. C-1, G-Block, Bandra-Kurla Complex, Bandra (E), Mumbai 400 051.

24th AGM Thursday, December 28, 2006 at 3.00 p.m. Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai 400 018.

During last three Annual General Meetings of the Company, the members had passed following Special Resolutions:

At 26th Annual General Meeting : Alteration of Articles of Association

At 25th Annual General Meeting : None

At 24th Annual General Meeting : Delisting of Equity Shares of the Company from Calcutta Stock Exchange Association Limited

Change of name of the Company from Zee Telefilms Limited to Zee Entertainment Enterprises Limited and consequent amendment to Memorandum and Articles of Association of the Company

Payment of Commission to Non-Executive Directors of the Company

Approval for appointment of Mr. Subhash Chandra, Non-Executive Chairman of the Company for holding an office or place of profit in Asia TV Limited UK, a wholly owned foreign subsidiary of the Company

All the above resolutions were passed with requisite majority.

No Ordinary or Special resolutions were passed through Postal Ballot during financial year 2008-09. None of the resolutions proposed at the ensuing Annual General Meeting need to be passed by Postal Ballot.

Disclosures

There are no materially significant related party transactions, i.e. transaction material in nature, between the Company and its promoters, directors or management or their relatives etc., having any potential conflict with interests of the Company at large. Transactions with related parties are disclosed elsewhere in the Annual Report.

There has not been any non-compliance by the Company and no penalties or strictures imposed by SEBI or Exchanges or any statutory authority on any matter relating to capital markets, during the last three years.

SEBI had issued a Show Cause Notice to the Company in 2005 wherein the Company and its Promoters were charged for alleged involvement in market manipulation transactions of Ketan Parekh and his associates. In connection with this Show Cause Notice, Hon’ble Whole-time Member of SEBI has vide Order dated March 19, 2008, held that the charges of alleged involvement of the Company and its Promoters in market manipulation transactions, are not sustainable and that the Company and its Promoter Companies are not directly involved in the market manipulation.


Therefore any penal actions sought under the Show Cause Notice were dropped. However, since in the opinion of SEBI, the actions of the Company and its Promoters gave an impression of such involvement, the SEBI order cautioned the Company and its promoters against any similar actions in future.

Compliance with Non-Mandatory requirements

The Company has complied with all mandatory requirements of Clause 49 of Listing Agreement(s). The status of compliance with non-mandatory requirements of Clause 49 of the Listing Agreement are as detailed hereunder:

1. Remuneration Committee – The Company has setup Remuneration Committee to recommend/review overall compensation policy, service agreements and other employment conditions of Executive Directors.

2. Whistle Blower Policy – The Board of Directors of the Company approved the Whistle Blower Policy, pursuant to which employees can raise concern relating to the fraud, malpractice or any other untoward activity or event which is against the interest of the Company and/or its stakeholders.

3. Audit Qualification – Company is in the regime of unqualified financial statements.

4. Chairman’s Office – A Chairman’s office with requisite facilities is provided and maintained at the Company’s expenses for use by its Non-Executive Chairman. The Company also reimburses all travel and other expenses incurred in his furthering the Company’s business interests.

Means of Communication

The Company has promptly reported all material information including declaration of quarterly financial results, press releases, etc. to all Stock Exchanges where the securities of the Company are listed. Such information is also simultaneously displayed immediately on the Company’s corporate website, www.zeetelevision.com. The financial results quarterly, half yearly and annual results and other statutory information were communicated to the shareholders by way of an advertisement in a English newspaper viz. ‘Daily News & Analysis (DNA)’ and in a vernacular language newspaper viz. ‘Punya Nagari (Marathi)’ as per requirements of the Stock Exchange.

Official press releases and presentations made to institutional investors or to the analysts are displayed on Company’s corporate website, www.zeetelevision.com.

Hard copies of the said disclosures and correspondences are also filed with the exchanges.

Management Discussions and Analysis Report forming part of annual report is annexed separately.

General Shareholder Information

The required information is provided in Shareholders’ Information Section.


AUDITORS’ CERTIFICATE

ToThe Members, Zee Entertainment Enterprises Limited

We have examined the compliance of conditions of Corporate Governance by Zee Entertainment Enterprises Limited (‘the Company’), for the year ended March 31, 2009 as stipulated in Clause 49 of the Listing Agreement of the Company with the Stock Exchanges.

The Compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion of the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has compiled with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement.

We state that no investor grievances are pending for a period exceeding 30 days against the Company as per the records maintained by the Company.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

Mohan BhandariPartnerM. No.12912

For and on behalfMGB & Co.Chartered Accountant

Mumbai,June 26, 2009


SHAREHOLDERS’ INFORMATION

1. Date, Time and Venue of Shareholder’s Meeting

Meeting : Annual General Meeting

Day & Date : Tuesday, August 18, 2009

Time : 11.00 a.m.

Venue : Nehru Centre, Nehru Auditorium,

Dr. Annie Besant Road, Worli,

Mumbai – 400 018

2 Financial Year 2008-2009

3. Period of Book Closure Monday, August 10, 2009 to Tuesday, August 18, 2009 (both days inclusive)

4. Dividend Payment Date 1st Week of September 2009

5 Company Identification No L92132MH1982PLC028767

6. Registered office Continental Building, 135, Dr. Annie Besant Road,

Worli, Mumbai - 400 018, India

Tel: +91-22-6697 1234

Fax: +91-22-2490 0302/0213

Website : www.zeetelevision.com

7. Listing on Stock Exchanges Equity Shares:

The Bombay Stock Exchange Limited (BSE)

The National Stock Exchange of India Limited (NSE)

Foreign Currency Convertible Bonds :

The Singapore Stock Exchange (Redeemed in April 2009)

8. Stock Code BSE - 505537

NSE - ZEEL EQ

Reuters - ZEE.BO (BSE) & ZEE.NS (NSE)

Bloomberg - Z IN (BSE) & NZ IN (NSE)

9. ISIN No. Equity - INE256A01028

FCCB - XS0191281137

10. Trustee for FCCB Issue Deutsche Trustee Company Limited

Winchester House, 1 Great Winchester Street,

London EC2N 2DB,

United Kingdom

11. Registrar & Share Transfer Agent Sharepro Services (India) Private Limited

13AB, Samhita Warehousing Complex, Second Floor, Sakinaka Telephone Exchange Lane, Off Andheri-Kurla Road, Sakinaka, Andheri (East)

Mumbai - 400 072, India

Tel: +91-22-6772 0400, Fax: +91-22- 2859 1568

E-mail: [email protected]


12. Investor Relations Officer Mr. Pushpal Sanghavi, Investors Relations Officer

Zee Entertainment Enterprises Limited

Continental Building, 135, Dr. Annie Besant Road,

Worli, Mumbai - 400 018, India

Tel: +91-22-6697 1234,

Fax: +91-22-2490 0302/0213/2495 5974

E-mail: [email protected]

13. Dividend

The Board of Directors have recommended payment of dividend of Rs. 2/- per share on paid-up value of Re. 1 per share.

Dividend, if approved by Members at the ensuing Annual General Meeting, will be paid to all those shareholders whose name appear in the Register of Members of the Company, after giving effect to all valid share transfers in physical form lodged with the Company or its Registrar on or before August 8, 2009 and in the list of beneficial owners furnished by National Securities Depository Limited and/or Central Depository Services (India) Limited, in respect of shares held in electronic form, as at the end of the business on August 8, 2009.

Dividend for the financial year ended March 31, 2002, which remains unpaid or unclaimed, will be due for transfer to the Investor Education and Protection Fund on completion of seven years. The same would be transferred on or before December 2009.

Members who have not encashed their dividend warrant(s) for the financial year ended March 31, 2002, or any subsequent financial year(s), are requested to seek issue of duplicate warrant(s) by writing to the Registrar and Share Transfer Agent of the Company. Members will not be able to claim any unpaid dividend from the Investor Education and Protection Fund or the Company once it is transferred to the fund.

Information in respect of unclaimed dividend for the subsequent financial years and date(s) when due for transfer to Investor Education and Protection Fund is given below:

Financial Year Ended Date of Declaration of Dividend

Last date for Claiming unpaid Dividend

Due date for transfer to IEP fund

31.03.2002 25.10.2002 30.11.2009 29.12.2009

31.03.2003 26.09.2003 01.11.2010 30.11.2010

31.03.2004 28.09.2004 03.11.2011 02.12.2011

31.03.2005 28.09.2005 03.11.2012 02.12.2012

31.03.2006 28.12.2006 03.02.2014 02.03.2014

31.03.2007 17.08.2007 22.09.2014 21.10.2014

31.03.2008 23.07.2008 28.08.2015 27.09.2015

14. Change of Name of the Company

The name of the Company was changed from ‘Zee Telefilms Limited’ to ‘Zee Entertainment Enterprises Limited’ with effect from January 10, 2007. In compliance with SEBI guidelines for Good and Bad Delivery, the Company confirms that old Share Certificates which have not been corrected with the new name of the Company shall also be good for delivery in the market.

The Registrar and Share transfer Agent shall make necessary endorsement of change of name of the Company in physical share certificates as and when the same are received for transfer / transmission / remat / sub-division/split etc.


15. Share Transfer System

Equity Shares sent for physical transfer or for dematerialization are generally registered and returned within a period of 15 days from the date of receipt of completed and validly executed documents.

16. Dematerialisation of Equity Shares and Liquidity

Trading in equity shares of the Company became mandatory in dematerialized form with effect from April 5, 1999. To facilitate trading in demat form the Company has made arrangements with both the depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Shareholders can open account with any of the Depository Participant registered with any of these two depositories. As on date 99.69% of the equity shares of the Company are in the dematerialized form.

17. Splitting of Shares

On October 25, 1999 Shareholders had approved splitting of face value of equity shares of the Company from Rs. 10 each to Re. 1 each. The resolution became effective from the start of no-delivery period w.e.f. December 6, 1999. From this day onwards trading in equity shares of Re.1 each commenced and consequently the equity shares of Rs. 10 each ceased to trade on the exchanges.

For the shareholders, holding shares in physical form, the Company had sent them intimation to exchange the old certificates of face value of Rs. 10 each with new certificate of face value of Re. 1 each. For the shareholders holding shares in demat form, the depositories automatically gave the effect of splitting of face value of shares by way of a Corporate action dated December 23, 1999.

Shareholders who could not exchange their old certificates earlier for the new certificates and who are desirous of exchanging the same may send appropriate request along with old share certificate in original to the Company’s Registrar & Share Transfer Agent.

18. Shareholders’ Correspondence

The Company has attended to all the investors’ grievances/ queries/ information requests except for the cases where we are constrained because of some pending legal proceeding or court/statutory orders. We endeavour to reply all correspondence received from the shareholders within a period of 5 working days.

All correspondence may be addressed to the Registrar & Share Transfer Agent at the address given above. In case any shareholder is not satisfied with the response or do not get any response within reasonable period, they may approach the Investors Relations Officer at the address given above.

19. Outstanding Convertible Instruments, Conversion Date and Likely Impact on Equity

In April 2004, the Company has raised US$ 100 million by issuing 10,000 0.5% Foreign Currency Convertible Bonds (FCCB) of US$ 10,000 each, which were due for redemption on April 29, 2009. The bondholders had an option to convert these bonds into equity shares at an initial conversion price of Rs.197.235 per share, with a fixed rate of exchange on conversion of Rs.43.88 (US$1), from and including June 8, 2004 to and including April 22, 2009. The initial conversion price was revised to Rs. 153.459, with effect from April 18, 2008, consequent to Scheme of Arrangement for demerger of News, Cable and Direct Consumer Services Business Undertakings of the Company.

As on March 31, 2009, on exercise of conversion option 9,621 FCCBs of US$ 10,000 each were converted to 21,502,099 Equity Shares of Re. 1 each of the Company. Balance of outstanding FCCBs viz. 379 Bonds of US$ 10,000 each, aggregating to US$ 3.79 million were redeemed at 116.24% of principal amount, as per the terms of Issue on April 29, 2009.


20. Stock Market Data Relating to Shares Listed in India

Monthly high and low quotations and volume of shares traded on Bombay Stock Exchange and National Stock Exchanges for financial year 2008-2009 are as detailed herein

BSE NSE

Month High (Rs.) Low (Rs.) Volume of Share Traded

High (Rs.) Low (Rs.) Volume of Shares Traded

April 2008 257.00 206.00 9,012,230 254.90 205.00 31,750,202

May 2008 244.85 211.40 4,835,837 244.90 213.10 20,931,430

June 2008 251.80 193.30 6,362,463 252.00 192.20 24,991,189

July 2008 232.90 180.10 6,246,789 232.00 180.00 22,936,936

August 2008 224.70 188.00 5,496,275 224.50 188.00 19,158,232

September 2008 239.00 187.00 5,554,054 254.80 187.55 22,579,482

October 2008 209.00 93.00 9,532,477 210.00 91.10 34,752,592

November 2008 163.00 99.05 6,554,364 163.00 100.00 30,915,775

December 2008 146.40 102.00 4,854,282 146.20 102.20 27,247,802

January 2009 155.80 90.40 11,919,172 156.80 90.00 48,227,315

February 2009 132.40 95.90 8,725,107 132.80 95.25 37,825,454

March 2009 110.10 88.10 9,242,448 110.25 88.00 41,826,813

21. Relative Performance of Zee Shares Vs. BSE Sensex & Nifty Index

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22. Distribution of Shareholding as on March 31, 2009

No. of Equity Share Share Holders No. of Shares

Number % of Holders Number % of Shares

Up to 5000 95,329 99.34% 12,261,934 2.83%

5001 – 10000 177 0.18% 1,338,720 0.31%

10001 – 20000 100 0.10% 1,459,625 0.34%

20001 – 30000 38 0.04% 955,456 0.22%

30001 – 40000 28 0.03% 975,796 0.22%

40001 – 50000 13 0.01% 575,689 0.13%

50001 – 100000 45 0.06% 3,339,001 0.77%

100001 and Above 233 0.24% 413,100,890 95.18%

Total 95,963 100.00% 434,007,111 100.00%

23. Categories of Shareholders as on March 31, 2009

Category March 31, 2009

% of shareholding No. of shares held

Promoters 41.50% 180,102,368

Individuals 3.03% 13,180,700

Domestic Companies 4.70% 20,404,507

FIIs, Mutual funds and Banks 20.77% 90,134,184

FIIs, OCBs & NRI 30.00% 130,185,352

Total 100.00% 434,007,111


24. Particulars of Shareholding

a) Promoter Shareholding as on March 31, 2009

Sr. Name of Shareholder No of Shares held % of shareholding1 Delgrada Limited 74,633,402 17.20%2 Jayneer Capital Pvt. Ltd. 52,346,704 12.06%3 Lazarus Investments Limited 11,500,000 2.65%4 Prajatma Trading Co. Pvt. Ltd. 7,574,500 1.75%5 Essel Infraprojects Ltd. (formerly Pan India Paryatan Ltd.) 6,400,000 1.47%6 Premier Finance and Trading Co. Ltd. 6,176,000 1.42%7 Ganjam Trading Co. Pvt. Ltd. 6,016,500 1.39%8 Briggs Trading Co. Pvt. Ltd. 4,451,262 1.03%9 Churu Trading Co Pvt. Ltd. 3,576,000 0.82%10 Ambience Advertising Pvt. Ltd. 2,275,000 0.52%11 Ashok Kurien 2,042,000 0.47%12 Laxmi Goel 1,750,000 0.40%13 Sushila Goel 680,000 0.16%14 Veena Investment Pvt. Ltd. 681,000 0.16%

Total 180,102,368 41.50%

b) Top ten (10) Public Shareholding as on March 31, 2009

Sr. Name of Shareholder No of Shares held % of shareholding1 Life Insurance Corporation of India 45,784,735 10.55%2 Oppenheimer Funds Inc- Oppenheimer Developing Markets Fund 19,470,773 4.49%3 HDFC Trustee Company Ltd - HDFC Cap 18,236,495 4.20%4 HDFC Standard Life Insurance Co. Ltd. 13,650,401 3.15%5 Oppenheimer Funds Inc. A/c Oppenheimer Global Fund 12,047,984 2.78%6 Reliance Capital Trustee Co. Ltd. Reliance Media & Ent. Fund 10,373,294 2.39%7 Government of Singapore 4,905,298 1.13%8 FID Funds (Mauritius) Ltd. 4,370,684 1.01%9 Emerging Markets Portfolio A Series of the Pacific Select Fund 4,303,068 0.99%10 J.P. Morgan Asset Management (Europe) S.A.R.L.A/C

J.P. Morgan Funds – Emerging Markets Equity Fund3,770,380 0.87%

Total 136,913,112 31.56%

Zee Entertainment Enterprises Limited Shareholding Pattern as on March 31, 2009

Promoters41.50%

FIS / MF / Bank20.77%

FIIs / NRIS / OCBS30.00%

Indian Companies4.70%

Individuals3.03%


MANAGEMENT DISCUSSION AND ANALYSIS

The figures have been stated in Rs. X million in theMD & A for better readability instead of Rs. XX thousands as stated in the financial statements.

Investors are cautioned that this discussion contains forward looking statements that involve risks and uncertainties including, but not limited to, risks inherent in the Company’s growth strategy, acquisition plans, dependence on certain businesses, dependence on availability of qualified and trained manpower and other factors. The following discussion and analysis should be read in conjunction with the Company’s financial statements included herein and the notes thereto.

1. OVERVIEW

Zee Entertainment Enterprises Limited (ZEEL) (BSE Code: 505537, NSE Code: ZEEL.EQ) is India’s largest vertically integrated media and entertainment company. The Company was formed in 1982.

ZEEL was the first company to launch a satellite channel in India and from being a single channel for a single geography today operators multiple channels across multiple geographies in different languages and genres. The Company’s programming reaching out to over 500 million viewers across 167 countries.

ZEEL channels include Zee TV (Hindi General Entertainment), Zee Cinema (Hindi Movies), Zee Sports, Ten Sports (sports including Cricket), Zee Café (English Entertainment), Zee Studio (English Movies), Zee Trendz (Fashion & Life Style), Zing (Music and Lifestyle), ETC Music (Hindi Music), ETC Punjabi (Regional language), Zee Classic (Old Hindi movies), Zee Action (Action-based Hindi movies), Zee Premier (New Hindi movies), Zee Jagran (Alternative Lifestyle) and Zee Smile (Niche Hindi General Entertainment).

2. MEDIA AND ENTERTAINMENT INDUSTRY

A buoyant economy led to the Indian media and entertainment industry growing at a quick pace over the last few years. Advertising revenues continued to outperform the world growth average and digitization ensured that corrections were brought into the subscription revenues model. However, last year was a unique one for the world economy at large and growth plans across businesses were brought under check while rationalizing spends to grapple with the unprecedented slowdown.

An ever increasing ad spend to GDP ratio, rapid adoption of DTH and digital pay television services, favourable trends from television heavy advertisers gives management the confidence that the sector

will revive from this pressure situation in the second half of the fiscal 2010 and will again rally in the coming years.

The new era of digitization has seen DTH adoption going up to 12 million pay DTH households as of March 2009, a 100% growth over the last year. With more number of players foraying into the DTH market and heavier investments into consumer education, the DTH industry is estimated to grow by another 9-10 million households this year alone. Established broadcasters with emphasis on subscription revenues are likely to be the biggest beneficiaries from this expansion going forward.

India has been relatively lesser impacted by the upheaval in the world economic situation, yet the widespread uncertainty has led to a slowdown in advertising spends.

3. BUSINESS PROFILE

Zee is an integrated media and entertainment company engaged primarily in broadcasting and content development, production and its delivery via satellite. The Company has 15 channels that serves widest array of content choices in India and is the leading broadcaster across the country as also the pioneer in the international markets for Indian content.

Zee TV

The flagship channel Zee TV operates in the Hindi General Entertainment genre. Over the last year, easy liquidity in capital markets and growth prospects of Indian media had lead to the launch of various new channels, especially in the Hindi General Entertainment space. New players were attracted to the genre owing to its popularity among viewers and the resultant advertising spends it attracts through giving little emphasis on their breakeven horizons and profitability.

Nevertheless, with the launch of new players, a lot more choice was available to the viewers, the quantity of GEC content being produced went up. This in turn also resulted in increased cost of marketing and distribution within the GEC genre. Since cable distribution in India is predominantly in analogue mode, getting carriage on cable networks was a challenge for most. As a result, the channels had to pay sizable amounts as carriage fees.

The cost structure of new channels was thus very different as compared to established players. While new channels spent excessively across all cost heads, creating unviable operating plans, the


liquidity scenario also changed for the worse and put a brake in the plans of some new players.

The fragmentation in viewership brought with it some pressure on advertising for the genre. New broadcasters offered entry pricing on new inventory, which resulted in lower realizations and yields. Subscription revenues were also under pressure, with all new entrants offering long free-view windows.

On the viewership front, the launch of each of the channels led to an expansion in the overall GEC viewership pie. The chart demonstrates the growth in GRPs (Viewership) of the Hindi GEC space:

share to new competitors, the channel was the least affected by the upheaval that surrounded it. During the year, the channel launched various new successful shows including ‘Choti Bahu’, ‘Agle Janam Mohe Bitiya Hi Kijo’, ‘Dance India Dance’etc. These shows met with instant success and broke into the top 50 shows slot.

Leadership across different Genres

Apart from its flagship channel Zee TV, the Company has a dominant presence across different segments in Indian broadcasting space.

• In Hindi Movie Genre, it has 4 channels viz. Zee Cinema, Zee Premier, Zee Action and Zee Classic. Zee Cinema has been a leader in its genre from the time of its inception and commanded 34% weekly average channel share during the year. The channel has the largest film library in the country and is a strong favourite with the viewers as also the advertisers.

