# Acquisition of Metro Cast Network India Private Limited
Consequent to the Share Purchase and Subscription cum Shareholders' Agreement ("Agreement") dated June 30, 2023 entered into between the Company and the Metro Cast Network India Private Limited ("Metro Cash'), the Company has acquired 4,37,676 equity share of '10/- each at the rate of ' 571.1982/-per share resulting in 34.34% stake in Metro Cast for an upfront payment of ' 250 million to its existing shareholders.
Further, the Company has subscribed 4,02,428 equity shares of ' 10/- each at the rate of ' 571.1982/- per share for consideration other than cash, i.e., in lieu of sale/transfer of Set-Top-Boxes ("STBs") to Metro Cast aggregating to 229.87 million ("Subscription"). Post Subscription, the aggregate shareholding of the Company in Metro Cast is 50.10%.w.e.f. March 14, 2024.
NOTE - 14.4 : As at March 31, 2024, the Company does not have any holding Company.
NOTE - 14.5 : The Company has only one class of shares referred to as equity shares having a par value of ' 10. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
NOTE - 14.6 : In the period of five years immediately preceding March 31, 2024:
i) The Company has not allotted any equity shares as fully paid up without payment being received in cash.
ii) The Company has not allotted any equity shares by way of bonus issue.
iii) The Company has not bought back any equity shares.
The Description of the nature and purpose of reserve within equity is as follows:
Securities Premium : Securities Premium Reserve comprises the premium received on issue of shares. It can be utilised in accordance with the provisions of the Companies Act, 2013 to issue bonus shares, to provide for premium on redemption of shares or debentures, write-off equity related expenses like underwriting cost, etc.
Capital Reserve : Capital reserve is recognised as higher the value of the assets over the value of liabilities including reserves pertaining to Demerged Undertaking, after adjusting the proportionate bookvalue of the investments in the shares of Demerged Companies.
i) The Company has used the borrowings from banks and financial institutions for the specific purpose for which it was taken.
ii) The Company was not declared wilful defaulter by any bank or financial Institution or other lender
(ii) The Department of Telecommunications, Ministry of Communications, Government of India ("DoT") has raised demand of ' 9,754.15 Million on the Company consisting of Principal amount of ' 2,286.50 Million and interest, penalty and interest on penalty (as of July 31, 2020) of ' 7,467.65 Million towards license fee by including the revenue generated from its cable television business.
These demands are mainly based on Hon'ble Supreme Court's Judgment in the matter of Union of India v/s AUSPI & Ors. bearing C.A. Nos.6328 - 6399 on AGR dues from telecom operators ("AGR Judgment"). Subsequently, vide order dated June 11 and June 18, 2020, the Supreme Court clarified that the AGR judgement pertaining to telecom companies could not have been basis for raising demands in the non-telecom PSUs and accordingly DoT withdrew the demands on the non-telecom PSUs. The Company, in line with the observations made by the Supreme Court has made representations to DoT against said demands, which DoT has taken on record.
Also, All India Digital Cable Federation for all its member companies has filed an intervention petition in TDSAT in the matter of Asianet Satellite Communications Private Limited versus Union of India bearing TP No. 54 of 2020 challenging the demands raised on such member companies (the Company being a member too) by including its non-licensed income for computation of license fees. Further, the Ministry of Information & Broadcasting has in February 2021 written to DoT that it grants permission to Multi System Operators ("MSOs") for cable tv operations and does not levy any license fee on the revenue, and hence the revenues earned by MSOs from cable tv business may not be clubbed with the revenue earned by them under Internet Service Provider's license. Additionally, TDSAT in February 2022 set aside the demands raised by DoT in matter relating to another ISP license holder by treating them at par with some PSUs who held similar license. The DoT has challenged the TDSAT order which is still pending. Hence, the extent and timing of outflow of funds that may be required is dependent on the outcome of litigation.
With effect from 01/10/2021,definition of AGR has been amended and Applicable Gross Revenue (ApGR) was introduced which was starting point for arriving AGR. ApGR specifically excludes revenue from activities under a license / permission issued by MIB. Further, by an order dated 05.10.2021, the TDSAT has stayed all demands of additional license fee. The interim order is continuing and the petition is pending before the TDSAT.
Basis its assessment of the legal position as stated above and based on the opinion of independent legal experts, the Company is confident that it has good grounds on merit to defend itself. Accordingly, the Company is of the view that no provision is necessary to be made in the financial results in relation to the demands and the same has been considered as a contingent liability.
NOTE 31: CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES
The Fair value of Assets and Liabilities are not significantly different from the carrying value and Assets and Liabilities are carried at Amortised cost.
NOTE 31 (a): FAIR VALUE MEASUREMENT
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The Company has established the following fair value hierarchy that categorises the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:-
Level 1: This hierarchy uses quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on Company specific estimates. If all significant inputs required for fair value and instruments are observable, then the instruments are included in Level-2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
NOTE 32 : FINANCIAL RISK MANAGEMENT
The Company's principal financial liabilities comprises of borrowings, trade payable, lease liabilities and other payable. The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets includes trade and other receivables, investments, cash and cash equivalents and other assets that derive directly from operations.