• The Company’s sports offering includes 2 channels viz. Zee Sports and Ten Sports (company has 50% stake in Taj TV Group, which owns the Ten Sports channel). With telecast rights to 5 cricket boards, which ensure coverage of cricket of all test playing countries, and over hundred days of cricket per year along with rights to exciting properties such as UEFA cup football, WWE wrestling, US Open tennis etc tied up, the sports business has emerged as a strong segment of the Company’s revenues, contributing to over 18% of the Company’s top line this year.

• Zee Café, Zee Studio and Zee Trendz channels are company’s offering to the English speaking audiences in the country. Zee Café has the rights to the latest current series programming of super-hit shows while Zee Studio has tied up with leading studios from across the globe. The channels continue to drive in strength to network subscription bouquet.

• Zee Music, the music channel offering of the company was rebranded to Zing during the course of the year. The content on Zing will revolve around the world of music, movies and celebrities.

Global Presence

The Company has access to more than 500 million viewers globally and broadcasts to over 167 countries worldwide. Internationally, subscription is a key driver of revenues for any broadcaster and international subscription revenues contributed to over 21% of Zee Entertainment’s total revenues in this financial year. The Company also forayed into new markets with the launch of local language channels in Russia, Indonesia, Malaysia, Saudi Arabia. The offering is of the existing

While the initial flurry of spends did bring with it short-term viewership spikes, most of the channels started to plateau out on ratings. Monetize-able ratings eluded new players, even as established incumbents continued to garner a larger pie of the relevant viewership and advertising revenues hence. The graph below is indicative of the competitive Hindi GEC space and primetime ratings of each of the channels over the last four years, showing the growing strength of Zee TV versus other established players in the genre.

Zee TV continued to maintain its dominance in the genre even as other channels lost market share and delivered an average channel share of 19% across the year. The encouraging part for the channel was that while other existing players lost channel

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library either subtitled or dubbed into the local language to cater to the non South Asian audiences as well.

Films Business

During the course of the year, the Company reentered the movie production and distribution business in India. Plans include producing and distributing movies in six local Indian languages to help strengthen the movie library of the company as also benefit from the fast evolving transparency in the movie distribution business. Fifteen movies were released under two banners: Zee Motion Pictures and Zee Limelight.

Education

For India to achieve its target of GDP growth, it needs to harness all its Resources – the biggest one being manpower. Sadly, our manpower today is not equipped to take on the challenge of leading India to its destiny. 36% of them are illiterate and the ones, who are certified literate, are barely employable. Therefore, organized private initiatives are gaining momentum in India’s lucrative education market.

Zee Interactive Learning Systems (ZILS) is the education division of ETC Networks Ltd. ZILS’s purpose is to improve Human Capital via quality education and development as also helps individuals (children and youth) realize their unique potential through our chain of Pre-schools, Schools, Youth Institutes and Online ventures. ZILS plans to make substantial investments in developing new education centres for the children and youth through organic and inorganic routes.

ZILS runs India’s No. 1 chain of pre-schools, Kidzee with more than 415 operational pre-schools in more than 275 cities. Kidzee is a pioneer in organized and standardized pre-schooling in the country. ZILS has also ventured into K12 schools with Kidzee High, India’s only chain of Higher Secondary schools with an integrated approach to Learner Centric Education. For youth, ZILS runs 2 vocational institutes in Mumbai in addition to more than 50 ZedCA centres across the country. ZedCA centres impart IT training. Zee Institute of Media Arts (ZIMA) is a TV and Film training institute in Lokhandwala, Mumbai that offers diploma courses in Direction, Acting, Sound, Editing, Production and Cinematography. Zee Institute of Creative Animation (ZICA) is a premier animation institute at Esselworld, Mumbai that trains youth in classical 2D and modern 3D animation.

4. BUSINESS STRATEGY

The year gone by can be classified as two distinct parts: the first half from April to September and the second half from October to March. While the first half was fueled by growth and an enhanced competitive environment, the second half saw a slowdown in advertising revenues.

The key elements of Zee’s strategy during the year were (i) to take appropriate steps to safeguard its leadership position in a fiercely competitive environment (ii) to concentrate on additional revenues from digital pay platforms (iii) rationalize on costs across different heads, especially towards the latter half of the year (iv) fortify its expansion in the international markets (v) maintain consistently high standards of corporate governance.

(i) Appropriate steps to safeguard its leadership position in a fiercely competitive environment:

Over the years, Zee Network has been the only network to gain viewership share in the top 3 television networks of the country. The launch of new shows across network channels along with the tie up of cricket rights and current series rights of programs has helped ensure that in a highly fragmented environment, the network maintained and grew its dominance.

(ii) Concentrate on additional revenues from digital pay platforms:

India is a fast digitizing market and the consumer shift towards digital services is exhibited through the rampant expansion from 6 million pay DTH households at the beginning of the fiscal to 12 million pay DTH households at the end of it. The company gained substantially through this growth and revenues realized by the company for these consumers grew 93% over the last year.

(iii) Rationalize on costs across different heads towards the latter half of the year:

The belief at the Company has always been that higher spends will not necessarily result in sustained incremental viewership. Even in the wake of competition, the network maintained its cost structures though with increased competition our costs also moved up. The costs were however brought under check towards the fourth quarter of the year and are expected to further be brought under check going forward. The Company cut back on expansion plans such as Zee Next and Zee Entertainment Studios. Better negotiations with suppliers, efforts on manpower rationalization and stricter control on distribution spends will help in further keeping costs under check.

(iv) Fortify its expansion in the international markets:

While the network launched local language channels across various new territories in the


previous fiscal, this fiscal saw the consolidation on this front, with the success of Zee Aflam for the Middle East region and Zee Music in the UK. The success of these channels has given the management confidence that low cost experiments such as these are an innovative way of expanding network strengths.

(v) Corporate Governance:

Zee firmly believes that good governance is critical to sustaining corporate development, increasing productivity and competitiveness and creating shareholder wealth. The governance process should ensure that the available resources are utilized in a manner that meets the aspirations of all its stakeholders. Your Company’s essential charter is shaped by the objectives of transparency, professionalism and accountability. The Company continuously endeavours to improve on these aspects on an ongoing basis.

With the increasing emphasis on transparency and accountability, standards have been set by various governing bodies on disclosure as well as judiciousness in conduct. Zee has always tried to go a step further in this direction.

5. OTHER COMPANY INFORMATION

ZEE ENTERTAINMENT ENTERPRISES LIMITED

1. Internal Control Systems

The Company has in place adequate internal control systems, commensurate with its size and nature of operations so as to ensure smoothness of operations and compliance with applicable legislation. The Company has a well-defined system of management reporting and periodic review of businesses to ensure timely decision-making. It has an internal audit team with professionally qualified financial personnel, which conducts periodic audits of all businesses to maintain a proper system of checks and control.

The management information system (MIS) forms an integral part of the Company’s control mechanism. All operating parameters are monitored and controlled. Any material change in the business outlook is reported to the Board. Material deviations from the annual planning and budgeting, if any, are reported to the Board on quarterly basis. An effective budgetary control on all capital expenditure ensures that actual spending is in line with the Capital Budget.

2. Human Resources

The Company seeks, respects and values the diverse qualities and backgrounds that its people bring to it and is committed to utilizing the richness of knowledge, ideas and experience that this diversity provides. The work environment is stimulating and development of core competencies through formal training, job rotation and hands on training is an ongoing activity.

6. RISK FACTORS

Competition from other players:

The Company operates in highly competitive environment that is subject to innovations, changes and varying levels of resources available to each player in each segment of business.

Ever changing trends in Media sector:

It may not be possible to consistently predict changing audience tastes. People’s tastes vary quite rapidly along with the trends and environment they live in. This makes it virtually impossible to predict whether a particular show or serial would do well or not. With the kind of investments made in ventures, repeated failures would have an adverse impact on the bottom-line of the Company.

Cost of programming mix might affect its Bottom line:

The urge to compete and provide the best content to viewers, Zee would have to incur high expenditure to provide an impetus on its programming front from time to time.

The increase in costs might not necessarily perk up its revenues in the same proportion.

Investments in new channels:

The Company may from time to time launch new channels. Content for these channels is obtained from its existing library as well as from programmes acquired in the normal course of its business. The success of any new channel depends on various factors, including the quality of programming, price, extent of marketing, competition etc. There can be no assurance that the Company will be as successful in launching new channels as it has been the case of its existing channels.

Weakened Macro Economic Environment takes longer than expected to recover:

The Company estimates that the economic slowdown will be overcome by the second half of the fiscal 2010 and that an upward trend will follow with regard to spends by the advertisers. However,


a longer recovery period may lead to delayed uptake on advertising spends and an impact on the company’s strategy going forward.

Delay in DTH/CAS rollouts resulting in slower ramp up in pay revenues:

The uptake of pay digital services by subscribers has been a very encouraging sign for all broadcasters. Internationally most broadcasters derive a greater share of their revenues from the subscription revenues where as in India the under-declaration in the analogue cable system has led to broadcasters being more dependant on advertising revenues, which tend to cyclical in nature and more affected by the macro economic factors. The industry expects pay digital services to grow at over 50% CAGR in the next three years and Zee is likely to benefit heavily from this rapid growth. A slowdown in growth of digital services may lead to incremental profit margins being impacted.

Increased competitive environment in the Hindi General Entertainment Space:

The Hindi GEC genre is amongst the key genres for all advertisers and with the increased competition in the space, the Company’s revenues may be at risk. Though Zee TV has been maintaining its share of viewership and off late growing it with new launches, the channel may be the risk of losing revenues.

Sluggish consumer uptake in the international markets:

Zee has been a pioneer in the international markets and has the highest market share amongst all South East Asian broadcasters across Europe and USA. Indian content in these markets serves the preference of a niche audience and Zee has strong relations with distribution platforms in these markets giving management the confidence that the Company will retain market share in key geographies. In the given slowdown, consumers may find it difficult to upgrade their packages and the value growth from these markets may get affected.

Cannibalization of analogue cable revenues due to increased digital pay revenues

The television distribution system in India is primarily analogue in nature and continues to be impacted by the rampant under-declaration and piracy by the last mile cable operators. With the advent of digital pay TV services such as DTH and digital cable, a clear shift in consumer preference has emerged with all of the expansion in the cable and satellite adoption coming on the back of these digital services. Though analogue cable is

still under-reported, this expansion of digital DTH services may lead to cannibalization of analogue cable revenues in the near term.

Increase in cost of acquisition for some of the key sports properties:

While a significant amount of rights have been signed on by the Company for leading sports properties, any future contracts may be at higher costs, which may put pressure on margins of the company.

The Company may be exposed to foreign exchange rate fluctuations:

The Company receives a significant portion of its revenues and incurs a significant portion of its expenses in foreign currencies, particularly US dollars and UK pounds. Accordingly, the Company is exposed to fluctuations in the exchange rates between those currencies and the Rupee, the Company’s reporting currency, which may have a substantial impact on its revenues and expenses.

7. FINANCIAL RESULTS:CONSOLIDATED FINANCIALS

A. RESULTS OF OPERATIONS

We have provided a comparison between ZEEL (Audited) figures for 2007-08 and ZEEL (Audited) figures for 2008-09

RevenueTotal revenue increased Rs. 3,853.6 million or 20% from Rs. 19,491.7 million in 2008 to Rs. 23,345.3 million in 2009 on account of higher Advertisement, Subscription, Other Sales and Services and other income.

Sales and ServicesRevenue from sales and services increasedRs. 3,419.4 million, or 19%, from Rs. 18,353.7 million in 2008 to Rs. 21,773.1 million in 2009. Advertisement Revenue has recorded a growth of 14 % from Rs. 9,306.9 million to Rs. 10,592.6 million. Subscription Revenue showed a growth of 22% from Rs.7436.0 million to Rs.9037.6 million. Other Sales and Services increased Rs.532.2 or 33% from Rs. 1,610.7 million to Rs.2142.9 million due to higher income from Film Production and distribution income in addition to Commission Income on Advertisement and Subscription Sales for other Broadcasters, Syndication Sales of Programmes, Films and Sports Events.

Other IncomeOther income had risen by Rs. 434.2 million, or 38%, from Rs. 1,138.1 million in 2008 to Rs. 1,572.3 million in 2009. It includes Interest income, Rental


income and Profit on Sales of Investment in a Subsidiary company namely Pan Asia Infrastructure Ltd besides dividend and other miscellaneous Income.

ExpendituresTotal expenditure increased Rs. 3,362 million, or 26%, from Rs. 12,930.7 million in 2008 to Rs. 16,292.7 million in 2009. Majority of the jump is in Personnel Cost and Administrative & other expenses.

Operational Cost/Cost of GoodsOperational cost/Cost of goods increased by Rs. 1,991.9 million, or 25%, from Rs. 7,817.7 million in 2008 to Rs. 9,809.6 million in 2009. Increase in operating cost is mainly due to increase in programming cost by Rs.1,820.1 million or 35% from Rs. 5,172.7 million in 2008 to Rs. 6,992.8 million in 2009. Increase in Programming costs is mainly due to newly launched Channel Zee Next, Film Production Costs, High Cost Sports events besides increase in higher programming and Film content on existing Channels.

Personnel CostPersonnel cost increased Rs. 593.1 million, or 41%, from Rs. 1438.0 million in 2008 to Rs. 2,031.1 million in 2009. The main reason for this being incentives, increments and increase in manpower during the year. On a % of sales basis, the same has gone up to 9% in 2009 from 8% in 2008.

Administrative and Other ExpensesAdministrative and other expenses have decreased by Rs. 271.9 million, or 13%, from Rs. 2,132.1 million in 2008 to Rs.1,860.2 million in 2009. This is manly due to lesser provision required to be made for Doubtful Debts and advances of Rs.235 million in 2009 as against Rs 727.2 million in 2008.

Selling and Distribution ExpensesSelling and distribution expenses increased Rs. 1048.9 million, from Rs. 1,542.7 million in 2008 to Rs. 2,591.6 million in 2009. This is mainly due to higher marketing costs for new channels, higher carriage fees and increase in Advertisement and Publicity and other promotional activities.

Operating ProfitOperating profit increased by Rs. 491.5 million, or 8%, from Rs. 6,561.1 million in 2008 to Rs. 7,052.6 million in 2009. The operating margin has gone down from 34% in 2008 to 30% in 2009. This is primarily because of higher costs incurred during the year on New Channel Zee Next, Film Production and Distribution Business and Sports event Telecast rights.

Financial ExpensesFinancial expenses increased Rs. 823.1 million, or 159%, from Rs. 515.9 million in 2008 to Rs. 1,339 million in 2009. This includes Rs.443.52 million on Foreign Currency Derivative Contracts and Rs. 445.2 million due to Exchange fluctuation loss besides increase on account of higher interest cost during the year.

Depreciation and AmortisationDepreciation and amortisation increased Rs. 78 million, or 34%, from Rs. 232.3 million in 2008 to Rs. 310.3 million in 2009.

Profit Before Tax and Exceptional ItemsProfit before tax and exceptional items decreased Rs. 409.6 million or 7%, from Rs. 5,812.8 million in 2008 to Rs. 5,403.2 million in 2009.

Exceptional ItemExceptional Item Rs. 25.8 million represent reversal of provision against diminishing in value of investments in free hold land of 2700 sq. mtr. bought from Padmalaya Telefilms Ltd. as the same was written off during the year.

Provision for TaxationProvision for taxation decreased Rs. 1,418.7 million, or 87%, from Rs. 1626.6 million in 2008 to Rs. 207.9 million in 2009. During the year Company has received a refund taxes paid in earlier year Rs. 1,425.2 upon winning its claim for Tax Incentives. For current year Tax Provision has been Rs. 1,633.1 million at Effective Tax Rate of 28% in 2009 as against 29% in 2008.

Profit After Tax and Before Minority Interest/Share of Profits (Losses) in AssociateProfit after tax and before minority interest/share of profits (losses) in associates increased Rs. 1,060.7 million from Rs. 4,160.4 million in 2008 to Rs. 5,221.1 million in 2009.

Share of Results of AssociatesShare of losses in associates decreased Rs. 3.7 million from profit of Rs. 5.1 million in 2008 to profit of Rs. 1.4 million in 2009.

Minority InterestMinority interest decreased Rs. 234 million from Rs. 332.9 million in 2008 to Rs. 98.9 million in 2009.

Net Profit After TaxNet profit after tax increased by Rs. 1,290.9 million or 34%, from Rs. 3,832.7 million in 2008 to Rs. 5,123.6 million in 2009. The Net Profit margin in 2009 was 22% against 20% in 2008.


B. FINANCIAL POSITION

Consolidated Financial Position as on March 31, 2009 as compared to March 31, 2008.

Sources of Funds

Share Capital, Reserves and SurplusDuring the year, Upon conversion of FCCB, Share capital has changed from Rs. 433.6 million in 2008 to Rs. 434 million in 2009.

Loan FundsThe total Loan funds of the Company increased from Rs. 3,865.6 million as on March 31, 2008 to Rs. 5,756.9 million as on March 31, 2009. This increase is mainly on account of fixed term borrowing for Taj TV Ltd. at the time for bidding major sporting events telecasting rights and by Asia Today Ltd. for acquiring Media assets.

Application of Funds

Fixed AssetsDuring the year, the Company’s Gross Fixed Assets block increased by Rs. 2,706.5 million. This increase is mainly on account of Goodwill arising out of acquisition of balance 40% shareholding in Asia Business Broadcasting Limited. There has been addition to New Building premises, additional studio, production equipment and uplinking facility at NOIDA and at TAJ TV Dubai..

The Net Block increased Rs. 2,437 million from Rs. 14,986.1 million as on March 31, 2008 to Rs. 17,423.1 million as on March 31, 2009. This increase is on account of increase of Gross Fixed Assets.

Capital Work-in Progress of Rs. 669.4 million includes Rs. 450 million towards rights for managing School for an Education Business and Rs. 150 million for Building under constructions.

InvestmentsThe Investments of the Company were valued at Rs. 1,271.1 million on March 31, 2009 as compared to Rs. 2,515.4.million on March 31, 2008, a decrease of Rs. 1,244.3 million over 2008. During the year, Company’s Subsidiary Asia Today Limited had divested its 100% holding in Pan Asia Infrastructure Limited and 48.44% holding in Broadcast South Asia Limited.

Deferred Tax AssetsDeferred Tax Assets (Net of Liabilities) is Rs.112.8 million in 2009 as against Rs. 243.1 million in 2008. Decrease is largely on account of reduced Provision for Doubtful Debts, and lower unabsorbed fiscal allowances.

Net Current Assets

The Net current assets has increased by Rs. 5,993.4 million during the year ended March 31, 2009 from Rs. 15,229.6 million on March 31, 2008 to Rs. 21,223 million on March 31, 2009.

Current Assets

During the year the current assets increased by Rs. 5,518 million from 21,508.3 million as on 31.03.2008 to Rs. 27,026.3 as on 31.03.2009.

Current Liabilities

During the year the current Liabilities and Provisions decreased by Rs. 475.4 million from Rs. 6,278.7 Million as on 31.03.2008 to Rs. 5,803.3 Million as on 31.03.2009.

Program/Film Rights

Program/Film rights held by the Company increased from Rs. 2,441.8 million on March 31, 2008 to Rs. 4,532.4 million on March 31, 2009. This increase was mainly on account of acquisition of film rights, Higher Programming and Sports events rights acquired during the year.

Inventories

The inventories of the Company as on March 31, 2009 were at Rs. 43.9 million a growth from Rs. 31.9 million as on March 31, 2008. These inventories mainly consist of raw tapes, cassettes & discs and other stores & spares.

Sundry Debtors

After netting off provision for Doubtful Debts and Bad Debts written off, Net Debtors as on March 31, 2009 stood at Rs. 6,436.5 million. This was at Rs. 5,907.2 million as on March 31, 2008. This increase is commensurate to the increase in scale of operations. The age of Net Debtors is improved to 107 days of sales in 2009 as against 117 days of sales in 2008.

Cash and Bank Balances

The cash and bank balances lying with the Company as on March 31, 2009 was Rs. 1,926.3 million as against Rs. 1,652 million on March 31, 2008.

Loans and Advances

There was an increase in loans given from Rs. 8,331.3 million on March 31, 2008 to Rs. 8,862 million on March 31, 2009. Trade Advances have increased by Rs. 2,082.4 million from Rs. 2,974 million on March 31, 2008 to Rs. 5,056.4 million on March 31, 2009. Trade Advances are given mainly for Content Acquisitions and film rights.


The deposits given have increased from Rs. 168.2 million to Rs. 168.8 million on March 31, 2009. Due to the above changes, the total of loans, advances and deposits has increased by Rs. 2,611.8 million from Rs. 11,475.3 million on March 31, 2008 to Rs. 14,087.1 million on March 31, 2009.

Current Liabilities and ProvisionsCurrent Liabilities and Provisions have decreased by Rs. 475.4 million during the year.

Current LiabilitiesCurrent liabilities on March 31, 2009 were atRs. 4,317.5 million up from Rs. 4,151.8 million on March 31, 2008.

ProvisionsProvisions made have decreased from Rs. 2,126.9 million as on March 31, 2008 to Rs. 1,485.8 million as on March 31, 2009.

Miscellaneous Expenditure (to the extent not written off or adjusted)Miscellaneous Expenditure (to the extent not written off or adjusted) reduced by Rs. 0.05 million from Rs. 0.1 million on March 31, 2008 to Rs. 0.05 million as on March 31, 2009.

STAND-ALONE FINANCIALS

A. RESULTS OF OPERATIONS

Non-Consolidated Financial Information for the Year Ended March 31, 2009 compared to the Year Ended March 31, 2008.

Total RevenueTotal revenue increased Rs. 1,714.1 million, or 15% from Rs. 11,439.2 million to Rs.13,153.3 million due to higher Broadcasting Revenue and other income.

Sales and ServicesRevenue from Sales and Services increased Rs. 1,682.5 million, or 16% from Rs. 10,419.9 million to Rs. 12,102.4 million. Major contributor being broadcasting revenue on account of better advertisement revenue on its channel. Subscription Revenue also has seen significant improvements.

Interest and Other IncomeInterest and Other income increased by Rs. 31.7 million or 3% from Rs. 1,019.3 million to Rs. 1,051 million in 2009

Total ExpenditureTotal expenditure increased by Rs. 2159.4 million or 34% from Rs. 6,334.1 million to Rs. 8,493.5 million. The major contributor to this is Programming Cost, Selling & Marketing Cost and Personnel Cost.

Operational Cost/Cost of GoodsOperational cost/Cost of Goods increased Rs. 1,421 million, or 39%, from Rs. 3,609.7 million in 2008 to Rs. 5,030.7 million in 2009, increased is mainly attributable to Film Production/Distribution expenses, cost of sports AIFF, ICL etc. and overall increase in programming cost.

Personnel CostPersonnel cost increased Rs. 303.2 million, or 49%, from Rs. 621.0 million in 2008 to Rs. 924.2 million in 2009. The rise is mainly on account of Incentive and increments. As a % of sales, the same was 7% in 2009 as against Rs. 5% in 2008.

Administrative and Other expensesAdministrative and Other expenses decrease from Rs. 953.7 million to Rs. 596 million, a decrease of Rs. 357.7 million. This is mainly due to additional provision for doubtful debts last year on account BCCI Rs.335 mn .

Selling and Distribution expensesSelling and Distribution expenses have increased by Rs. 792.9 million or 69% from Rs. 1,149.8 million in 2008 to Rs.1,942.7 million in 2009. This is mainly due to high Carriage Fees paid by the Company for effective carriage of its channels on cable networks.

Operating ProfitOperating profit decrease Rs. 445.1 million, or 9%, from Rs. 5,105.1 million in 2008 to Rs.4,660 million in 2009. The operating margin has reduced mainly due to increase in operating cost.

Financial ExpensesFinancial expenses increased by Rs. 348.9 million or 81% and has gone up from Rs. 429.8 million to Rs. 778.7 million. This includes Rs.443.5 million on account of losses on Foreign Exchange derivative contracts.

Depreciation and AmortisationDepreciation increased by Rs. 13.2 million or 12%, from Rs. 106 million to Rs. 119.2 million.

Profit Before Tax and Exceptional ItemsProfit before tax and exceptional items decrease Rs. 807.3 million or 18%, from Rs. 4,569.2 million in 2008 to Rs. 3,761.9 million in 2009.

Exceptional ItemExceptional Item Rs. 25.8 million represent reversal of provision against diminishing in value of investments in free hold land of 2700 sq. mtr.


bought from Padmalaya Telefilms Limited as the same was written off during the year.

Provision for Taxation

Provision for taxation increased to Rs. 1,324.4 million from Rs. 1,592.2 million. Effective Tax Rate works out to 34%. Current year includes Rs.634.1 million towards excess provision for tax for earlier years written back.

Profit After Tax for the Period

Profit after tax for the year increased by 5% to Rs. 3,097.4 million from Rs. 2,951.2 million.

B. FINANCIAL POSITION

Non-Consolidated Financial Position as on March 31, 2009 as compared to March 31, 2008.

Sources of Funds

Share Capital, Reserves and Surplus

During the year, Upon conversion of FCCB, Share capital has changed from Rs. 433.6 million in 2008 to Rs. 434 million in 2009

Loan Funds

Total loan funds as on March 31, 2009 stood at Rs. 1,709.4 million down from Rs. 2,042.6 million mainly due to repayment of certain long-term debt during the year.

Application of Funds

Fixed Assets

The Net Block increased Rs. 178.1 million fromRs. 1,221,2 million as on March 31, 2008 to Rs. 1,399.3 million as on March 31, 2009. This is mainly due to purchase of new Plant and Machinery at Mumbai and New Building premises constructed at NOIDA.

Investments

Investments have increased from Rs. 13,494.7 million in 2008 to Rs. 13,496.1 million in 2009 an increase of Rs.1.4 million towards subscription of equity share in ZES Holdings Ltd. and investment in Equity of Last Minute Media Private Limited.

Net Current AssetsThe Net current assets have increased from Rs. 8,359.8 million to Rs. 10,020.7 million largely due to increase in inventory and reduction in Creditors.

Current Assets

Program/Film RightsProgram/Film rights held by the company increased from Rs. 2,357.9 million on March 31, 2008 to Rs. 3,177.5 million on March 31, 2009. This is mainly due to acquisition of Film Rights and Film under Production.

Sundry DebtorsSundry Debtors have reduced to Rs. 3,516.8 million from Rs. 4,082.8 million last year. The reduction is mainly due to effective realization of debtors outstanding for more than 180 days. Age of Debtors has down from 120 days in 2008 to 107 daysin 2009.

Cash and Bank BalancesThe cash and bank balances lying with the Company, as on March 31, 2009 was Rs. 1,104.3 million as against Rs. 222.1 million on March 31, 2008.

Loans and AdvancesThere was an reduction in loans and trade advances given from Rs. 7,156,7 million on March 31, 2008 to Rs. 6,448.9 million on March 31, 2009.

Current Liabilities and ProvisionsCurrent Liabilities and Provisions have decreased by Rs. 1,221.8 million during the year.

Current LiabilitiesCurrent liabilities on March 31, 2009 are atRs. 2,841.9 million up from Rs. 3,748.5 million on March 31, 2008.

Miscellaneous Expenditure (to the extent not written off or adjusted)Miscellaneous Expenditure (to the extent not written off or adjusted) reduced by Rs. 0.05 million from Rs. 0.10 million on March 31, 2008 to Rs. 0.05 million on March 31, 2009.


1. 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, there is a regular program of physical verification of fixed assets except lying with third parties which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. Pursuant

Annexure referred to in Paragraph (3) of Auditors’ Report to the members of Zee Entertainment Enterprises Limited on the accounts for the year ended March 31, 2009

To,The Members,Zee Entertainment Enterprises Limited

1. We have audited the attached Balance Sheet of Zee Entertainment Enterprises Limited (“the Company”) as at March 31, 2009, 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”), and 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. 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 purpose of our audit;

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

AUDITORS’ REPORT(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 Section 211 (3C) 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, 2009 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 to accounts as per Schedule 18, 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, 2009;

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

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

Mohan BhandariPartnerMembership No. 12912

For MGB & Co.Chartered Accountants

Mumbai, June 26, 2009

to the program, the physical verification was carried out during the year and discrepancies noticed on such verification, which were not material, have been properly dealt with in the books of accounts.

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

2. a) The inventory has been physically verified (copyrights of programs/film rights verified


with reference to title documents/agreements) by the management at reasonable intervals during the year.

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 inventory and no discrepancies were noticed on physical verification as compared to the book records.

3. 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) The Company has not taken any loan, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system in respect of the aforesaid areas.

5. According to the information and explanations given to us, there are no contracts or arrangements the particulars of which are required to be entered into the register in pursuance of Section 301 of the Act.

6. The Company has not accepted any deposits from the public during the year.

7. The Company has an internal audit system commensurate with the size and nature of its business.

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

9. 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, VAT, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and others as applicable. There are no undisputed amounts payable in respect of the aforesaid dues which have remained outstanding as at March 31, 2009 for a period of more than six months from the date they became payable.

b) There are no disputed amounts on account of Income Tax, Sales Tax, VAT, Service Tax, Customs Duty, Excise Duty and Cess, which have not been deposited except Wealth tax of Rs./ Thousand 13 for A.Y. 1997-98 appeal pending with Income Tax Appellate Tribunal.

10. The Company does not have accumulated losses at the end of the financial year and has not incurred cash losses during the current financial year or in the immediately preceding financial year.

11. On the basis of our examination of records and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and financial institutions.

12. 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.

13. The Company is not chit fund or a nidhi/ mutual benefit fund/ society.

14. The Company is not dealing in or trading in shares, securities, debentures and other investments.

15. In our opinion and according to the information and explanations given to us, the terms and conditions of guarantees given by the Company for loans taken by subsidiaries and others are prima facie not prejudicial to the interests of the Company.

16. According to the information and explanations given to us, the term loan raised during the year have been applied for the purposes for which they were raised.

17. On the basis of overall examination of the Balance Sheet and cash flows of the Company and related information as made available to us, we report that no short-term funds have been used for long-term investments.

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

19. The Company has not issued any secured debentures during the year.

20. The Company has not raised any money by public issue during the year.

21. Based on audit procedures and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.


For MGB & Co.Chartered AccountantsMumbai, June 26, 2009


BALANCE SHEET AS AT MARCH 31,

As per our attached report of even date

Mohan BhandariPartner



For and on behalf of the Board

Subhash Chandra Chairman

Punit Goenka Whole-time Director

Nemi Chand Jain Director

Hitesh Vakil Director - Finance

M. Lakshminarayanan Company Secretary

(Rs. in ‘000)Schedule 2009 2008

SOURCES OF FUNDSShareholders' FundsShare Capital 1 434,007 433,567 Reserves and Surplus 2 22,996,025 20,848,879

23,430,032 21,282,446 Loan FundsSecured Loans 3 1,213,964 708,733 Unsecured Loans 4 495,450 1,333,881

1,709,414 2,042,614 TOTAL 25,139,446 23,325,060

APPLICATION OF FUNDSFixed Assets 5Gross Block 1,898,167 1,622,035 Less: Depreciation/Amortization 498,900 400,781 Net Block 1,399,267 1,221,254 Capital Work-in-progress 183,250 183,523

1,582,517 1,404,777 Investments 6 13,496,163 13,494,713

Deferred Tax Assets (Net) [Refer Note 8 (b)] 39,986 65,605

Current Assets, Loans and Advances 7Program/Film Rights 3,177,504 2,357,884 Inventories 17,259 6,170 Sundry Debtors 3,516,805 4,082,828 Cash and Bank Balances 1,104,344 222,126 Loans and Advances 6,448,945 7,156,774

14,264,857 13,825,782 Less:Current Liabilities and ProvisionsCurrent Liabilities 8 2,841,967 3,748,516 Provisions 9 1,402,161 1,717,401

4,244,128 5,465,917 Net Current Assets 10,020,729 8,359,865

Miscellaneous Expenditure 10 51 100 (to the extent not written off or adjusted)

TOTAL 25,139,446 23,325,060 Significant Accounting Policies and Notes to Accounts 18


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, (Rs. in ‘000)

Schedule 2009 2008INCOMESales and Services 11 12,102,425 10,419,923 Other Income 12 1,050,920 1,019,293

TOTAL 13,153,345 11,439,216 EXPENDITUREOperational Cost/Cost of Goods 13 5,030,689 3,609,736 Personnel Cost 14 924,181 620,961 Administrative and Other Expenses 15 595,827 953,678 Selling and Distribution Expenses 16 1,942,767 1,149,788

TOTAL 8,493,464 6,334,163 Operating Profit 4,659,881 5,105,053 Financial Expenses 17 778,737 429,815 Depreciation/Amortization 119,240 106,019 Profit before Tax and Exceptional Item 3,761,904 4,569,219 Less/(Add): Exceptional ItemProvision for Dimunition in Value of Investment (Refer Note 4 (b) ) (25,806) 25,806 Profit before Tax 3,787,710 4,543,413 Less/(Add): Provision for Taxation

- Current Tax 1,277,143 1,652,550 - Earlier Years (634,116) - - Deferred Tax 25,619 (77,287)- Fringe Benefit Tax 21,618 16,940

Net Profit after Tax 3,097,446 2,951,210 Add : Balance brought forward 7,209,482 5,571,728 Amount available for Appropriation 10,306,928 8,522,938

AppropriationsProposed Dividend 868,014 868,014 Tax on Dividend 145,441 145,442 General Reserve 400,000 300,000 Balance carried to Balance Sheet 8,893,473 7,209,482

TOTAL 10,306,928 8,522,938 Earnings Per Share: (Rs.)Basic before Exceptional Item 7.08 6.87 Basic after Exceptional Item 7.14 6.81 Diluted before Exceptional Item 7.07 6.84 Diluted after Exceptional Item 7.13 6.78 (On distributable profits on shares outstanding)(Face Value Re.1)Significant Accounting Policies and Notes to Accounts 18

As per our attached report of even date

Mohan BhandariPartner










(Rs. in ‘000) 2009 2008

SCHEDULE - 1

Share Capital

Authorised

500,000,000 Equity Shares of Re.1/- each 500,000 500,000

2,500,000 Cumulative Redeemable Preference Shares of Rs.100/- each 250,000 250,000

750,000 750,000

Issued, Subscribed and Paid up

434,007,111 [433,566,765] Equity Shares of Re.1/-

each fully paid up [Refer Note 3] 434,007 433,567

(Out of the above 210,316,212 Equity Shares of Re.1/- each fully paid up

were allotted for consideration other than cash against acquisition of Investments)

TOTAL 434,007 433,567

SCHEDULE - 2

Reserves and Surplus

Capital Redemption Reserve

As per last Balance Sheet 70,000 70,000

Securities Premium

As per last Balance Sheet 10,288,554 10,295,520

Add: Received during the year 67,136 –

Less: Premium on redemption of FCCB [Refer Note 3 (c)] 3,981 6,966

10,351,709 10,288,554

General Reserve

As per last Balance Sheet 3,280,843 2,980,843

Add: Appropriated during the year 400,000 300,000

3,680,843 3,280,843

Profit and Loss Account 8,893,473 7,209,482

TOTAL 22,996,025 20,848,879

SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31,


SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31, (Rs. in ‘000)

2009 2008SCHEDULE - 3Secured LoansWorking Capital Finance from Banks 200,000 43,262 Secured by hypothecation of stocks (other than Program and Films Rights),and advertisement receivables (other than advertisement receivables from SportsChannel) all ranking pari passu with other financing banks.Term Loan From BanksSecured by hypothecation by way of first charge on all domestic cable subscription receivables and program/film rights and further secured – 650,813 by exclusive charge on advertising receivables from sports channel. (Due within a year Rs./Thousand Nil (200,250))Secured by hypothecation by way of first pari passu charge on immovable properties at Noida and subscription receivables. The Charge is to be created within the stipulated period. (Due within a year Rs./Thousand 62,500 (Nil))

1,000,000 –

Vehicle Loans Secured by hypothecation of specific assets (Due within a year Rs./Thousand 5,855 (6,451))

13,964 14,658

TOTAL 1,213,964 708,733

SCHEDULE - 4Unsecured Loans Foreign Currency Convertible Bonds [Refer Note 3] 195,450 233,881 Short Term Loan- From Bank 300,000 1,100,000

TOTAL 495,450 1,333,881

SCHEDULE - 5 Fixed Assets ( at cost )

DescriptionGROSS BLOCK DEPRECIATION/AMORTIZATION NET BLOCK

As at 01/04/08

Additions Deductions As at 31/03/09

Up to 31/03/08

For the year

Deductions Up to 31/03/09

As at 31/03/09

As at 31/03/08

(a) Intangibles

Software 24,412 3,793 – 28,205 18,965 488 – 19,453 8,752 5,447

(b) Tangibles

Leasehold Land 65,690 – – 65,690 4,236 813 – 5,049 60,641 61,454

Buildings 368,720 50,849 350 419,219 28,086 6,425 83 34,428 384,791 340,634

Plant and Machinery 812,986 183,932 1,400 995,518 211,997 78,343 1,400 288,940 706,578 600,989

Equipments 157,067 35,887 16,010 176,944 51,931 18,224 14,469 55,686 121,258 105,136

Furniture and Fixtures 77,334 1,489 3,201 75,622 19,773 4,700 3,201 21,272 54,350 57,561

Vehicles 48,178 19,487 6,705 60,960 9,346 4,993 1,968 12,371 48,589 38,832

Leasehold Improvements 67,648 8,361 – 76,009 56,447 5,254 – 61,701 14,308 11,201

TOTAL 1,622,035 303,798 27,666 1,898,167 400,781 119,240 21,121 498,900 1,399,267 1,221,254

Previous Year 1,243,298 410,800 32,063 1,622,035 311,182 106,019 16,420 400,781 1,221,254 –

Note :-

1) Building includes Rs. 114, the value of shares in a Co-operative Society.

2) Part of Building has been given on Operating Lease


(Rs. in ‘000) 2009 2008

SCHEDULE - 6InvestmentsLong Term (at cost)Quoted - Non-Trade1,800,000 Equity Shares of Rs.2/- each of Essel Propack Limited 1,500 1,500 In Associate - Quoted1,321,200 Equity Shares of Rs.10/- each of Aplab Limited 46,599 46,599 Unquoted - Trade778,471 [1,692,328] Equity Shares of Rs. 10/- each of Asianet Communication Limited* 119,296 259,342 67,693 [Nil] Equity Shares of Rs. 10/- each of Asianet Infrastructure Limited* 10,374 –423,082 [Nil] Equity Shares of Rs. 10/- each of Asianet Radio Private Limited* 64,836 –423,082 [Nil] Equity Shares of Rs. 10/- each of Asianet News Private Limited* 64,836 –23,436, 7.25% Redeemable Non-Cumulative Preference Shares of Re.1/- each 23 23 of Wire & Wireless (India) LimitedIn Subsidiaries - Wholly owned - Unquoted34 Ordinary Shares of USD 1/- each Zee MultimediaWorldwide Limited ZMWL,BVI , (ZMWL) 10,840,000 10,840,000 501 Ordinary Shares of USD 1/- each of Asia Today Limited(50% held through wholly owned subsidiary ZMWL) 1,480,000 1,480,000 25,000 [Nil] Ordinary Shares of USD 1/- each of ZES Holdings Limited 1,150 –50,000 Equity Shares of Rs. 10/- each of Zee Sports Limited 500 500 In Subsidiaries - Others (Unquoted)74,000 Equity Shares of Rs.10/- each of Zee Turner Limited 740 740 (Extent of Holding 74 %)5,000 Equity Shares of Taj Television India Limited (Extent of Holding 50%) 20,558 20,558 In Subsidiaries - Others (Quoted)4,889,584 Equity Shares of Rs 10/- each of ETC Networks Limited 271,975 271,975 (Extent of Holding 50.18%)** Others1,000 Equity Shares of Rs 10/- each of Ecool Gaming Solution Private Limited + 5 10 1,000 (Nil) Equity Shares of Rs.10/- each of Pan India Network Private Limited + 5 –3,000 (Nil) Equity Shares of Rs. 10/- each of Last Minute Media Private Limited 300 –National Savings Certificates 10 10 (Pledged with VAT Authorities)Immoveable PropertiesFreehold Land [Refer Note 4] 573,456 599,262 Less: Provision for diminution in value – 25,806 All the above securities are fully paid up 573,456 573,456

TOTAL 13,496,163 13,494,713 Aggregate Book Value of all Quoted Investments 320,074 320,074 Market Value of all Quoted Investments 350,008 1,643,572 Aggregate Book Value of all Unquoted Investments 13,176,089 13,174,639

* Consequent to the Scheme of Arrangement for demerger of Asianet Communication Limited, the Company has been alloted shares in the demerged entities.** The Company has given non disposal undertaking against debentures issued by ETC Networks Limited.+ Pursuant to the Scheme of Arrangement for demerger of Pan India Infravest Network Private Limited and Ecool Gaming Solutions Private Limited the Company has been allotted Equity Shares in Pan India Network Private Limited.



SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31, (Rs. in ‘000)

2009 2008SCHEDULE – 7

Current Assets, Loans and Advances

A. Current Assets

Program/Film Rights [Refer Note 2] 3,177,504 2,357,884

Inventories (as taken,valued and certified by the Management)

Raw Stock - Tapes 17,259 6,170

Sundry Debtors

(Unsecured and considered good, unless otherwise stated)

More than six months [includes doubtful Rs./Thousand 466,512 (386,172) 895,634 1,029,665

Others 3,087,683 3,439,335

3,983,317 4,469,000

Less: Provision for doubtful debts 466,512 386,172

[includes Rs./ Thousand 412,849 (612,283) due from Subsidiaries] 3,516,805 4,082,828

Cash and Bank Balances

Cash in hand 1,764 1,825

Balances with Scheduled Banks in Current Accounts 1,102,160 218,834

Balances with Scheduled Banks in Deposit Accounts 68 68

Balances with Non-Scheduled Bank in Current Account [Refer Note 5 (d)] 352 1,374

Cheques in hand/transit – 25

1,104,344 222,126

B. Loans and Advances

(Unsecured and considered good unless otherwise stated)

Loans 5,930,817 6,332,736

Advances (recoverable in cash or in kind or for value to be received) [Refer Note 5 (c)]

481,800 810,745

Less: Provision for doubtful advances 81,514 98,605

400,286 712,140

Deposits 117,842 111,898

6,448,945 7,156,774

TOTAL 14,264,857 13,825,782


(Rs. in ‘000)2009 2008

SCHEDULE - 8

Current Liabilities*

Sundry Creditors: For Goods 1,054,223 803,619

For Expenses and Other Liabilities [Refer note 5 (l)] 887,788 1,060,862

Trade Advances/Deposits received 21,736 40,997

Pending remmittances to Principals 871,073 1,833,085

Unclaimed dividend 7,097 7,601

Interest accrued but not due 50 2,352

[There are no amounts due and outstanding to be credited to Investor

Education and Protecton Fund as at March 31, 2009].

[*include Rs./Thousand 924,608 (1,990,109) due to subsidiaries]

TOTAL 2,841,967 3,748,516

SCHEDULE - 9

Provisions

Provision: for Tax (net of advances) (Refer Note 8 (a)) 303,939 641,175

for Retirement benefits 84,767 62,770

Proposed Dividend (including tax) 1,013,455 1,013,456

TOTAL 1,402,161 1,717,401

SCHEDULE - 10

Miscellaneous Expenditure

(to the extent not written off or adjusted)

Share Issue and Preliminary Expenses 51 100

TOTAL 51 100



SCHEDULES TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,

(Rs. in ‘000)

2009 2008

SCHEDULE - 11

Sales and Services

Broadcasting Revenue 10,098,103 8,980,747

Sales 1,670,595 1,098,079

Commission - Space Selling 333,727 341,097

TOTAL 12,102,425 10,419,923

SCHEDULE - 12

Other Income

Dividend - From Subsidiaries (Gross) 12,224 7,679

- From Others (Gross) 5,489 3,303

Interest (Gross) [T.D.S. Rs./Thousand 204,952 (166,423)] 883,061 940,136

Rent Income [T.D.S. Rs./Thousand 7,067 (9,459)] 64,119 19,458

Miscellaneous Income (Includes Balances written back Rs./Thousand 80,057 (43,223)

86,027 48,717

TOTAL 1,050,920 1,019,293

SCHEDULE - 13

Operational Cost/Cost of Goods

i. Operational Cost

Program/Film Rights

Opening [ includes under production Rs./Thousand 4,604 (10,345)] 2,357,884 1,874,330

Add: Production / Acquisition Cost 5,733,914 4,009,373

Less: Closing [includes under production Rs./Thousand 363,760 (4,604)] 3,177,504 2,357,884

4,914,294 3,525,819

Transmission Cost 116,395 81,400

5,030,689 3,607,219

ii. Cost of Goods

Purchase - Trade – 2,517

TOTAL 5,030,689 3,609,736


SCHEDULES TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,(Rs. in ‘000)

2009 2008SCHEDULE - 14Personnel CostSalaries, Allowances and Bonus 842,874 570,280 Contribution to Provident and other funds 40,741 25,103 Staff Welfare expenses 40,566 25,578

TOTAL 924,181 620,961

SCHEDULE - 15Administrative and Other ExpensesRent 67,607 22,921 Rates and Taxes 8,446 8,428 Repairs and Maintenance - Building 6,831 2,655

- Plant and Machinery 17,401 5,470 - Others 9,361 9,662

Insurance 4,136 2,925 Electricity and Water charges 35,986 29,962 Communication expenses 42,681 41,124 Printing and Stationary 11,630 12,081 Miscellaneous expenses (including Directors' sitting fees Rs./Thousand 820 (670)] 20,796 55,419 Service charges/expenses 89,990 57,071 Travelling, Conveyance and vehicle expenses 88,501 85,013Legal, Professional and Consultancy charges 52,920 57,984 Bad debts and advances written off 72,467 337,430 Provision for doubtful debts and advances 63,249 219,019 Loss on sale/ discard/ shortage of fixed assets 3,776 6,465 Share Issue and Preliminary expenses written off 49 49

TOTAL 595,827 953,678

SCHEDULE - 16Selling and Distribution ExpensesFreight and Forwarding 3,416 1,194 Advertisement and Publicity expenses 584,699 532,477 Commission on sales and services 251,001 199,895 Business Promotion expenses 1,103,651 416,222

TOTAL 1,942,767 1,149,788

SCHEDULE - 17Financial ExpensesInterest on

- Fixed Loan 148,848 127,231 - Bonds 1,075 1,178 - Others 122,505 70,874

Discounting and Financing expenses 2,625 1,252 Loss on Foreign exchange derivative contracts/exchange difference 503,684 229,280

TOTAL 778,737 429,815


SCHEDULE 18:

Significant Accounting Policies and Notes to Accounts

Background

Zee Entertainment Enterprises Limited (“ZEEL” or “the Company”) is incorporated in the State of Maharashtra, India. The Company has been mainly in the following businesses during the year:

a) Broadcasting of Satellite Television Channels uplinked from India;

b) Advertisement canvassing agent for other television channels;

c) Sale of programs including films and program feeds mainly to its subsidiaries for broadcasting on their satellite television channels all over the world;

d) Production and Distribution of Films.

A. Significant Accounting Policies

1. Basis of Accounting

The Financial statements have been prepared under the Historical Cost Convention and on accrual basis in accordance with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956.

2. 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 these estimates. Any revision to estimates is recognized prospectively in current and future periods.

3. Fixed Assets

a) Fixed assets are stated at original cost of acquisition/ installation net of accumulated depreciation, amortization and impairment losses. The cost of fixed assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation of the respective assets.

b) Capital Work in progress is stated at the amount expended upto the date of Balance sheet including advances for capital expenditure.

c) Software is capitalized as an intangible asset in the year in which the related software is implemented.

4. Borrowing Costs

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

5. Impairment of Assets

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.

6. Depreciation/Amortization

a) Depreciation on fixed assets is provided on Straight Line Method at the rate specified in Schedule XIV to the Companies Act, 1956.

b) Premium on Leasehold Land and Leasehold Improvements are amortized over the period of Lease.

c) Software is amortized on straight line basis over a period of 36 months from the date of its implementation based on the management estimate of useful life.

7. Investments

Investments intended to be held for more than one year, from the date of acquisition, are classified as long-term and are carried at cost. Provision for diminution in value of these investments is made to recognize a decline other than temporary. Current Investments are carried at cost or fair value, whichever is lower.


8. Transaction in Foreign Currencies

a) Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transactions.

b) Foreign currency monetary assets and liabilities at the Balance Sheet date are reported using the closing rate. Gain and losses arising on account of difference in foreign exchange rates on settlement/translation of monetary assets and liabilities are recognized in the Profit and Loss Account.

c) Non-monetary items denominated in foreign currency are carried at the exchange rate prevailing on the date of the transaction.

d) In respect of forward exchange contracts assigned to the foreign currency assets/liabilities, the difference due to change in exchange rate between the inception of forward contract and date of the Balance Sheet is recognized in the Profit and Loss Account. Any profit or loss arising on settlement/cancellation of forward contract is recognized as income or as expense for the year in which they arise.

9. Revenue Recognition

a) Broadcasting Revenue – Advertisement revenue (net of agency commission) is recognized when the related advertisement or commercial appears before the public i.e. on telecast. Subscription revenue is recognized on completion of service.

b) Sales are recognized when the risk and rewards of ownership are passed onto the customers, which is generally on dispatch of goods.

c) Commission – Space Selling i.e. on Advertisement canvassing is recognized when the related advertisement or commercial appears before the public i.e. on telecast.

d) Dividend is recognized when the right to receive the dividend is unconditional.

10. Programs/Film Rights and Inventories

a) Programs/Film Rights:

Programs/Film rights are stated at lower of net cost (cost minus accumulated amortization/impairment) or realizable value. Where the realizable value on the basis of its useful economic life is less than its carrying amount, the difference is expensed.

i. Cost of news/ current affairs/ chat shows/ events including sports events etc. are fully expensed on telecast.

ii. Programs (other than (i) above) are amortized over three financial years from the year of telecast.

iii. Film telecast rights are amortized on a straight-line basis over the duration of license period or 60 months from the date of purchase, whichever is shorter.

iv. Film rights for trade – Cost of respective right is fully expensed on sale.

b) Film produced and acquired for distribution:

The cost is amortized for Theatrical, Satellite, Music rights, Home Video rights etc. is as under:

i. Theatrical rights: - 70% cost is amortized over three months of theatrical release of movie and balance 30% in subsequent three quarters.

ii. Satellite rights, Music rights , Home Video rights etc. are expensed on sale.

iii. In case of Negative rights 10% is allocated to IPR to be amortized over subsequent nine years.

c) Inventory of Raw Stock – Tapes is valued at lower of cost or estimated net realizable value. Cost is taken on First In First Out (FIFO) basis.

11. Retirement Benefits

a) Short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

b) Post employment and other long-term employee benefits are recognized as an expense in the profit and loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the profit and loss account.


12. Accounting for Taxes on Income

a) Current Tax is determined as the amount of tax payable in respect of taxable income for the year as per the provisions of the Income Tax Act, 1961.

b) 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.

13. Leases

a) Finance Lease

Assets acquired under Finance Lease are capitalized and the corresponding lease liability is recorded at an amount equal to the fair value of the leased asset at the inception of the lease. Initial costs incurred in connection with the specific leasing activities directly attributable to activities performed by the Company are included as part of the amount recognized as an asset under the lease.

b) Operating Lease

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

14. Miscellaneous Expenditure

Share Issue and Preliminary expenses are amortized over a period of 10 years.

15. Earnings Per Share

Basic earnings per share is computed and disclosed using the weighted average number of common shares outstanding during the year. Dilutive earnings per share is computed and disclosed using the weighted average number of common and dilutive common equivalent shares outstanding during the year, except when the results would be anti-dilutive.

16. 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.

B. Notes to Accounts

1. Prior Year Comparatives

Previous year’s figures are regrouped, rearranged, or recast wherever necessary to confirm to this year’s classification. Figures in brackets pertain to previous year.

2. a) Program/film rights for broadcasting are intangible assets as defined in AS–26 but considered and shown under current assets as are used for broadcasting in the ordinary course of business.

b) In Schedule 13, Operational Cost includes Cost of Program/ Film rights amortized/ impaired, sold etc. The Company has impaired program/ film rights of Rs./Thousand Nil (8,400) during the year.

3. Foreign Currency Convertible Bonds (FCCB)

a) The Company had issued 10,000 0.5% Foreign Currency Convertible Bonds (FCCB) of US$10,000 each aggregating to US$100 million, redeemable on April 29, 2009 at 116.24% of their principal amount. The bond holders have an option to convert these bonds into equity shares from and including June 8, 2004 to and including April 22, 2009 at an initial conversion price of Rs.197.24 per share, with a fixed rate of exchange on conversion of Rs.43.88 (US$1). Consequent to the restructuring, the conversion price has been reset to Rs. 153.46 per share in terms of the Offering Circular, effective April 18, 2008.

b) 9,621 bonds (including 154 bonds during the year) have been converted and balance 379 bonds outstanding as at the date of the balance sheet are redeemed on due date i.e. April 29, 2009.

c) Premium payable on redemption of 379 bonds Rs./Thousand 3,981 has been provided and adjusted against Securities Premium as per Section 78 of the Companies Act, 1956.


d) Out of the Net proceeds of Rs./Thousand 4,269,473 from the issue of the FCCB, Rs./Thousand 4,269,122 has been utilized for the object of the issue, including new projects, modernization and expansion of the existing production units and expansion of wholly owned subsidiary operations and balance pending utilization is included in Cash and Bank balances.

4. Immovable Property

a) The Collector of Hyderabad, Andhra Pradesh, had resumed possession of the freehold land (included under Schedule 6 - “Investments”) admeasuring 17,639.64 sq. meters, bought from Padmalaya Telefilms Limited (PTL), registered in the name of the Company and having book value of Rs./Thousand 573,456. The action of the Collector has been set aside by the appellate authorities and the possession of the land is restored to the Company during the year.

b) In terms of final settlement agreement entered with PTL during the year, the company has given up its claim on the second piece of land admeasuring 2700 sq. meters having book value of Rs./Thousand 25,806, accordingly value of investments has been written off and liability provided is written back as an exceptional item.

5. Disclosures:

a) The Company has been deploying its surplus funds as short-term demand loans/inter corporate deposits mainly to related parties. The parties are regular in repayment of principal and interest, hence are considered good.

b) Details of prior period expenses/income included in respective heads in the Profit and Loss Account is as under

(Rs./Thousand)

Particulars 2009 2008Excess Interest on Tax Refund accounted, now reversed 23,400 –Business Promotion expenses 7,605 –Subscription Revenue (1,562) –Prior Period Expenses (net) 29,443 –

c) Advances include Rs./Thousand 29,249 (126,167) due from subsidiaries.

d) Balances with Non Scheduled Bank as at March 31, 2009 with Standard Chartered Bank (Mauritius) is Rs./Thousand 352 (1,374). Maximum Balance during the year is Rs./Thousand 1,374 (3,485).

e) Managerial Remuneration:

i) The Computation of Net Profit in accordance with the provisions of Section 349 of the CompaniesAct, 1956

(Rs./Thousand)

Particulars 2009 2008Net Profit before tax as per Profit and Loss Account 3,787,710 4,543,413Add/(Less): Directors sitting fees 820 670

- Managerial remuneration 26,267 11,451- Commission paid to Non-Executive Directors 11,751 11,812- Depreciation 119,240 106,019- Loss on sale of fixed assets 3,352 6,276- Provision for doubtful debts 63,249 219,019- Provision for diminution in the value of Investments (25,806) 25,806

Less: - Depreciation u/s 350 119,240 106,019Net Profit as per Section 198/349 of the Companies Act, 1956 3,867,343 4,818,448Maximum permissible remuneration to Whole Time as per Section 198/309

193,367 240,922

Maximum permissible Commission to Non-Executive Directors under Section 198/309

38,673 48,184

Remuneration and commission restricted as per service agreement 38,018 23,263


ii) Remuneration paid or provided in accordance with Section 198 of the Companies Act, 1956 to Whole-time Director included in Schedule 14 - Personnel Cost is as under:-

(Rs./Thousand)

Particulars 2009 2008

Salary and Allowances 21,182 9,300

Contribution to Provident fund 1,908 756

Perquisites 3,177 1,395

Note: Salary and Allowances includes basic salary, leave travel allowance and performance bonus but excludes leave encashment and gratuity provided on the basis of actuarial valuation.

iii) Remuneration (salaries and allowances) of Rs./Thousand 3,708 (4,041) is paid to a non-executive director by a Foreign subsidiary company. However, no remuneration is paid to him by the Company.

f) Auditors Remuneration included in Miscellaneous Expenses is as under:-(Rs./Thousand)


Audit fees 5,900 4,900

Tax Audit fees 500 500

Certifications and Tax Services 1,948 5,716

g) Foreign Exchange Difference

i) The foreign exchange loss (net) including on forward contracts and cross currency swap of Rs./Thousand 435,392 (240,005) on settlement or realignment of foreign exchange transactions has been adjusted in respective heads in the Profit and Loss account.

ii) Foreign currency exposures that are not hedged by derivative instruments as at March 31, (Rs./Thousand)


Foreign Currency Payables 241,903 393,497

Receivables 454,190 690,745

iii) Derivative contracts entered into by the Company and outstanding:

Nominal amounts of derivative contracts (Interest Rate Swaps) entered into by the Company and outstanding as at March 31, 2009 is Rs./Thousand 4,125,600 (3,192,000).

h) Employee Stock Option Plan (ESOP)

Zee Network Employees Welfare Trust holds 5,000 (5,000) Equity Shares of Re. 1/- each of the Company.

i) Micro, Small and Medium Enterprises:

The Company has no dues to Micro and Small enterprises during the year ended March 31, 2009, on the basis of information provided by the parties and available on record.

j) Capital work in progress includes Capital Advances Rs./Thousand 183,250 (142,427).

k) Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances) is Rs./Thousand 266,181 (312,662).

l) Sundry Creditors for expenses and other liabilities under Current Liabilities include cheques overdrawn Rs./Thousand 11,844 (82,847).

m) Dividend Rs./Thousand 1,315 (1,174) unclaimed for the period of more than seven years is transferred to Investor’s Education and Protection Fund.

n) During the year, expenses of Rs./Thousand 63,160 (76,980), shared by other related party, are netted off in relevant heads of expenses in Profit and Loss account.


6. Employee Benefits

A) Defined Benefit plans:

(Rs./Thousand)

Particulars Gratuity (Non Funded)2009 2008

I. Expenses recognized during the year ended March 31, 20091. Current Service Cost 4,393 3,8652. Interest Cost 2,056 1,4433. Actuarial Losses/(Gains) 3,374 2,374

Total Expenses 9,823 7,682II. Net Asset/(Liability) recognized in the Balance Sheet as at March

31, 20091. Present value of defined benefit obligation 25,885 19,680

2. Net Asset/(Liability) (25,885) (19,680)III. Reconciliation of Net Asset/(Liability) recognized in the Balance

Sheet as at March 31, 20091. Net Asset/(Liability) at the beginning of year (19,680) (17,821)2. Expense as per I above (9,823) (7,682)3. Employer contribution 3,618 5,8234. Net Asset/(Liability) at the end of the year 25,885 (19,680)

IV. Actuarial Assumptions:1. Discount rate 7.95% 8.65%2. Expected rate of salary increase 7.50% 7.50%3. Mortality LIC (1994-96) LIC (1994-96)

Notes:

(a) Amounts recognized as an expense and included in the Schedule 14 “Personnel Cost” are gratuity Rs./Thousand 9,823 (7,278) and leave encashment Rs./Thousand 22,137 (16,964).

(b) The estimates of future salary increases considered in the actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

B) Defined contribution plan:

“Contribution to Provident and other funds” is recognized as an expense in Schedule 14 “Personnel Cost” of the Profit and Loss Account

7. Contingent Liabilities not provided for

(Rs./ Thousand)

Particulars 2009 2008a) Corporate Guarantees

- For Subsidaries to the extent of loans availed/outstanding Rs./Thousand 1,001,338 (519,340)

- For other related parties, loans outstanding Rs./Thousand 3,949,415 (4,654,185)

1,565,100

4,526,760

1,204,500

5,362,700

b) Bank guarantees outstanding 1,810 3,028c) Claims against the company not acknowledged as debts 132,743 348,334d) Disputed Direct Taxes 133,517 46,585e) Letters of credit (net of liability provided) – 7,969f) Legal cases against the Company Unascertainable Unascertainable


8. Taxation

a) The Company’s claims for certain deductions under Chapter VIA of the Income Tax Act, 1961 for Assessment years 1993-1994 to 1999-2000 is allowed by second appellate authority and effect of those appeal orders resulted in excess provision for tax of Rs./ Thousand 573,794 which is accounted for during the year. Interest of Rs./Thousand 204,053 received on these refunds was however credited to the Profit and Loss account in previous financial year.

Further, during the year, the Company has received income tax refund of Rs./Thousand 524,934 relating to Assessment year 2006-2007, pending final tax assessment, interest income of Rs./Thousand 47,904 and excess tax provision are not accounted, and refund received is adjusted against provision for tax.

b) The components of deferred tax balances as at March 31:

(Rs./Thousand)


Deferred Tax Assets

Provision for retirement benefits 28,813 21,335

Expenses allowable on payment basis – 14,273

Provision for doubtful debts 158,567 131,260

Total 187,380 166,868

Deferred Tax Liabilities

Depreciation 118,881 101,229

Others 28,513 34

Total 147,394 101,263

Deferred Tax Assets - Net 39,986 65,605

9. Leases:

(a) The Company leases office, residential facilities and plant and machinery (including equipments) etc. under cancellable/non-cancellable 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 60 months.

(Rs./Thousand)

Particulars 2009 2008Lease rental charges for the year 154,759 154,541Future lease rental obligation payable (under non-cancelable lease)Not later than one year 140,683 32,432Later than one year but not later than five years 187,153 53,429

(b) In respect of assets given under operating lease.

(i) The Company has given part of building under cancelable operating lease agreement. The initial term of the lease is for 36 months.

(ii) The rental revenue for the year is Rs./Thousand 64,119 (19,458).

10. Related Party Transactions

(i) List of Parties where control exists

Subsidiary Companies

a) Wholly Owned

Apac Media Ventures Limited; Asia Business Broadcasting Mauritius Limited; Asia Today Limited; Asia TV Limited; Expand Fast Holding (Singapore) Pte. Limited; Zee CIS Holding LLC; Pan Asia Infrastructure Limited (ceased w.e.f. January 19, 2009); Zee Multimedia (Maurice) Limited; Zee Multimedia Worldwide Limited, Mauritius; Zee Multimedia Worldwide Limited (BVI); Zee Sports Americas Limited; Zee Sports International Limited; Zee Sports Limited; Zee Technologies (Guangzhou) Limited; Zee Telefilms


Middle East FZLLC; Zee TV South Africa (Proprietary) Limited; Zee TV USA Inc.; ZES Holding Limited*; Zee Entertainment Studios BVI*; ZES Mauritius Limited*; ZES International Limited*; Zee Motion Pictures Private Limited*.

* incorporated during the year.

b) Others – Direct

ETC Networks Limited; Taj Television India Private Limited; Zee Turner Limited.

c) Other - Indirect

Taj Television Limited, Mauritius

(ii) Associates

Aplab Limited (extent of holding 26.42%)

Broadcast South Asia Limited (extent of holding 48.44%) (Ceased to be w.e.f. May 8, 2008)

(iii) Other Related parties with whom transactions have taken place during the year and balance outstanding as on the last day of the year.

25 FPS Media Private Limited; Asian Sky Shop Limited; Asian Satellite Broadcasting Private Limited; Briggs Trading Company Private Limited; Buddha Films Limited; Churu Trading Company Private Limited; Credensys Software Technologies Limited; Digital Media Convergence Limited; Dakshin Media Gaming Solutions Private Limited; Dish TV India Limited; Diligent Media Corporation Limited; Essel Propack Limited; E-City Entertainment (India) Private Limited; E-City Retail Private Limited; E-Cool Gaming Solution Private Limited; Essel Agro Limited; Essel Corporate Services Private Limited; Essel Sports Private Limited; Essel Infraprojects Limited; Essel International Limited; Essel Shyam Communication Private Limited; Essel Shyam Technologies Limited; Integrated Subscribers Management Limited; Ganjam Trading Company Private Limited; Intrex Trade Exchange Limited; Jay Properties Private Limited; Jayneer Capital Private Limited; New Media Broadcasting Private Limited; Pan India Network Infravest Private Limited; Pan India Network Private Limited; Prajatma Trading Company Private Limited; Premier Finance and Trading Co. Limited; Rama Associates Limited; Real Media FZLLC, Taleem Research Foundation; Wire and Wireless (India) Limited; Zee News Limited.

Directors/Key Management Personnel

Mr. Punit Goenka

(iv) Transactions with Related Parties (Rs./Thousands)

Sr. Particulars 2008–2009 2007–2008

A) Fixed Assets / Capital work in progress

Assets Purchased during the year

Associates – 497

B) Investments

Subsidiaries

Balance as at April 1, 12,613,773 12,593,773

Call Money Paid – 20,000

Purchased/adjusted during the year 1,150 –

Balance as at March 31, 12,614,923 12,613,773

Other Related Parties

Balance as at April 1, 1,533 1,533

Balance as at March 31, 1,533 1,533

Associates

Balance as at April 1, 46,599 46,599

Balance as at March 31, 46,599 46,599


Sr. Particulars 2008–2009 2007–2008

C) Sundry Debtors as at March 31, Subsidiaries 412,849 612,283Other Related Parties 854,682 708,297

D) Loans, Advances and Deposits as at March 31, Subsidiaries 29,249 126,167Other Related Parties 4,811,662 1,699,578

E) Sundry Creditors as at March 31, Pending Remittance to PrincipalsSubsidiaries 871,073 1,833,085Purchase of Programs/Goods and Services Subsidiaries 53,535 157,024Other Related 175,508 142,777Associates – 260

F) Sales and Services TurnoverSales, Services and Recoveries (Net)Subsidiaries 955,474 816,492Other Related Parties 275,251 90,232Subscription RevenueSubsidiaries – 126,610Advertisement Revenue (Net)Subsidiaries 6,186 –Other Related Parties 99,479 166,694Commission Space Selling Subsidiaries 65,360 69,418Other Related Parties 268,367 271,679

G) Other IncomeDividend IncomeSubsidiaries 12,224 7,679Other Related Parties 2,186 –Associates 3,303 3,303Interest IncomeOther Related Parties 885,087 708,124Miscellaneous Rent IncomeSubsidiaries 56,242 148Other Related Parties 48,989 2,796

H) Loans, Advances and Deposits GivenSubsidiaries – 20,145Other Related Parties 11,525,500 11,035,061

I) Purchase of Programs, Goods and ServicesSubsidiaries 65,332 58,524Other Related Parties 688,282 139,284Commission PaidSubsidiaries 145,993 147,758Balances written offOther Related Parties 13,665 –

K) Loans and Advances repayment receivedOther Related Parties 7,620,400 10,178,522

L) GuaranteesCorporate Guarantees GivenSubsidiaries 1,565,100 1,204,500Other Related Parties 4,526,760 5,362,700

J)


Disclosure in respect of material other Related Parties which account for 10% or more of the transactions during the year:

a) Fixed asset purchased include from Aplab Limited Rs./Thousand Nil (497).

b) Loans, Advances and Deposits given include to Zee Sports Limited Rs./Thousand Nil (20,115); Briggs Trading Co. Private Limited Rs./Thousand Nil (1,410,000); Churu Trading Co. Private Limited Rs./Thousand 3,770,500 (2,186,000); Ganjam Trading Co. Private Limited Rs./Thousand Nil (1,492,522); Prajatma Trading Co. Private Limited Rs./Thousand 2,170,000 (1,605,000); Dish TV India Limited Rs./Thousand 2,430,000 (3,177,000); Wire and Wireless (India) Limited Rs./Thousand 1,550,000 (1,070,000); Premier Finance and Trading Co. Limited Rs./Thousand 1,605,000 (Nil).

c) Loans, Advances and Deposits repayment received includes Briggs Trading Co. Private Limited Rs./Thousand Nil (1,410,000); Churu Trading Co. Private Limited Rs./Thousand 3,770,500 (2,186,000); Ganjam Trading Co. Private Limited Rs./Thousand Nil (1,492,522); Prajatma Trading Co. Private Limited Rs./Thousand 2,170,000 (1,605,000); Dish TV India Limited Rs./Thousand Nil (2,900,000); Wire and Wireless India Limited Rs./Thousand 70,000 (Nil); Premier Finance and Trading Co. Limited Rs./Thousand 1,605,000 (Nil).

d) Loans, Advances and Deposits balances outstanding at year end include Zee Sports Limited Rs./Thousand 29,249 (31,704); Zee Turner Limited Rs./Thousand Nil (94,463); Dish TV India Limited Rs./Thousand 2,430,000 (7,81,315); Wire and Wireless (India) Limited Rs./Thousand 23,00,817 (820,817).

e) Sundry Creditors balances include Pending Remittances to Principals pending to Asia Today Limited Rs./Thousand 869,628 (1,688,837); Amounts due for Purchase of Programs, Goods and Services to Asia Today Limited Rs./Thousand 12,448 (88,157); ETC Networks Limited Rs./Thousand 41,085 (48,847); Dish TV India Limited Rs./Thousand Nil (98,929); Diligent Media Corporation Limited Rs./Thousand Nil (15,118); Wire and Wireless (India) Limited Rs./Thousand 92,984 (Nil); Essel Sports Private Limited Rs./Thousand 70,044 (Nil).

f) Sales, Services and Recoveries (Net) include to Asia Today Limited Rs./Thousand 929,083 (785,724); Dish TV India Limited Rs./Thousand 4,475 (9,957); Zee News Limited Rs./Thousand 245,694 (66,260); Real Media FZ LLC. Rs./Thousand 5,958 (9,461); Subscription Revenue from Asia Today Limited Rs./Thousand Nil (126,610); Advertisement Revenue from Asia Sky Shop Rs./Thousand 12,085 (Nil); Dish TV India Limited Rs./Thousand 83,427 (166,694); ETC Networks Limited Rs./Thousand 6,186 (Nil); Commission - Space Selling from Asia Today Limited Rs./Thousand 65,360 (29,144); Zee TV USA Inc. Rs./Thousand Nil (37,436); Zee News Limited Rs./Thousand 268,367 (271,679).

g) Other income include Dividend Income from ETC Networks Limited Rs./Thousand 12,224 (7,679); Aplab Limited Rs./Thousand 3,303 (3,303); Essel Propack Limited Rs./Thousand 2,186 (Nil); Interest income from Briggs Trading Co. Private Limited Rs./Thousand Nil (6,208); Churu Trading Co. Private Limited Rs./Thousand 258,147 (120,272); Ganjam Trading Co. Private Limited Rs./Thousand Nil (144,805); Prajatma Trading Co. Private Limited Rs./Thousand 256,625 (136,071); Dish TV India Limited Rs./Thousand 68,917 (198,237); Premier Finance & Trading Co. Private Limited. Rs./Thousand 173,521 (Nil); Wire and Wireless (India) Limited Rs./Thousand 127,877 (Nil); Miscellaneous/Rent income from Zee Turner Limited Rs./Thousand 14,330 (148); Asia Today Limited Rs./Thousand 39,829 (Nil); ETC Networks Limited Rs./Thousand 2,083( Nil); Asian Sky Shop Limited Rs./Thousand Nil (316); Diligent Media Corporation Limited Rs./Thousand 2,081 (462); Pan India Network Infravest Private Limited Rs./Thousand Nil (669); Dish TV India Limited Rs./Thousand 25,132 (Nil); Zee News Limited Rs./Thousand 20,441 (Nil); Digital Media Convergence Limited Rs./Thousand Nil (1,349); Wire and Wireless (India) Limited Rs./Thousand 1,335 (Nil)

h) Purchase of Programs, Goods and Services from Asia Today Limited Rs./Thousand 59,212 (46,175); Taj TV Limited – Mauritius Rs./Thousand 3,529 (8,095); Dish TV India Limited Rs./Thousand 20,886 (13,660); Essel Corporate Services Private Limited Rs./Thousand 134,872 (44,315); Essel Sports Private Limited Rs./Thousand 262,603 (59,500); Wire and Wireless (India) Limited Rs./Thousand 250,321 (Nil).; Commission paid to Zee Turner Limited Rs./Thousand 145,992 (120,342); Balances written off 25 FPS Media Private Limited Rs./Thousand 13,665 (Nil).

i) Corporate guarantees include in respect Asia Today Limited Rs./Thousand 1,565,100 (1,204,500); Dish TV India Limited Rs./Thousand 3,305,760 (1,877,700); Wire and Wireless India Limited Rs./Thousand 921,000 (2,835,000).

Notes:

i) Details of Remuneration to Whole-time Director is disclosed in Note 5 (e).

ii) Sharing of expenses has been disclosed in Note 5 (n).


12. Disclosures as required by the amendment to Clause 32 of the listing agreement vide SEBI Circular No. 2/2003 of January 10, 2003:

a) Loans given to Subsidiaries and Others: Nil

b) Investments by Loanee in the shares of the Company as at March 31:

Loanee No. of fully paid up equity shares

2009

No. of fully paid up equity shares

2008Churu Trading Co. Private Limited 3,576,000 3,576,000Briggs Trading Co. Private Limited 4,451,262 4,451,262Prajatma Trading Co. Private Limited 7,574,500 7,574,500Ganjam Trading Co. Private Limited 6,016,500 6,016,500Premier Finance & Trading Co. Limited 6,176,000 Not Loanee

13. Additional Information required to be given pursuant to Part II of Schedule VI to the Companies Act, 1956 is as follows:

The Company is in the business of producing television programs and is not subject to any license hence licensed capacity is not given. Further the nature of business of the Company is such that the installed capacity is not quantifiable.

a) Quantitative Information. The details of opening stock, acquisitions/productions, sales and closing stock are as under: (Refer Note 2)

Quantity in numbers and Amount in Rs./Thousand


Qty. Amount Qty. Amount

Opening Stock

Program/Film Rights – 2,353,280 – 1,863,985

Total – 2,353,280 – 1,863,985

Acquisitions/Productions


Others – Electronic Devices – - 1 2,517

Total – 5,733,915 4,011,890

Sales & Services

Broadcasting Revenue – 10,098,103 – 8,980,747

Program/ Film Rights/ Others – 1,670,595 – 1,095,512

Commission – 333,727 – 341,097

Others – Electronic Devices - 1 2,567

Total – 12,102,425 – 10,419,923

Closing Stock


Total – 2,813,744 – 2,353,280

(b) Consumption of Raw Stock (included in Program/Film Rights above)

(Quantity in numbers, Amount in Rs./Thousand)


Qty. Amount Qty. Amount

Raw Tapes/Discs 53,041 48,562 57,986 34,715


(c) Value of Imported and Indigenous Raw Stock consumed

(% denotes Percentage, Amount in Rs./Thousand)

Particulars 2009 2008% Amount % Amount

Imported 9.80 4,761 2.16 752Indigenous 90.20 43,801 97.84 33,963Total 100.00 48,562 100.00 34,715

(d) Other Information (Rs./Thousand)


Earning in Foreign Exchange

FOB Value of Exports 893,415 797,075

Broadcasting Revenue 34,632 155,294

Others 21,605 30,321

Remittances in Foreign Currency

Net Dividend remitted 172,803 348,256

No. of Shareholders (Nos.) 133 1,924

No. of Equity Shares held (Nos.) 86,401,552 232,170,943

Expenditure in Foreign Currency (On Accrual Basis)

Travelling expenses 4,970 6,874

Transponder rent 64,485 63,614

Programming Expenses 31,175 38,712

Repairs and Maintenance 1,661 75

Interest expense 1,168 1,832

Others 20,082 40,029

CIF Value of Imports

Capital Equipment 169,774 104,032

Electronic Devices - 2,517

Raw Tapes 4,907 845

14. Earnings per share (EPS) -

Sr. Particulars 2009 2008

a. Profit after Tax before Exceptional Item (Rs./Thousand) 3,071,640 2,977,016

b. Profit after Tax after Exceptional Item (Rs./Thousand) 3,097,446 2,951,210

Adjustment for the purpose of Diluted EPS:

Add: Interest on Foreign Currency Convertible Bonds 1,075 1,178

Less: Tax on above 365 400

c. Profit after Tax before Exceptional Item for Diluted EPS (Rs./Thousand) 3,072,350 2,977,792

d. Profit after Tax after Exceptional Item for Diluted EPS (Rs./Thousand) 3,098,156 2,951,985

e. Weighted Average number of equity shares for Basic EPS (Nos.) 433,930,729 433,566,765

Add: Weighted Average outstanding option deemed to be issued for no consideration (Nos.)

1,083,712 1,524,058


Sr. Particulars 2009 2008

f. Weighted Average number of equity shares for Diluted EPS (Nos.) 434,726,859 435,090,823

Nominal value of equity shares (Re.) 1 1

g. Basic EPS before Exceptional Item (Rs.) 7.08 6.87

h. Basic EPS after Exceptional Item (Rs.) 7.14 6.81

i. Diluted EPS before Exceptional Item (Rs.) 7.07 6.84

j. Diluted EPS after Exceptional Item (Rs.) 7.13 6.78

16. Segmental Reporting

The Financial Statements of the Company contain both the consolidated financial statements as well as the separate financial statements of the parent company. Hence, the Company has presented the segmental information on the basis of the consolidated financial statements as permitted by Accounting Standard – 17.

As per our attached report of even dateMohan BhandariPartner










I. REGISTRATION DETAILSREGISTRATION NO. STATE CODE

DATE MONTH YEAR

BALANCE SHEET DATE

II. CAPITAL RAISED DURING THE YEAR (AMOUNT RS. IN THOUSAND)PUBLIC ISSUE RIGHTS ISSUE

BONUS ISSUE PREFERENTIAL ALLOTMENT

III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT RS. IN THOUSAND) TOTAL LIABILITIES TOTAL ASSETS

SOURCES OF FUNDSPAID-UP CAPITAL RESERVES AND SURPLUS

SHARE APPLICATION MONEY SECURED LOANS

UNSECURED LOANS

APPLICATION OF FUNDS NET FIXED ASSETS INVESTMENTS

NET CURRENT ASSETS MISCELLANEOUS EXPENDITURE

OTHER ASSETS DEFERRED TAX LIABILITIES

IV. PERFORMANCE OF COMPANY (AMOUNT RS. IN THOUSAND) TURNOVER* TOTAL EXPENDITURE

(*INCLUDES OTHER INCOME) + - PROFIT/(LOSS) BEFORE TAX BEFORE EXCEPTIONAL ITEMS + - PROFIT/(LOSS) AFTER TAX AND EXCEPTIONAL ITEM

+ EARNINGS PER SHARE BEFORE EXCEPTIONAL ITEMS (WEIGHTED) (RS.) DIVIDEND RATE (%)

V. GENERIC NAMES OF PRINCIPAL PRODUCTS OF THE COMPANY (AS PER MONETARY TERMS) ITEM CODE NO. (ITC CODE)

PRODUCT DESCRIPTION

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

1 1

3 1 0 3 2 0 0 9

N I L

N I L

N I L

N I L

2 2 9 9 6 0 2 5

N I L

1 3 1 5 3 3 4 5

+ 3 0 9 7 4 4 6

7 . 0 8 2 0 0

8 5 2 4 9 0 0 1

S E T T E SR E C O R D E D V I D E O C A S

N I L

Place : MumbaiDate : June 26, 2009


Subhash Chandra ChairmanPunit Goenka Whole-time DirectorNemi Chand Jain Director

Hitesh Vakil Director - FinanceM. Lakshminarayanan Company Secretary

9 3 6 5 6 3 5

2 8 7 6 7

2 5 1 3 9 4 4 6

4 3 4 0 0 7

4 9 5 4 5 0

1 5 8 2 5 1 7

1 0 0 2 0 7 2 9

3 7 6 1 9 0 4

2 5 1 3 9 4 4 6

1 2 1 3 9 6 4

1 3 4 9 6 1 6 3

5 1

3 9 9 8 6


(Rs. in ‘000)

Particulars 2009 2,008

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before taxation and exceptional items 3,761,904 4,569,219

Adjustments for :

Depreciation/Amortization 119,240 106,019

Share issue and preliminary expenses written off 49 49

Provision for doubtful debts/advances 63,249 219,019

Exchange adjustments 29,143 –

Loss on Foreign exchange derivative contracts 443,519 261,172

Loss on sale/ discard/ shortage of fixed assets (net) 3,352 6,276

Interest expense 272,428 199,283

Dividend income (17,713) (10,982)

Interest income (883,061) (940,136)

Operating profit before working capital changes 3,792,110 4,409,919

Adjustments for :

(Increase)/Decrease in trade and other receivables 740,918 (1,358,164)

(Increase) in Programs/Film Rights and Inventories (830,709) (487,204)

Increase/(Decrease) in trade and other payables (885,726) 429,821

Cash Generated from Operations 2,816,593 2,994,372

Direct taxes paid - For current year (1,001,881) (1,036,044)

Net Cash flow from Operating Activities 1,814,712 1,958,328

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets/Capital Work-in-Progress (303,523) (352,692)

Purchase of Investments (1,450) (61,624)

Loans to others (12,761,580) (15,860,522)

Loans repaid by others 13,163,499 15,393,716

Dividend received 17,713 10,982

Sale of fixed assets 3,192 9,366

Interest received 976,632 806,119

Net Cash Flow from Investing Activities 1,094,483 (54,655)

C. CASH FLOW FROM FINANCING ACTIVITIES

Dividend paid (including dividend tax) (1,013,959) (761,010)

Interest paid (274,730) (200,258)

Loss on Foreign exchange derivative contracts (443,519) (261,172)

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31,











(Rs. in ‘000)

Particulars 2009 2,008

Proceeds from short term borrowings 500,000 1,400,000

Proceeds from long term borrowings 1,004,855 7,948

Repayments of short term borrowings (1,143,262) (1,748,130)

Repayments of long term borrowings (650,813) (150,188)

Payment under finance leases (5,549) (7,532)

Net Cash flow from Financing Activities (2,026,977) (1,720,342)

Net Cash Flow during the year (A+B+C) 882,218 183,331

Cash and Cash Equivalents at the beginning of the year 222,126 38,795

Cash and Cash Equivalents at the end of the year 1,104,344 222,126

Notes to the Cash Flow Statement for the year ended March 31, 2009

1. Previous year's figures have been regrouped, recast wherever necessary.

2. Conversion of FCCB (Refer Note 3 of Notes to Accounts) is not considered in the above cash flow statement being a non cash transaction

3. Cash and Cash Equivalents at the end of the year:


Balances with Scheduled Banks in Current Accounts 1,102,160 218,834

Balances with Scheduled Banks in Deposit Accounts 68 68

Balances with Non-Scheduled Banks in Current Accounts 352 1,374

Cheques in hand/transit 25

Total 1,104,344 222,126


LAST FIVE YEARS FINANCIAL HIGHLIGHTS

Year Ending March 31Consolidated Standalone

2009 2008 2007 2006 2005 2009 2008 2007 2006 2005

Revenue Account

Income from Operations 21,773 18,354 15,159 16,543 13,252 12,102 10,420 8,677 8,314 6,473

Total Expenses 16,293 12,931 11,955 13,848 8,900 8,493 6,334 6,556 7,525 4,091

Operating Profit 5,480 5,423 3,204 2,695 4,352 3,609 4,086 2,121 789 2,382

% to Income from Operations 25% 30% 21% 16% 33% 30% 39% 24% 9% 37%

Other Income 1,572 1,138 747 640 521 1,051 1,019 614 510 458

PBIDT 7,053 6,561 3,951 3,335 4,873 4,660 5,105 2,735 1,299 2,840

Financial Expenses 1,339 516 334 188 206 779 430 189 140 165

Depreciation / Amortisation 310 232 185 360 329 119 106 85 148 139

Profit Before Tax & Exceptional Items 5,403 5,813 3,432 2,787 4,338 3,762 4,569 2,461 1,011 2,536

Exceptional Items (26) 26 – (20) 141 (26) 26 – (19) 53

Taxation 208 1,627 999 547 1,023 690 1,592 799 339 860

Profit After Tax & before exceptional items 5,195 4,186 2,433 2,240 3,315 3,072 2,977 1,662 672 1,676

Profit After Tax & before minority interest / share of profits/(losses) in associates

5,221 4,160 2,433 2,260 3,174 3,097 2,951 1,662 691 1,623

Add: Share of Results of Associates 1 5 10 (46) 7

Less: Minority Interest 99 333 68 71 56

Profit After Tax for the year 5,124 3,832 2,375 2,143 3,125 3,097 2,951 1,662 691 1,623

% to Total Income 22% 20% 15% 12% 23% 24% 26% 18% 8% 23%

Dividend 868 868 650 435 413 868 868 650 435 413

Dividend Rate 200% 200% 150% 100% 100% 200% 200% 150% 100% 100%

Capital Account

Share Capital - Equity 434 434 434 413 412 434 434 434 413 412

Share Application Money – – –

Share Capital - Preference – – –

Reserves & Surplus 33,561 28,177 25,747 20,873 24,124 22,996 20,849 18,918 15,037 20,955

Deferred Tax Balances (113) (243) (75) (148) (219) (40) (66) 12 (6) (55)

Minority Interest 948 1,117 818 458 397 –

Loan Funds 5,757 3,866 3,226 4,772 5,304 1,709 2,043 2,541 4,712 5,221

Capital Employed 40,587 33,351 30,150 26,368 30,018 25,099 23,259 21,904 20,156 26,533

Fixed Assets 18,093 15,605 14,841 12,948 15,373 1,583 1,285 1,054 1,153 1,792

Investments 1,271 2,516 2,326 3,024 3,744 13,496 13,495 13,459 13,448 15,475

Net Current Assets 21,223 15,230 12,981 10,384 10,851 10,021 8,480 7,391 5,549 9,252

Miscellaneous Expenditure (to the extent not w/o) – – 2 12 51 – – – 6 14

Capital Deployed 40,587 33,351 30,150 26,368 30,018 25,099 23,259 21,904 20,156 26,533

Closing market price per share of Re.1 106 245 251 238 139 106 245 251 238 139

Market capitalisation 46,157 106,072 108,674 98,372 57,297 46,157 106,072 108,674 98,372 57,297


PERFORMANCE RATIOS - AN ANALYSIS

Year Ending March 31Consolidated Standalone

2009 2008 2007 2006 2005 2009 2008 2007 2006 2005

Financial Performance

Advertisement Income / Income from Operations (%) 48.6% 50.7% 46.4% 39.7% 43.0% 64.9% 69.8% 58.9% 45.4% 50.2%

Subscription Income / Income from Operations (%) 41.5% 40.5% 43.9% 43.4% 50.6% 18.5% 16.4% 19.1% 21.2% 32.1%

Operating Profit / Income from Operations (%) 25.2% 29.5% 21.1% 16.3% 32.8% 29.8% 39.2% 24.4% 9.5% 36.8%

Other Income / Total Income (%) 6.7% 5.8% 4.7% 3.7% 3.8% 8.0% 8.9% 6.6% 5.8% 6.6%

Programming Cost / Income from Operations (%) 32.6% 28.2% 31.5% 25.7% 19.7% 40.6% 33.8% 46.1% 42.5% 29.9%

Personnel Cost / Income from Operations (%) 9.3% 7.8% 6.7% 6.6% 6.5% 7.6% 6.0% 4.7% 5.3% 6.0%

Selling and Admin Expenses / Income from Operations (%)

20.4% 20.0% 18.9% 20.7% 18.8% 21.0% 20.2% 15.7% 20.3% 19.7%

Total Operating Cost / Income from Operations (%) 74.8% 70.5% 78.9% 83.7% 67.2% 70.2% 60.8% 75.6% 90.5% 63.2%

Financial Expenses / Income from Operations (%) 6.2% 2.8% 2.2% 1.1% 1.6% 6.4% 4.1% 2.2% 1.7% 2.5%

Tax / Income from Operations (%) 1.0% 8.9% 6.6% 3.3% 7.7% 5.7% 15.3% 9.2% 4.1% 13.3%

PAT for the year / Total Income (%) 21.9% 19.7% 14.9% 12.5% 22.7% 23.5% 25.8% 17.9% 7.8% 23.4%

Tax / PBT (%) 3.8% 28.0% 29.1% 19.6% 23.6% 18.3% 34.8% 32.5% 33.6% 33.9%

Dividend Payout / PAT for the year (%) 16.9% 22.6% 27.4% 19.3% 13.2% 28.0% 29.4% 39.1% 59.7% 25.4%

Dividend Payout / Effective Networth (%) 2.6% 3.0% 2.5% 2.0% 1.7% 3.7% 4.1% 3.4% 3.2% 2.1%

Balance Sheet

Debt-Equity ratio (Total loans / Eff. Networth) (%) 16.9% 13.5% 12.3% 22.4% 21.7% 7.3% 9.6% 13.1% 34.7% 26.8%

Current ratio (Current assets / Current liabilities) (x) 4.7 3.4 3.5 3.4 3.4 3.4 2.6 2.8 2.3 3.2

Capital Output Ratio (Inc from Ops / Eff. Capital employed) (x)

0.5 0.6 0.5 0.6 0.4 0.5 0.4 0.4 0.5 0.3

Fixed assets Turnover (Inc from Ops / Fixed assets) (x)

7.5 6.9 8.0 7.5 3.1 7.6 8.1 8.2 7.2 3.6

Cash & cash equivalents / Total Eff. Capital employed (%)

4.7% 5.7% 3.2% 4.9% 5.2% 4.4% 1.0% 0.2% 1.3% 1.6%

RONW (PAT for the year / Eff. Networth) (%) 15.1% 13.4% 9.1% 10.1% 12.8% 13.2% 13.9% 8.6% 5.1% 8.3%

ROCE (PBIT / Eff. Capital employed) (%) 16.6% 19.0% 12.5% 11.3% 15.2% 18.1% 21.4% 12.1% 6.3% 10.9%

Per Share Data #

Revenue per share (Rs.) 53.8 45.0 36.7 41.7 33.4 30.3 26.4 21.4 21.4 16.8

Dividend per share (Rs.) 2.00 2.00 1.50 1.00 1.00 2.00 2.00 1.50 1.00 1.00

Indebtedness per share (Rs.) 13.3 8.9 7.4 11.6 12.9 3.9 4.7 5.9 11.4 12.7

Book value per share (Rs.) 78.3 66.0 60.4 51.6 59.4 54.0 49.1 44.6 32.9 47.3

Earnings per share (after prior period adjustments) (Rs.)

11.8 8.8 5.5 5.2 7.6

PE Ratio - Price / EPS Ratio (Share Price as of March 31,) (x)

9.0 27.7 45.8 45.9 18.3


AUDITORS’ REPORT

To,

The Board of Directors

Zee Entertainment Enterprises Limited

1. We have audited the attached Consolidated Balance Sheet of Zee Entertainment Enterprises Limited (“the Company”) and its subsidiaries and associate Companies (“the Group”) as at March 31, 2009, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year then 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 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. (a) The financial statements of subsidiaries with total assets (net) of Rs. /Thousand 17,818,445 as at March 31, 2009 and total revenues (net) of Rs./Thousand 9,980,182 for the year ended on that date have not been audited by us. These financial statements have been audited by other auditors whose report has been furnished to us and in our opinion, in so far it relates to the amounts included in respect of those subsidiaries, is based solely on the report of the other auditors.

(b) The financial statements of associates for the year ended March 31, 2009 has been audited by other auditors whose report has been furnished to us. The profit of such associates considered for consolidation is Rs./Thousand 1,357. Our opinion, in so far it relates to the amounts

included in respect of those associates, is based solely on the report of the other auditors.

4. We draw reference to Note 18(b) regarding receivable of Rs./Thousand 313,046 claimed from a competing broadcaster, which is under litigation. In the opinion of the management, based on the legal opinion, the said claim is considered as good and recoverable.

5. We report that the Consolidated Financial Statements have been prepared by the Company in accordance with the requirements of the Accounting Standard (AS) 21 “Consolidated Financial Statements” and AS 23 “Accounting for Investments in Associates”, issued by the Institute of Chartered Accountants of India and on the basis of the separate audited financial statements of the Company, its subsidiaries and associates.

6. On the basis of information and explanations given to us and on consideration of the separate audit reports on individual audited financial statements of the Company, its subsidiaries and associates and subject to Para (3) above, we are of the opinion that

(a) The Consolidated Balance Sheet gives a true and fair view of the consolidated state of affairs of the Group as at March 31, 2009;

(b) The Consolidated Profit and Loss Account gives a true and fair view of the consolidated result of operations of the Group for the year ended on that date; and

(c) The Consolidated Cash Flow Statement gives a true and fair view of the consolidated cash flows of the Group for the year ended on that date.


For and on behalf ofMGB & Co.Chartered Accountants

Mumbai, June 26, 2009


CONSOLIDATED BALANCE SHEET AS AT MARCH 31,










(Rs. in '000) Schedule 2009 2008

SOURCES OF FUNDSShareholders' FundsShare Capital 1 434,007 433,567 Reserves and Surplus 2 33,560,988 28,177,252

33,994,995 28,610,819 Minority Interest 947,659 1,117,148 Loan FundsSecured Loans 3 5,261,451 2,531,740 Unsecured Loans 4 495,450 1,333,881

5,756,901 3,865,621 TOTAL 40,699,555 33,593,588

APPLICATION OF FUNDSFixed Assets 5Gross Block 18,931,540 16,225,048 Less: Depreciation/Amortisation 1,508,466 1,238,984 Net Block 17,423,074 14,986,064 Capital work-in-progress 669,444 619,304

18,092,518 15,605,368 Investments 6 1,271,146 2,515,401 Deferred Tax Assets (Net) [Refer Note 23(c)] 112,828 243,057 Current Assets, Loans and Advances 7Program/Film rights 4,532,418 2,441,848 Inventories 43,931 31,931 Sundry Debtors 6,436,508 5,907,177 Cash and Bank Balances 1,926,334 1,652,024 Loans and Advances 14,087,139 11,475,349

27,026,330 21,508,329 Less:Current Liabilities and ProvisionsCurrent Liabilities 8 4,317,532 4,151,814 Provisions 9 1,485,786 2,126,865

5,803,318 6,278,679 Net Current Assets 21,223,012 15,229,650 Miscellaneous Expenditure 10 51 112 (to the extent not written off or adjusted)

TOTAL 40,699,555 33,593,588 Significant Accounting Policies and Notes to Accounts 18


CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,










(Rs. in '000)Schedule 2009 2008

INCOMESales and Services 11 21,773,097 18,353,653 Other Income 12 1,572,205 1,138,120

TOTAL 23,345,302 19,491,773 EXPENDITUREOperational Cost/Cost of Goods 13 9,809,652 7,817,687 Personnel Cost 14 2,031,154 1,438,049 Administrative and other Expenses 15 1,860,230 2,132,196 Selling and Distribution Expenses 16 2,591,618 1,542,734

TOTAL 16,292,654 12,930,666 Operating Profit 7,052,648 6,561,107 Financial Expenses 17 1,339,098 515,925 Depreciation/Amortization 310,333 232,329 Profit Before Tax and Exceptional Items 5,403,217 5,812,853 (Add)/Less: Exceptional Items Provision for Dimunition in Value of Investment [Refer Note 17 (b)]

(25,806) 25,806

Profit before Tax and After Exceptional Items 5,429,023 5,787,047 (Add)/Less: Provision for Taxation

- Current Tax - current year 1,501,077 1,741,313 - earlier period (1,425,204) 31,252

- Deferred Tax 107,877 (167,668)- Fringe Benefit Tax 24,134 21,740

Profit after tax and before minority interest/share of profits in associates 5,221,139 4,160,410 Add: Share of results of associates 1,357 5,141 Less: Minority Interest 98,870 332,883 Net Profit after tax 5,123,626 3,832,668 Less: Adjustments pursuant to scheme of Amalgamation – 593,201 Add: Balance brought forward 14,775,431 12,878,540 Amount available for appropriation 19,899,057 16,118,007 AppropriationsProposed Dividend 868,014 868,014 Tax on Dividend 145,441 149,562 General Reserve 410,000 325,000 Capital Redemptional Reserve 29,700 –Balance carried to Balance Sheet 18,445,902 14,775,431

TOTAL 19,899,057 16,118,007 Earnings Per Share: (Rs.)Basic before Exceptional Item 11.75 8.90 Basic after Exceptional Item 11.81 8.84 Diluted before Exceptional Item 11.73 8.87 Diluted after Exceptional Item 11.79 8.81 (On distributable profits on shares outstanding)(Face Value Re.1)Significant Accounting Policies and Notes to Accounts 18


SCHEDULES TO CONSOLIDATED BALANCE SHEET AS AT MARCH 31,

(Rs. in ’000) 2009 2008

SCHEDULE - 1Share CapitalAuthorised500,000,000 Equity Shares of Re.1/- each 500,000 500,000 2,500,000 Cumulative Redeemable Preference Shares of Rs.100/- each. 250,000 250,000

750,000 750,000 Issued, Subscribed and Paid-up434,007,111 Equity Shares of Re.1/- each fully paid-up 434,007 433,567 (Out of the above 210,316,212 Equity shares of Re.1/- each fully paid-up were allotted for consideration other than cash against acquisition of Investments.)

TOTAL 434,007 433,567

SCHEDULE - 2Reserves and SurplusDebenture Redemption ReserveAs per last Balance Sheet – –Add: Appropriated During the year 29,700 –

29,700 –Capital Redemption ReserveAs per last Balance Sheet 71,168 70,000 Add: Transfer from General Reserve – 1,168

71,168 71,168 Securities PremiumAs per last Balance Sheet 10,288,554 10,295,520 Add: Received during the year 67,135 –Less: Premium on Redemption of FCCB [Refer Note 16(c)] 3,981 6,966

10,351,708 10,288,554 General ReserveBalance as per last Balance Sheet 4,069,194 3,152,161 Less: Transfer to Capital Redemption Reserve – 1,168 Add: Transfer pursuant to the Scheme of Amalgamation – 593,201 Add: Appropriated during the year 410,000 325,000

4,479,194 4,069,194 Foreign Currency Translation Reserve 183,316 (1,027,095)Profit and Loss Account 18,445,902 14,775,431

TOTAL 33,560,988 28,177,252



(Rs. in ’000) 2009 2008

SCHEDULE - 3Secured Loans [Refer Note 15]500 (Nil) Secured Redeemable Non-Convertible Debenture of Rs.1,000,000 each fully paid-up 500,000 –Term Loan from Financial Institution/Bank 2,824,977 1,754,883 Working Capital Finance from Banks 1,911,260 754,307 Vehicle/Other Loans 25,214 22,550

TOTAL 5,261,451 2,531,740

SCHEDULE - 4Unsecured LoansForeign Currency Convertible Bonds [Refer Note 16 ] 195,450 233,881 Short Term Loan

From Bank 300,000 1,100,000 TOTAL 495,450 1,333,881

SCHEDULE - 5

Fixed Assets (at cost) (Rs. in ’000)

DescriptionGROSS BLOCK DEPRECIATION/AMORTIZATION NET BLOCK

As at 1.4.2008

Additions Deductions As at 31.03.2009

As at 1.4.2008

For the year

Deductions As at 31.03.2009

As at 31.03.2009

As at 31.03.2008

a) Intangibles

Goodwill - On Consolidation ^ 12,959,829 2,225,796 2,880 15,182,745 – – – – 15,182,745 12,959,829

Software/Knowledge basedContent

14,929 8,799 43 23,685 10,389 4,021 26 14,384 9,301 4,540

Trade Mark 33,037 – – 33,037 26,347 3,304 – 29,651 3,386 6,690

b) Tangibles

Leasehold Land 65,690 – – 65,690 4,235 813 – 5,048 60,642 61,455

Building 784,049 67,935 7,762 844,222 181,174 29,860 6,701 204,333 639,889 602,875

Plant and Machinery 1,783,402 238,283 3,756 2,017,929 744,284 125,544 1,312 868,516 1,149,413 1,039,118

Equipments 387,777 156,920 29,758 514,939 204,336 124,421 24,191 304,566 210,373 183,441

Furniture and Fixtures 120,330 13,959 7,375 126,914 50,237 12,398 4,905 57,730 69,184 70,093

Vehicles 76,005 58,372 11,998 122,379 17,982 9,973 3,717 24,238 98,141 58,023

Total 16,225,048 2,770,064 63,574 18,931,540 1,238,984 310,334 40,852 1,508,466 17,423,074 14,986,064

Previous Year 15,702,098 623,370 100,420 16,225,048 1,080,533 232,329 73,878 1,238,984 14,986,064 –

Notes :

(a) ^ Arising on consolidation on ZEEL with its subsidiaries and its ultimate subsidiaries.

(b) Building includes Rs. 114, the value of shares in a Co-operative Society.

(c) Part of Building has been given on Operating Lease.



(Rs. in ‘000)

SCHEDULE - 6 2009 2008

Investments

Long Term (at cost)

Quoted - Non-Trade

1,800,000 Equity Shares of Rs. 2/- each of Essel Propack Limited 1,500 1,500

{Market Value Rs. Thousand / 66,420 (124,200)}

Quoted - Trade - In Associates

1,321,200 Equity shares of Rs.10/- each of Aplab Limited 46,599 46,599

(Extent of holding 26.42%)

Add: Share of profit for previous years 20,780 20,797

Add: Share of profit for current year 1,357 3,286

Less: Dividend received during the year (3,303) (3,303)

{Market Value Rs. Thousand / 98,297 (115,010)} 65,433 67,379

Unquoted - Trade

50 Equity shares of Rs.10/- each of North Karnataka GSB Bank Limited 1 1

2,500 Equity shares of Rs.10/- each of Samata Sahakari Bank Limited 63 63

346,000 (296,000) Equity Shares of Rs.10/- each of Asianet Communication Limited# 119,297 259,342

67,693 [Nil] Equity shares of Rs. 10/- each of Asianet Infrastructure Limited# 10,373 –

423,082 [Nil] Equity shares of Rs. 10/- each of Asianet Radio Private Limited# 64,836 –

423,082 [Nil] Equity shares of Rs. 10/- each of Asianet News Private Limited# 64,836 –

3,000 Equity Shares of Rs. 10/- each of Last Minute Media Private Limited 300 –

23,000 7.25% Redeemable Non-Cumulative Preference shares of 23 23

Re. 1/- each of Wire & Wireless India Limited

28 (Nil) 14% Unsecured Reedemable Optionaly Convertible Debentures (OCD's)

of Cornershop Entertainment Company Private Limited of Rs.10,000,000 fully paid-up (Refer Note 19)* 280,000 –

Unquoted - Trade

13,344 Equity Share of US$ each of Broadcast South Asia Limited

[extent of holding 48.44%] 1,319,455 1,384,663

(Less): Share of Loss in previous year (65,208) (67,063)

Add: Share of Profit in current year – 1,855

Less: Sale of Investments during the year 1,254,247 –

– 1,319,455

Others

1,000 Equity share of Rs.10/- each of Ecool Gaming Solutions Private Limited 5 10

1,000 Equity share of Rs.10/- each of Pan India Network Private Limited+ 5 –

National Savings Certificates 15 25

(Pledged with VAT/Sales Tax authorities)



(Rs. in ‘000)

SCHEDULE - 6 (Contd.) 2009 2008

Investments

Current Investments

Unquoted

506,305 (Nil) units of Rs. 10/- each of Principal Cash Management Fund Liquid Option - Daily Dividend * 5,064 –

2,042,115 (Nil) units of Rs. 10/- each of JM Money Manager Fund Super Plus Plan - Daily Dividend * 20,430 –

601,214 (Nil) units of Rs. 10/- each of Reliance Medium Term Fund - Daily Dividend Plan * 10,278 –

3,523,103 (Nil) units of Rs. 10/- each of LIC MF Income Plus - Daily Dividend Plan * 35,231 –

2,000,000 (2,000,000) units of Rs. 10/- each of JM Fixed Maturity Plan Series VII - 18 Month Plan * 20,000 20,000

Nil (2,044,565) units of Rs.10/- each of LIC MF Liquid Plus Fund Daily Dividend – 20,446

Nil (2,606,937) units of Rs. 10/- each of Principal Floating Rate Fund (FMP) – 26,101

Nil (957,595) units of Rs. 10/- each of HDFC High Interest Fund - Short Term Plan Dividend Option – 10,195

Nil (1,476,766) units of Rs. 10/- each of HDFC Short Term Plan - Dividend Option – 15,264

Nil (1,559,667) units of Rs. 10/- each of JM Fixed Maturity Fund Series VII - 13 Month Plan – 15,597

Nil (45,054) units of Rs. 1,000/- each of Reliance Liquid Plus Fund - Institutional Option - Daily Dividend Plan – 45,106

Nil (5,093,614) units of Rs. 10/- each of JM Money Manager Fund Super Plus Plan – 50,957

Nil (2,011,698) units of Rs. 10/- each of LIC Liquid Plus Fund - Daily Dividend – 20,137

Nil (1,506,975) units of Rs. 10/- each of Birla Sun Life Liquid Plus - Institutional Daily Dividend – 15,080

Nil (2,006,456) units of Rs. 10/- each of SBI SHF Liquid Plus- Institutional Plan Weekly Dividend – 20,130

Nil (1,908,645) units of Rs. 10/- each of Prudential ICICI - Flexible Income Plan – 20,134

Nil (1,500,000) units of Rs. 10/- each of UTI Fixed Maturity Plan Institutional Dividend Plan - Re-investment – 15,000

(*These investments have been charged against Secured RedeemableNon-Convertible Debentures issued.) – –

Immovable Property (Refer Note 17)

Freehold Land 573,456 599,262

Less: Provision for diminution in value of investments – 25,806

573,456 573,456

TOTAL 1,271,146 2,515,401 Note:All the above securities are fully paid up.# Consequent to the Scheme of Arrangement for demerger of Asianet Communication Limited, the Company has been alloted shares in the demerged entities.+ Pursuant to the Scheme of Arrangement for demerger of Pan India Infravest Network Private Limited and Ecool Gaming Solutions Private Limited the Company has been allotted Equity Shares in Pan India Network Private Limited.


SCHEDULES TO CONSOLIDATED BALANCE SHEET AS AT MARCH 31,(Rs. in ’000)

SCHEDULE - 7 2009 2008Current Assets, Loans and AdvancesA. Current Assets

(a) Programs/Film Rights [Refer Note 10] 4,532,418 2,441,848 (b) Inventories (as taken, valued and certified by the Management)

Raw Stock - Tapes 17,871 6,566 Educational Materials/Equipments 26,060 25,365

43,931 31,931 (c) Sundry Debtors (Unsecured and considered good unless otherwise stated)

More than six months 3,146,063 2,648,214 Others 5,768,001 5,170,143

8,914,064 7,818,357 Less: Provision for doubtful debts 2,477,556 1,911,180

6,436,508 5,907,177 (d) Cash and Bank Balances

Cash in hand 16,263 6,270 Balances with Banks in Current Accounts 1,792,747 1,561,582 Balances with Banks in Deposit Accounts 112,791 39,103 Cheques in hand/transit 4,533 45,069

1,926,334 1,652,024 (Fixed deposit Pledged Rs./Thousand 55 (53) with Sales Tax authorities,

Rs./Thousand 6,592 (6,363) against guarantee given by bank and Rs./Thousand 47,461 (Nil) as security for Secured Redeemable Optionally Non-Convertible Debentures)

(e) Loans and Advances Loans (Unsecured and considered good unless otherwise stated) 8,861,962 8,331,306 Advances (recoverable in cash or kind or for value to be received) 5,145,081 3,078,957 Less: Provision for doubtful advances 88,663 103,171

5,056,418 2,973,962 Deposits 168,759 168,257

14,087,139 11,475,349 TOTAL 27,026,330 21,508,329

SCHEDULE - 8Current LiabilitiesSundry Creditors - For Goods 1,281,661 949,729

- For Expenses and other liabilities 1,968,720 2,262,920 Trade Advances/Deposits received 327,039 114,774 Pending remittance to Principals 732,533 814,067 Unclaimed dividend/Fixed deposits 7,529 7,972 Interest accrued but not due 50 2,352 TOTAL 4,317,532 4,151,814

SCHEDULE - 9ProvisionsProvision for - Tax (net of advances) 327,502 984,640

- Retirement benefits 142,766 124,629 Proposed Dividend (including tax) 1,015,518 1,017,596

TOTAL 1,485,786 2,126,865

SCHEDULE - 10Miscellaneous Expenditure(to the extent not written off or adjusted)Share Issue and Preliminary Expenses 51 112 TOTAL 51 112


SCHEDULES TO CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,(Rs. in ’000)

SCHEDULE - 11 2009 2008Sales and ServicesServices - Advertisement 10,592,585 9,306,869

- Subscription 9,037,579 7,436,098 - Commission - Broadcasters 388,159 360,962 - Educational Services 164,800 151,233 - Other Services 461,413 271,120

Sales 1,128,561 827,371TOTAL 21,773,097 18,353,653

SCHEDULE - 12Other IncomeDividend (Gross) 13,387 10,543 Interest 1,255,697 995,990 Profit on sale of investment - in subsidiary 191,923 –

- in associates 4,590 –- others – 5,511

Rent Income 52,776 20,915 Miscellaneous Income 53,382 57,646 Balances written back (net) 450 47,515

TOTAL 1,572,205 1,138,120

SCHEDULE - 13Operational Cost/Cost of GoodsA. Program/Film Rights

Opening 2,441,848 2,015,644 Add: Production/Acquisition cost 9,083,407 5,598,904 Less: Closing 4,532,418 2,441,848

6,992,837 5,172,700 B. Transmission Cost/Other Direct Expenses

Subscription Management Services 2,017,308 1,952,540 Transmission Cost 692,785 604,539 Other operational expenses 54,441 46,382

2,764,534 2,603,461 C. Stock-in-Trade

Opening Stock 25,365 21,116 Add: Purchases 52,976 45,775 Less: Closing Stock 26,060 25,365

52,281 41,526 TOTAL 9,809,652 7,817,687

SCHEDULE - 14Personnel CostSalaries, Allowances and Bonus 1,871,882 1,317,509 Contribution to Provident and other funds 78,073 54,607 Staff Welfare Expenses 81,199 65,933

TOTAL 2,031,154 1,438,049


SCHEDULES TO CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,

(Rs. in ’000)2009 2008

SCHEDULE - 15Administrative and Other ExpensesRent 200,644 133,341 Lease Rentals 1,077 1,401 Rates and Taxes 50,188 28,799 Repairs and maintenance - Building 9,249 3,369

- Plant and Machinery 37,297 27,546 - Others 34,603 30,097

Insurance 14,412 21,574 Electricity and Water charges 69,752 51,308 Communication expenses 110,662 103,697 Printing and Stationary 32,324 24,618 Miscellaneous Expenses 58,044 90,435 Conveyance, Travelling and Vehicle expenses 268,089 224,229 Service charges/expenses 100,212 71,133 Legal, Professional and Consultancy charges 287,049 213,743 Auditors Remuneration 23,950 25,727 Provision for doubtful debts and advances 235,577 727,208 Bad debts and advances written off 315,572 345,427 Loss on sale/discard/shortage of fixed assets (net) 11,467 8,493 Share issue and preliminary expenses written off 62 51

TOTAL 1,860,230 2,132,196

SCHEDULE - 16Selling and Distribution ExpensesAdvertisement and Publicity expenses 1,016,734 756,055 Commission on sales and services 270,012 163,081 Business Promotion expenses 1,304,872 623,598

TOTAL 2,591,618 1,542,734

SCHEDULE - 17Financial ExpensesInterest on - Fixed Loan 210,575 195,425

- Bonds and Debentures 1,075 1,178 - Working Capital Loan 191,048 97,644 - Others 3,200 3,575

Discounting and Financing expenses 44,467 36,045 Loss on Foreign exchange derivative contracts and exchange difference 888,733 182,058

TOTAL 1,339,098 515,925


SCHEDULE 18

Significant Accounting Policies and Notes to Accounts

1. Background:

Zee Entertainment Enterprises Limited (hereinafter referred to as ̀ the parent company’, ̀ the Company’ or ‘ZEEL’) together with its subsidiaries and associates (collectively known as “the Group”) derives revenue mainly from advertisements and subscription. The Group also generates revenue through sale of television softwares, film distribution and Educational services.

2. Basis of Consolidation

a) The Consolidated Financial Statements (CFS) of the Group are prepared under Historical Cost Convention under going concern basis in accordance with Generally Accepted Accounting Principles in India and the Accounting Standard-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.

b) The CFS is prepared using uniform accounting policies for transactions and other events in similar transactions.

c) The consolidation of the financial statements of the parent company and its subsidiaries is done to the extent possible on a line-by-line basis by adding together like items of assets, liabilities, income and expenses. All significant inter-group transactions, unrealized inter-company profits and balances have been eliminated in the process of consolidation. Minority interest in subsidiaries represents the minority shareholders proportionate share of the net assets and net income.

d) The CFS includes the Financial Statements of the parent company and the subsidiaries (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 holdingof Parent (%)

Country of Incorporation

Direct SubsidiariesETC Networks Limited 50.18 IndiaTaj Television India Private Limited 50.00 IndiaZee Turner Limited 74.00 IndiaZee Sports Limited 100.00 IndiaZee Multimedia Worldwide Limited 100.00 British Virgin IslandsZES Holdings Limited ^ 100.00 MauritiusIndirect SubsidiariesApac Media Venture Limited 100.00 HongkongAsia Today Limited # 100.00 MauritiusAsia Business Broadcasting (Mauritius) Limited * 100.00 MauritiusPan Asia Infrastructure Limited + 100.00 MauritiusTaj TV Mauritius Limited 50.00 MauritiusZee Multimedia Worldwide (Mauritius) Limited 100.00 MauritiusZee Multimedia (Maurice) Limited 100.00 MauritiusZee Sports International Limited 100.00 MauritiusZee Sports Americas Limited 100.00 MauritiusAsia TV Limited 100.00 United KingdomExpand Fast Holding (Singapore) Pte Limited 100.00 SingaporeZee Technologies (Guangzhau) Limited 100.00 ChinaZee Telefilms Middle East FZ LLC 100.00 U.A.E.


Name of the Subsidiaries Extent of holdingof Parent (%)

Country of Incorporation

Zee TV USA Inc. 100.00 United States of AmericaZee TV South Africa (Proprietary) Limited 100.00 South AfricaZES Entertainment Studios Limited ^ 100.00 British Virgin IslandsZES Mauritius Limited ^ 100.00 MauritiusZES International Limited ^ 100.00 United KingdomZee Motion Pictures Private Limited ^ 100.00 IndiaCIS Holding LLC ^ 100.00 Russia

* 40% Shareholding acquired during the year ^ Incorporated during the year # 50% held through wholly owned subsidiary. + Ceased to be subsidiary w.e.f. January 19, 2009

e) Associates

The Group has adopted and accounted for Investments in Associate in these CFS, using the “Equity Method” as per AS -23 issued by ICAI.

Name of the Associate Company Extent of Holdings Country of IncorporationAplab Limited 26.42% IndiaBroadcast South Asia Limited * 48.44% British Virgin Islands

* ceased to be an associate w.e.f. May 8, 2008.

No adjustments are made for differences in accounting policy for inventories are valued on weighted average basis and depreciation provided on fixed assets on written down value method in case of Aplab Limited. The impact of this non-compliance on company’s share of profit in the associate is not ascertained.

3. 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 these estimates. Any revision to estimates is recognized prospectively in current and future periods.

4. Comparatives

(a) Previous years figures have been regrouped, rearranged or recasted wherever necessary to confirm to this year’s classification. Figures in brackets pertain to previous year.

(b) The CFS is not comparable, in view of subsidiaries incorporated/ acquired during the current and previous year.

5. Fixed Assets

(a) Goodwill on Consolidation

Goodwill represents the difference between the group’s shares in the net worth of the subsidiary or an associate, and the cost of acquisition at the time of making the investment in subsidiary or associate. Capital reserve represents negative goodwill arising on consolidation.

(b) Intangible Assets

Intangible assets comprises Software, Knowledge based content and Trade Mark. These intangible assets are amortized on straight line basis based on the useful lives, which in management’s estimate represents the period during which economic benefits will be derived from their use.

(c) Tangible Fixed Assets

(i) Fixed assets are stated at original cost of acquisition/installation net of accumulated depreciation, amortization and impairment losses. The cost of fixed assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation of the respective assets.

(ii) Capital Work in progress is stated at the amount expended upto the date of Balance sheet including advances for capital expenditure.


(iii) Assets acquired under Finance Lease are capitalized and the corresponding lease liability is recorded at an amount equal to the fair value of the leased asset at the inception of the lease.

6. Impairment of assets

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.

7. Borrowing Costs

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

8. Depreciation/Amortization

a) Depreciation is provided on tangible fixed assets, including on fixed assets acquired under finance lease, on straight-line method at the rates specified in Schedule XIV or at such higher rates as permissible under applicable law, so as to write off their costs over the estimated useful life of the assets.

b) Premium on Leasehold land and leasehold improvements are amortized over the period of Lease.

c) No part of goodwill arising on consolidation is amortized.

d) Intangible assets are amortized over the economic useful life as estimated by the management as under:-

Assets Useful life ( in years)Software/ Knowledge based Content 3Trade Marks 10

9. Investments

a) Investments (other than investment in associates) intended to be held for more than one year, from the date of acquisition, are classified as long term investments and are carried at cost. Provision for diminution in value of these investments is made to recognize a decline other than temporary.

b) Current Investments are carried at cost or fair value whichever is lower.

10. Programs/Film Rights and Inventories

a) Programs/Film rights:

Programs/Film rights are stated at lower of net cost (cost minus accumulated amortization/impairment) or realizable value. Where the realizable value on the basis of its useful economic life is less than its carrying amount, the difference is expensed.

i. Cost of news/ current affairs/ chat shows/ events including sports events etc. are fully expensed on telecast.

ii. Programs (other than (i) above) are amortized over three financial years from the year of telecast.

iii. Film telecast rights are amortized on a straight-line basis over the duration of license or 60 months from the date of purchase, whichever is shorter.

iv. Film rights for trade – Cost of respective right is fully expensed on sale.

b) Film produced and acquired for distribution:

The cost is amortized for Theatrical, Satellite, Music rights etc. as under:

i. Theatrical Rights: - 70% cost is amortized over three months of theatrical release of movie and balance 30% in subsequent three quarters.

ii. Satellite Rights, Music Rights, Home Video Rights etc. are expensed on sale.

iii. In case of Negative rights 10% is allocated to IPR to be amortized over subsequent nine years.

c) Inventory of Raw Stock - Tapes is valued at lower of cost or estimated net realizable value. Cost is taken on First In First Out (FIFO) basis.

d) Educational Materials/Equipments are valued at lower of cost or estimated net realizable value. Cost means average cost.


11. Revenue Recognitiona) Broadcasting services - Advertisement revenue (net of agency commission) is recognized when the related

advertisement or commercial appears before the public i.e. on telecast. Subscription revenue is recognized on completion of service.

b) Commission - Broadcaster includes commission on subscription, advertising canvassing i.e. space selling, revenue recognized when the service is completed.

c) Sales are recognized when the risk and rewards of ownership are passed onto the customers, which is generally on dispatch of goods.

d) In respect of education services, revenue is recognized over the duration of course. Franchise fees are recognized as and when instalments are due.

e) Dividend is recognized when the right to receive the dividend is unconditional.

12. Foreign Currency

a) Accounting of Transactions

(i) The functional currency of each entity in the group is its respective currency. Monetary assets and liabilities in foreign currencies are converted into functional currency at the rates of exchange prevailing at the Balance Sheet date. Transactions in the foreign currencies are converted into functional currency at the rates of exchange prevailing at the date of the transaction.

(ii) Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transactions.

(iii) Foreign currency monetary assets and liabilities at the Balance Sheet date are reported using the closing rate. Gain and losses arising on account of difference in foreign exchange rates on settlement/ translation of monetary assets and liabilities are recognized in the Profit and Loss Account.

(iv) Non-monetary items denominated in foreign currency are reported using exchange rate prevailing on the date of transaction.

(v) In respect of forward exchange contracts assigned to the foreign currency assets/liabilities, the difference due to change in exchange rate between the inception of forward contract and date of the Balance Sheet is recognized in the Profit and Loss Account. Any profit or loss arising on settlement/ cancellation of forward contract is recognized as income or as expense for the year in which they arise.

b) Translation and Exchange Rates

Financial Statements of overseas non-integral operations are translated as under:

(i) Assets and Liabilities at the exchange rate prevailing at the end of the year. Depreciation is accounted at the same rate at which assets are converted.

(ii) Revenues and expenses at yearly average rates (except for inventories and depreciation are converted at opening/closing rates as the case may be). Off Balance Sheet items are translated into Indian Rupees at year-end rates.

(iii) Exchange differences arising on translation of non-integral foreign operations are accumulated in the Foreign Currency Translation reserve until the disposal of such operations.

13. Retirement Benefits

Retirement benefit plans, pensions schemes and defined contribution plans, or funds are governed by the statutes of the countries in which subsidiaries are located and contribution to the fund, future liability on actuarial valuation or liability on termination are charged to Profit and Loss Account. Accrued liabilities for leave encashment are made by the parent and its subsidiaries wherever applicable based on unavailed leave to the credit of employees in accordance with the rules of the respective companies. Incase of a subsidiary, the gratuity fund benefits are administered by a specific Trust formed and annual contributions are deposited under group policy scheme of Life Insurance Corporation of India (LIC).

14. Miscellaneous Expenditure

Share issue and Preliminary expenses are amortized over a period of ten years.

15. Secured Loans

a) In case of Parent Company :

Term Loan from Banks is secured by hypothecation by way of first pari passu charge on immovable property at noida and subscription receivables. The charge to be created within stipulated period. Certain


loans were repaid during the year were hypothecated by way of first charge on all domestic cable subscription receivables and Program and Film Rights and further secured by exclusive charge on advertising receivables from sports channel.

Working Capital Finance from Banks is secured by hypothecation of stocks (other than Program and Film Rights), and book debts (other than advertisement commission and subscription receivables) and other current assets, all ranking pari passu with other financing banks.

b) In case of subsidiaries, Debentures are secured by way of first charge on all fixed assets including immovable property, current

assets including certain fixed deposits with banks, investments in units of mutual funds, charge on Escrow account through which all the receivables of the Company will be routed and negative lien/non-disposal undertaking in respect of equity shares of the Company held by ZEEL (parent company) and other promoter companies

- Charge in respect of pledge of investments in debentures of Cornershop Entertainment Company Private Limited and assignment of lease right under agreement with Taleem Research Foundation is yet to be created.

- Redeemable at par in four equal installments with the earliest redemption being on January 6, 2012 and last being on January 6, 2015.

c) Vehicle/other Loans: Hire purchase and lease finance is secured by hypothecation of specific assets underlying the hire purchase/

lease.16. Foreign Currency Convertible Bonds (FCCB):

a) The Company had issued 10,000 0.5% Foreign Currency Convertible Bonds (FCCB) of US$ 10,000 each aggregating to US$ 100 million, redeemable on April 29, 2009 at 116.24% of their principal amount. The bond holders have an option to convert these bonds into equity shares from and including June 8, 2004 to and including April 22, 2009 at an initial conversion price of Rs.197.24 per share, with a fixed rate of exchange on conversion of Rs.43.88 (US$ 1). Consequent to the restructuring, the conversion price has been reset to Rs. 153.46 per share in terms of the Offering Circular, effective April 18, 2008.

b) 9,621 bonds (including 154 bonds during the year) have been converted and balance 379 bonds outstanding as at the date of the balance sheet are redeemed on due date i.e. April 29, 2009.

c) Premium payable on redemption of 379 bonds Rs./Thousand 3,981 has been provided and adjusted against securities premium as per Section 78 of the Act.

d) Out of the Net proceeds of Rs./Thousand 4,269,473 from the issue of the FCCB, Rs./Thousand 4,269,122 has been utilized for the object of the issue, which includes new projects, modernization and expansion of the existing production units and expansion of wholly owned subsidiary operations and balance pending utilization has been included in Cash and Bank balances.

17. Immovable Propertya) The Collector of Hyderabad, Andhra Pradesh, had resumed possession of the freehold land (included under

Schedule 6 - “Investments”) admeasuring 17,639.64 sq. meters, bought from Padmalaya Telefilms Limited (PTL), registered in the name of the Company and having book value of Rs./Thousand 573,456. The action of the Collector has been set aside by the appellate authorities and the possession of the land is restored.

b) In terms of final settlement agreement entered during the year with PTL, company has given up his claim on the Second piece of land admeasuring 2,700 sq. meters having book value of Rs./Thousand 25,806, accordingly value of investment has been reduced to that extent in the books.

18. Debtorsa) Debtors are stated in the Balance Sheet at net realizable value. Net realizable value is the invoiced amount

less provision for bad and doubtful debtors. Provisions are made specifically against debtors where there is evidence of a dispute or an inability to pay or recoverability.

b) The Group has recognized a receivable of Rs./Thousand 313,046 (239,400) claimed from competing broadcaster for recovery of the telecast rights money relating to the sports event, which is under litigation. In the opinion of management and based on legal opinions, the receivable is considered as good.

19. Investment

During the year, the Company has invested in Rs. 28 Crores in 14% Unsecured Redeemable Optionally Convertible Debentures (OCD’s) of Cornershop Entertainment Company Private Limited (Cornershop) engaged


in the business of Animation. These debentures are convertible at the option of the Company within a period of 18 months from the date of allotment i.e. March 31, 2009 into 50,000 equity shares of Rs. 10/- each at a premium of Rs. 5,589.10 per share. Upon exercise of the conversion option Cornershop would become a subsidiary of the Company, extent of holding being 83%. Unless converted earlier, these debentures shall be redeemed at par on expiry of 18 months from the date of allotment.

20. During the year, the Company has entered into an arrangement with a Charitable Trust/ Society established under the Bombay Public Trust Act, 1950 to acquire exclusive rights for providing educational infrastructure, content, advisory and other related services to its school for a period of 30 years for Rs. 75 Crores and advance of Rs. 45.25 crores paid for acquiring the rights is included in capital work in progress, eventually to be capitalized as an intangible asset on commencement of operations by the school, to be amortised over the period of the right. Pursuant to the agreement Rs. 4.41 Crores, incurred for arranging finance, interest on loan and other related expenditure, recoverable from the Trust is included in other advances.

21. Acquisitions/Disinvestmenta) During the year Asia Today Limited a subsidiary of the Company has disinvested its entire 100% shareholding

in Pan Asia Infrastructure Limited (PAIL), which resulted in aggregate profit of Rs./Thousand 191,923.b) During the year Asia Today Limited a subsidiary of the Company has (i) divested its 48.44% holding in

Broadcast South Asia Limited (BSA) under a buyback arrangement for USD 30.9 million. And (ii) has increased its 60% shareholding in its subsidiary Asia Business Broadcasting Limited to 100% by an additional investment of USD 56 million. Goodwill arising on consolidation is Rs./Thousand 2,225,795.

22. LoansThe Group has been deploying its surplus funds as short-term demand loans/inter corporate deposits, the parties are regular in repayment of principal and interest, hence are considered good.

23. Taxationa) Current income tax is calculated on the results of individual companies in accordance with local tax

regulations.b) 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.

c) The components of the deferred tax balances as on March 31, are as under:(Rs./Thousand)

Sr. No. Particulars 2009 2008(i) Deferred Tax Assets

Arising on account of timing differences in Retirement Benefit 33,080 21,335Provision for doubtful debts 238,962 194,008 Allowable on payment basis 4,562 26,321Unabsorbed fiscal allowances 4,631 114,614Other Provisions 6,679 6,571Total 287,914 372,849

(ii) Deferred Tax LiabilitiesDepreciation 146,574 129,758 Other Provisions 28,512 34 Total 175,086 129,792Deferred Tax Assets (Net) 112,828 243,057

d) The Company’s claims for certain deductions under Chapter VIA of the Income Tax Act, 1961 for Assessment years 1993-1994 to 1999-2000 is allowed by second appellate authority and effect of those appeal orders resulted in excess provision for tax of Rs./ Thousand 573,794 which is accounted for during the year. The interest of Rs./Thousand 204,053 received on these income tax refunds have however been credited to the Profit and Loss account in previous financial year.

Further, during the year, the Company has received income tax refund of Rs./Thousand 524,934 relating to Assessment year 2006-07, pending final tax assessment, interest income of Rs./Thousand 47,904 and excess tax provision are not accounted and refund received is adjusted against provision for tax.

Subsidiary’s certain claim for exemption based on status for Assessment years 2001-02 , 2002-03 & 2004-05 is allowed by appellate authority and effect of those appeal orders resulted in excess provision for tax of Rs./Thousand 793,287 which is accounted for in these financials.


24. Leases(a) Finance Lease:

Long-term leases, which in economic terms constitute investments financed on a long-term basis (finance lease) are recognized as assets and recorded under tangible fixed assets at their cash purchase value. The minimum lease payments required under this finance lease that have initially or remaining non cancellable lease terms in excess of one year as at March 31, 2009 and its present value are as follows.

Reconciliation of minimum lease payments and present value:(Rs./Thousand)

2009 2008Minimum Lease Payments as atNot Later than one year 1,557 263Later than one year and not later than five year 4,815 842Later than five years – 173Total 6,372 1,278Less: Amount representing Interest 1,087 171Present value of Minimum Lease payment 5,285 1,107Less: Amount due not later than one year 1,107 209Amount due later than one year and not later than five years 4,178 728Amount due later than five years – 170

(b) Operating Leases: Lease of assets under which all the risk and rewards of ownership are effectively retained by the lessor are

classified as operating leases. Lease payments/revenue under operating leases are recognized as expense/income on accrual basis in accordance with the respective lease agreements.

Leasing liabilities primarily relate to lease of certain offices, residential premises, and other facilities. The initial tenure of the lease generally is for 11 to 72 months. The minimum rental payables under other operating leases that have initially or remaining non-cancellable lease term in excess of one year as at March 31, 2009 are as follows:

(Rs./Thousand)Particulars 2009 2008Lease rental charges for the year 355,964 454,470Future Lease rental obligation payable (Under non-cancellable lease)Not later than one year 222,975 112,490Later than one year but not later than five year 347,451 132,121Later than five years 246,191 –

(c) In respect of assets given under operating lease. (i) The Company has given part of building under cancellable operating lease agreement. The initial term

of the lease is for twelve months. (ii) The rental revenue for the year is Rs./Thousand 64,119 (19,458).25. (a) Contingent Liabilities

(Rs./Thousand)Sr. No. Particulars 2009 2008

a) Corporate guarantees for other related parties availed/ outstanding Rs./Thousand 3,949,415 (4,654,185)

4,526,760 5,362,700

b) Bank/Counter guarantees outstanding 3,630 3,073c) Letter of Credit 406,327 144,155d) Claims not acknowledged as debts 141,364 357,237e) Legal cases against the Company Unascertainable Unascertainablef) Disputed Direct Taxes 354,946 203,021g) Customs Duty pending export obligation against import of

machinery– 5,501

(b) Estimated amount of contracts remaining to be executed on capital account (net of advances) 726,856 Rs./Thousand (250,983).


26. During the year, expenses of Rs./Thousand 63,160 (76,980), shared by other related party, are netted off in relevant heads of Profit and Loss Account.

27. Capital work in progress includes Capital Advances Rs./Thousand 512,373.

28. Details of prior period expenses/income included in respective heads in the Profit and Loss Account is as under(Rs./Thousand)

Particulars 2009 2008Excess Interest on Tax refund accounted, now reversed 23,400 –Business Promotion expenses 7,605 –Subscription Revenue (1,562) –Prior Period Expense (net) 29,443 –

29. Related Party Disclosure(i) List of Parties where control exists

The list of subsidiaries is disclosed in Note 2 (d)(ii) Associate Companies

Name of the Associate Company Extent of Holdings Country of IncorporationAplab Limited 26.42% IndiaBroadcast South Asia Limited * 48.44% British Virgin Islands

* ceased to be an associate w.e.f. May 8, 2008.

(iii) Other Related Parties with whom transactions have taken place during the year and balances outstanding as on the last day of the year:

Agrani Convergence Limited; Agrani Wireless Service Limited; Asian Satellite Broadcasting Private Limited; Asian Sky Shop Limited; Borth Company Limited; Briggs Trading Company Private Limited;, Buddha Films Limited; Churu Trading Company Private Limited; Credensys Software Technologies Private Limited, Dakshin Media Gaming Solutions Private Limited; Delgrada Limited; Digital Media Convergence Limited; Diligent Media Corporation Limited; Dish TV India Limited; Essel Propack Limited; Essel Agro Limited;E-City Entertainment (India) Private Limited; E-City Films Limited; E-City Retail Private Limited; E-Cool Gaming Solution Private Limited; Essel Corporate Resources Private Limited; Essel Infraprojects Private Limited; Essel International Limited; Essel Shyam Communication Private Limited; Essel Shyam Technologies Limited; Ganjam Trading Company Private Limited; Intrex Trade Exchange Limited; Jay Properties Private Limited; Jayneer Capital Private Limited; Natural Wellness; New Media Broadcasting; Pan India Infrastructure Limited; Pan India Network Infravest Private Limited; Prajatma Trading Company Private Limited; Quickcalls Private Limited; Rama Associates Limited; Real Media FZLLC; Resource Software Limited; Scarpetta Investment Limited; Taleem Research Foundation; Turner International India Limited; Wire and Wireless (India) Limited; Zee News Limited; 25 FPS Media Private Limited.

Directors/Key Management Personnel

Mr. Puneet Goenka

Transactions during the year with related parties(Rs./Thousand)

Sr.No.

Particulars 2008-2009 2007-2008

A) Fixed Assets/Capital work-in-progress/Capital AdvancesOther Related Parties 452,570 –Associates – 497

B) InvestmentsOther Related PartiesBalance as at March 31, 281,533 1,533AssociatesBalance as at March 31, 65,433 1,386,834

C) Sundry Debtors as at March 31, Other Related Parties 890,887 760,045

D) Loans, Advances and Deposits Given as at March 31, Other Related Parties 10,479,529 5,297,073


(Rs./Thousand)Sr.No.

Particulars 2008-2009 2007-2008

E) Sundry Creditors as at March 31, Other Related Parties 450,433 717,419Associates – 260

F) Loans, Advances and Deposits Received as at March 31, Other Related Parties – 600

G) Share CapitalShare Application Money ReceivedOther Related Parties – 9,000Refund/adjustment of Share Application Money receivedOther Related Parties – 26,800DebenturesOther Related Parties 280,000 –Conversion of 1% DebenturesOther Related Parties – 40,000

H) Sale and Services TurnoverSale, Services and Recoveries (Net)Other Related Parties 655,664 406,041Advertisement Income (Net)Other Related Parties 99,479 189,178Commission ReceivedOther Related Parties 268,368 314,929

I) Other IncomeDividend ReceivedOther Related Parties 2,186 –Associates 3,303 3,303Interest ReceivedOther Related Parties 1,059,694 723,242Miscellaneous IncomeOther Related Parties 48,989 35,578

J) Share of Profit in Associates 1,357 5,141K) Sale of Investments in Associates 1,319,455 –L) Acquisition of Minority Interest in Subsidiary

Other Related Party 2,399,566 –M) Loans, Advances and Deposits Given

Other Related Parties 12,413,758 11,527,323N) Purchase of Fixed Assets/ CWIP/ Capital Advances

Other Related Parties 452,570 –O) Purchase of Investments

Other Related Parties 280,000 –P) Purchase of Programs, Goods and Services

Other Related Parties 1,748,679 1,141,005Q) Other Expenses

Interest PaidOther Related Parties – 133Remuneration and Consultancy fees paidKey Management Personnel 3,925 15,492

R) Loans, Advances and Deposits ReceivedOther Related Parties 569,459 –

S) Loans and Advances repayment receivedOther Related Parties 7,900,400 10,179,054

T) Corporate Guarantees GivenOther Related Parties 4,526,760 5,362,700


Note:

a) Name of the related parties has been disclosed where they have 10% or more of the aggregate for that category of transaction.

Disclosure in Respect of Material Related Party who account for 10% or more of the transactions during the year:

1. Purchase of Asset during the year Aplab Limited Rs./Thousand Nil (497); Capital Advances given to Taleem Research Foundation Rs./Thousand 452,570 (Nil).

2. Share of Profit in associates includes from Aplab Limited Rs./Thousand 1,357 (3,286), and from Broadcast South Asia Limited Rs./Thousand Nil (1,855).

3. Sale of shares in associate include of Broadcast South Asia Limited Rs./Thousand 1,319,455 (Nil).

4. Acquisition of Minority Interest in subsidiary is acquired from Resource Software Limited Rs./Thousand 2,399,566 (Nil).

5. Purchase of Investments includes investment in Debentures of Cornershop Entertainment Private Limited Rs./Thousand 280,000 (Nil).

6. Loans and Advances given include to Briggs Trading Co. Pvt. Ltd. Rs./Thousand Nil (14,10,000); Churu Trading Co. Pvt. Limited Rs./Thousand 37,70,500 (21,86,000); Ganjam Trading Co. Pvt. Limited Rs./Thousand Nil (14,92,522); Prajatma Trading Co. Pvt. Limited Rs./Thousand 21,70,000 (16,05,000); Dish TV India Limited Rs./Thousand 24,30,000 (31,77,000); Wire and Wireless (India) Limited Rs./Thousand 15,50,000 (10,70,000); Premier Finance and Trading Co. Limited Rs./Thousand 18,85,000 (Nil).

7. Loans and Advances repayment received includes Briggs Trading Co. Pvt. Ltd. Rs./Thousand Nil (14,10,000); Churu Trading Co. Pvt. Limited Rs./Thousand 37,70,500 (21,86,000); Ganjam Trading Co. Pvt. LimitedRs./Thousand Nil (14,92,522); Prajatma Trading Co. Pvt. Limited Rs./Thousand 21,70,000 (16,05,000); Dish TV India Limited Rs./Thousand Nil (29,00,000); Premier Finance and Trading Co. Limited Rs./Thousand 18,85,000 (Nil) .

8. Balances outstanding at year end include Zee Sports Limited Rs./Thousand Nil (31,704); Zee Turner Limited Rs./Thousand Nil (94,463); Dish TV India Limited Rs./Thousand 2,491,176 (7,81,315); Wire & Wireless India Limited Rs./Thousand 24,20,906 (8,20,817), Borth Company Limited Rs./Thousand 19,09,059 (14,59,942), Delgrada Limited Rs./Thousand 18,59,701 (14,39,779).

9. Sundry Creditors balances include amounts due for Purchase of Programs Goods & Services to Turner International India Limited Rs./Thousand Nil (3,37,177); Real Media F.Z.L.L.C. Rs./Thousand 132,168 (91,970); Dish TV India Limited Rs./Thousand 82,070 (1,08,589); Zee News Limited Rs./Thousand 47,318 (53,635), Essel Sports Private Limited Rs./Thousand 70,045 (Nil) , Wire and Wireless (India) Limited Rs./Thousand 92,984 (569).

10. Sale and Services Turnover include to Zee News Limited Rs./Thousand 384,483 (1,13,729); Turner Internationals India Private Limited Rs./Thousand 256,391 (191,697), Advertisement Income from Dish TV India Limited Rs./Thousand 83,427 (1,69,967), Asian Sky Shop Limited Rs./Thousand 12,086 (Nil); Agency Commission received from; Zee News Limited Rs./Thousand 2,68,368 (2,71,679).

11. Other income include Dividend received from Essel Propack Limited Rs./Thousand 2,186 (Nil); Aplab Limited Rs./Thousand 3,303 (3,303); Churu Trading Co. Pvt. Limited Rs./Thousand 2,58,147 (1,20,272); Prajatma Trading Co. Pvt. Limited Rs./Thousand 2,56,625 (1,36,071); Wire and Wireless (India) Limited Rs./Thousand 1,41,902 (Nil); Premier Finance & Trading Co. Pvt. Ltd. Rs./Thousand 1,92,548 (Nil); Delgrada LimitedRs./Thousand 139,265 (Nil); Miscellaneous income from Dish TV India Limited Rs./Thousand 25,132 (32,872); Zee News Limited Rs./Thousand 20,441 (Nil).

12. Purchase of Programs, Goods and Services from Turner International India Limited Rs./Thousand 4,54,750 (5,11,653); Real Media F.Z.L.L.C. Rs./Thousand 4,29,923 (3,46,855); Wire and Wireless (India) LimitedRs./Thousand 266,093 (16,926); Essel Sports Private Limited Rs./Thousand 262,603 (59,500); Remuneration and Consultancy Fees paid to Key Management personnel Rs./Thousand 3,925 ( 15,492); Balance written off 25 FPS Media Private Limited Rs./Thousand 13,665 (Nil).

13. Corporate guarantees include in respect Dish TV India Limited Rs./Thousand 3,305,760 (1,877,700);Wire and Wireless (India) Limited Rs./Thousand 921,000 (2,835,000).


30. Segment Information

The Group follows AS -17 “Segment 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.

Broadcasting and content (B & C), which principally consists of developing, producing and procuring television programming and film content and delivering via satellites, thereby earning revenues by way of advertisement and subscription revenues and syndication.

Education, which principally consists of delivering learning solutions and traning to various segments of the society.

Film Production which principally consists of Production and distribution of films.

(a) Business Segment (Financial Year 2008-2009)(Rs./Thousand)

Description B & C Education Film

Production Elimination TotalSEGMENT REVENUEExternal Sales 21,190,985 251,295 330,816 – 21,773,097Inter-segment SalesTotal Revenue 21,190,985 251,295 330,816 – 21,773,097SEGMENT RESULT 4,487,481 (16,481) (114,094) – 4,356,906Operating Profit before interest and Tax 4,356,906Profit on Sale of Investments in associates 4,590Profit on Sale of Investments in Subsidiaries 191,923Interest Expenses 405,899Interest Income 1,255,697Profit before Tax and ExceptionalItem 5,403,217Exceptional Items (25,806)Profit before Tax and After Exceptional Item 5,429,023Current Taxes – Current yearEarlier Period

1,525,211(1,425,204)

Deferred Tax Benefit/(Expense) – Current year 107,877Profit after tax 5,221,139Share in result of associates 1,357Minority Interest 98,870Net Profit 5,123,626

Business Segment (Financial Year 2007-2008)(Rs./Thousand)

Description B & C Education Others Elimination Total

SEGMENT REVENUE

External Sales 18,098721 252,365 2,567 – 18,353,653

Inter-segment Sales

Total Revenue 18,098721 252,365 2,567 – 18,353,653


(Rs./Thousand)

Description B & C Education Others Elimination Total

SEGMENT RESULT 5,008,626 54,398 50 5,063,074

Operating Profit before interest and Tax 5,063,074

Interest Expense 297,822

Interest income 995,990

Profit before Tax and exceptional Item 5,761,242

Exceptional items 25,806

Profit before Tax and after exceptional Item 5,735,436

Current Taxes – Current year (1,794,305)

Deferred Tax Benefit/(Expense) – Current Year 167,668

Profit after tax 4,160,411

Share in result of associates 5,141

Minority Interest 332,883

Net Profit 3,832,669

(b) Other Segment Information (Financial Year 2008-2009)(Rs./Thousand)

Description B & C EducationFilm

ProductionUnallocated Elimination Total

1. Segment Assets 35,612,629 726,646 823,314 10,254,987 (905,709) 46,502,8672. Segment Liabilities 4,283,079 128,827 954,097 8,047,509 (905,709) 12,507,8733. Capital Expenditures 2,336,478 466,274 14,203 2,816,9554. Depreciation/ Amortisation

300,357 8,243 1,733 310,333

5. Other Non Cash expenditures

208,306 6,817 – 215,123

Other Segment Information (Financial Year 2007-2008)(Rs./Thousand)

Description B & C Education Unallocated Elimination Total1. Segment Assets 28,593,761 162,819 11,115,681 – 39,872,2612. Segment Liabilities 4,186,256 90,188 6,985,004 – 11,261,4483. Capital Expenditures 942,509 8,680 – – 951,1894. Depreciation/ Amortization 223,648 8,681 – – 232,3295. Other Non-Cash expenditures 754,074 7,483 – – 761,557

Revenue by Geographical Market

The geographical segments considered for disclosure are India and Rest of World.

(a) The revenues are attributable to countries based on location of customers

(Rs./Thousand)

2009 2008

India 13,111,777 11,073,390

Rest of World 8,661,320 7,280,263


(b) Segment assets and liabilities are disclosed based on the countries of incorporation of respective companies.

(Rs./Thousand)

Segment Assets Capital Expenditures

2009 2008 2009 2008

India 29,682,765 28,378,488 949,159 381,700

Rest of World 16,820,102 11,493,774 1,867,796 641,472

31. Earning Per Share

In accordance with AS-20 “Earnings Per Share” issued by ICAI, basic earnings per share are computed using the weighted average number of shares outstanding during the year.

Sr.No.


a. Profit after Tax before Exceptional Item (Rs./Thousand) 5,097,820 3,858,475

b. Profit after Tax after Exceptional Item (Rs./Thousand) 5,123,626 3,832,669

Adjustment for the purpose of Diluted EPS:

Add: Interest on Foreign Currency Convertible Bonds 1,075 1,178

Less: Tax on above 365 400

c. Profit after Tax before Exceptional Item for Diluted EPS (Rs./Thousand) 5,098,530 3,859,253

d. Profit after Tax after Exceptional Item for Diluted EPS (Rs./Thousand) 5,124,336 3,833,447

e. Weighted Average number of equity shares for Basic EPS (Nos.) 433,930,729 433,566,765

Add: Weighted Average outstanding option deemed to be issued for no consideration (Nos.) 1,083,712 1,524,058

f. Weighted Average number of equity shares for Diluted EPS (Nos.) 434,726,859 435,090,823

Nominal value of equity shares (Re.) 1 1

g. Basic EPS before Exceptional Item (Rs.) 11.75 8.90

h. Basic EPS after Exceptional Item (Rs.) 11.81 8.84

i. Diluted EPS before Exceptional Item (Rs.) 11.73 8.87

j. Diluted EPS after Exceptional Item (Rs.) 11.79 8.81











(Rs. in ’000)2009 2008

A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit before taxation and exceptional items 5,403,217 5,812,853 Adjustments for :Depreciation 310,333 232,329 Share issue/Preliminary expenses written off 62 51 Provision for doubtful debts/advances and investments 235,577 727,208 Loss on sale of fixed assets 11,467 8,493 Exchange adjustments (net) 1,251,208 (545,297)Interest expense 405,899 297,822 Loss on Foreign Exchange derivative contracts 443,519 261,792 Profit on Sale of Investments - In Subsidiary (191,923) (5,511)Profit on Sale of Investments - in Associate (4,590) –Dividend income (13,387) (10,543)Interest income (1,255,697) (995,990)Operating profit before working capital changes 6,595,686 5,783,207 Adjustments for :Increase in trade and other receivables (2,916,865) (1,451,953)Increase in Programs/Film Rights and Inventories (2,102,571) (434,132)Increase/(Decrease) in trade and other payables 182,615 264,427 Cash Generated from Operations 1,758,864 4,161,549 Direct taxes paid (net) (757,146) (1,150,659)Net Cash flow from Operating Activities 1,001,718 3,010,890

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets/Capital Work-in-Progress (594,408) (1,018,929)Acquistion of Minority Interest in subsidiary (2,399,566) (51)Purchase of Investments - Long Term (280,300) (627,458)Purchase of Investments- Short Term (71,003) –Loans to others (13,691,098) (15,980,522)Loans repaid by others 13,163,499 14,659,879 Dividend received 16,690 13,846 Sale of fixed assets 11,254 18,050 Sale of subsidiary 103,979 –Sale of investment in Associate 1,319,455 –Sale of Investments - Long Term 10 –Sale of Investments - Short Term 274,148 –Sale of Investments – 419,247 Interest received 1,349,268 861,973 Net Cash flow from Investing Activities (798,073) (1,653,965)

CONSOLIDATED CASH FLOW STATEMENT AT AT MARCH 31,


(Rs. in ’000)2009 2008

C. CASH FLOW FROM FINANCING ACTIVITIES

Dividend paid (including dividend tax) (1,015,976) (763,609)

Interest paid (408,201) (298,806)

Loss on Foreign Exchange derivative contracts (443,519) (261,792)

Proceeds of Share Premium received

Increse/(decrease) in Minority Interest (20,493) (19,797)

Proceeds from short term borrowings 499,958 1,660,264

Proceeds from long term borrowings 2,947,505 624,841

Repayments of short term borrowings (1,143,262) (1,448,128)

Repayments of long term borrowings (345,345) (156,258)

Decrease in other vehicle loans (849)

Net Cash flow from Financing Activities 70,665 (664,134)

Net Cash Flow during the year (A+B+C) 274,311 692,791

Cash and Cash Equivalents at the beginning of the year 1,652,024 954,752

Cash and Cash Equivalents on acquistion of subsidiary – 4,481

Cash and Cash Equivalents at the end of the year 1,926,334 1,652,024

Cash and Cash Equivalents at the end of the year 1,926,334 1,652,024

Notes to the Cash Flow Statement for the year ended March 31, 2009

1. Previous year's figures have been regrouped, recast wherever necessary.

2. Conversion of FCCB (Refer Note 16 of Notes to Accounts) is not considered in the above cashflow statement being non cash transaction

3. Cash and Cash Equivalents at the end of the year:


Balances with Current Accounts 1,792,747 1,561,582

Balances with Deposit Accounts 112,791 39,103

Cheques in hand/transit 4,533 45,069

TOTAL 1,926,334 1,652,024










126ZEEL Annual Report 2008-2009

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0,129

–

ATTENDANCE SLIP27th Annual General Meeting

ZEE ENTERTAINMENT ENTERPRISES LIMITEDRegistered Office: Continental Building, 135, Dr. Annie Besant Road, Worli, Mumbai – 400 018.

PROXY FORM27th Annual General Meeting

I/We............................................................................................. of ............................................................................................

.......................................................................................................................................................... being member/members of

ZEE ENTERTAINMENT ENTERPRISES LIMITED hereby appoint ..............................................................................................

of ..................................................................................................................................................................................... or failing

him/her ........................................................................................ of ............................................................................................

......................................................................................................................................as my/our proxy to vote for me/us onmy/our behalf at the 27th Annual General Meeting of the Company to be held on Tuesday, August 18, 2009 at 11.00 a.m. at Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai - 400 018, and at any adjournment(s) thereof, if any.

Signed this __________ day of August, 2009.

Signature of Shareholder ...............................................

Folio No. ................................................

DP ID No. ...............................................

Client ID No. ..........................................

No. of Shares ........................................

NOTE: The Proxy completed in all respect must be deposited at the Registered Office of the Company not less than 48 hours before the commencement of the Annual General Meeting.

I hereby record my presence at the 27th Annual General Meeting of the Company at Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai - 400 018. on Tuesday, August 18, 2009 at 11.00 a.m.

................................................................................ ....................................................

Name of the Shareholder/Proxy (in BLOCK LETTERS) Signature of Shareholder/Proxy

Folio No. ................................................

DP ID No. ...............................................

Client ID No. ..........................................

No. of Shares ........................................

NOTE : Shareholder/Proxy holder wishing to attend the meeting must bring the Attendance Slip to the meeting and handover the same at the entrance, duly signed.

ZEE ENTERTAINMENT ENTERPRISES LIMITEDRegistered Office : Continental Building, 135, Dr. Annie Besant Road, Worli, Mumbai – 400 018.

Re. 1/-RevenueStamp

20901171 zee entertainment ltd ar 2k8-2k9 cover...

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