The Company's activities expose it to market risk, liquidity risk and credit risk. Company's overall risk management focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Company.
(B) Credit Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk.
(a) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve optimal maturity profile and financing cost.
The Company's main interest rate risk arises from borrowings with variable rates which expose the Company to future cash outflow. The Company's borrowings at variable rate were mainly denominated in INR.
Credit risk is the risk that a customer or counterparty to a financial instrument fails to perform or pay the amounts due causing financial loss to the Company. Credit risk arises from Company's activities in investments and outstanding receivables from customers.
The Company has a prudent and conservative process for managing its credit risk arising in the course of its business activities. Credit risk arising from the investments in the nature of Fixed Deposits is actively managed through investment in top rated Banks.
Trade Receivables
Customer credit risk is managed by the Company's established policy, procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing. Outstanding customers receivables are regularly monitored. With respect to the cable business, the Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically.
As per IND AS 109, Company follows the simplified approach in determining allowance for credit losses of trade receivables. The Company makes the provision of expected credit losses on trade receivables using provision matrix to mitigate the risk of defaults of payments. Provision matrix is prepared based on historic data and the same is adjusted considering forward looking estimates. The provision matrix followed by company is as follows :
Liquidity Risk is the risk that Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company's objective is to maintain optimum level of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquid position and deploys robust cash management system. It maintains adequate sources of financing at an optimised cost
NOTE 33: CAPITAL MANAGEMENT
The Company's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and maintain an optimal capital structure to reduce the cost of capital.
Consistent with others in the industry, the Company monitors capital on the basis of the following gearing ratio:
Deferred tax assets and deferred tax liabilities have been offset where the Company has legally enforceable right to set off the current tax assets against current tax liabilities.
In assessing the realisability of deferred income tax assets, the Management considers whether some portion or all the deferred income tax assets will not be realised. The ultimate realisation of deferred tax income tax assets is based on generation of future taxable income during the periods in which temporarily differences become deductible. The management considers the schedule reversals of deferred income tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
NOTE 34: INCOME TAXES
Income Tax Expenses consists of current and deferred income tax. Income tax expenses are recognised in the statement of profit and loss. Current income tax for current and prior period is recognised at the amount expected to be paid to the tax authorities, using the applicable tax rates. Deferred Income tax assets and liabilities are recognised for all temporarily differences arising from tax base of assets and liabilities and their carrying amount in the financial statements.
(d) The total Cash outflow for leases (excluding short term leases) for the year ended March 31, 2024 is ' 237.58 Millions (Previous Year is ' 72.13 Million)
(e) Income from sub leasing of Right of use assets is ' 1.46 Millions (Previous Year is ' 1.45 Million)
General Description of leasing agreements:
1. Leased Asset: Godowns, Land, Offices and Plant & Machinery
2. Future Lease rentals are determined on the basis of agreed terms.
3. At the expiry of lease term, the Company has an option to return the assets or extend the term by giving notice in writing.
4. Lease agreements are generally cancellable and are renewable by mutual consent on mutually agreed terms.
NOTE 40: DETAILS UNDER MSMED ACT, 2006 FOR DUE TO MICRO & SMALL, MEDIUM ENTERPRISE
The details of amount outstanding to Micro & Small Enterprises under the Micro and Small Enterprises Development Act,2006 (MSMED Act), based on the available information with the Company and relied upon by the auditors are as under:
The Company has given Loan to GTPL Broadband Private Limited, its wholly owned subsidiary Company for its business activities. The rate of Interest will be mutually decided by the Companies from time to time. The Borrower shall repay each loan together with accrued and unpaid interest thereon earlier of the Termination date of the Agreement or the date falling within 5 days of written demand by the Company.
At each reporting date, the Company evaluates, whether there is any indicators of credit risk on such loan resulting into expected credit loss. For the current year, no such indicators for significant increased in credit risk have been identified and accordingly no expected credit loss provision is required for the above loan.
NOTE 41: (A) DISCLOSURE AS PER SECTION 186 OF THE COMPANIES ACT,2013
The details of loans, guarantees and investment under Section 186 of the Companies Act, 2013 read with the Companies (Meeting of Board and its Powers)Rules, 2014 are as follows:
(i) Details of Investment made are given in Note 3
(ii) The loan is given to GTPL Broadband Private Limited, which is a wholly owned subsidiary of the Company.
(iii) The guarantee issued in accordance with section 186 of the companies Act 2013 read with rules issued there under are given under note 30(B)
The above investments, loans & guarantees are given for the business activities.
NOTE 42 : EMPLOYEE BENEFITS Defined Contribution Plan
(a) Provident Fund : A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions for provident fund as per the provisions of the Provident Fund Act, 1952 to the government. The Company's contribution is recognised as an expense in the Profit and Loss Statement during the period in which the employee renders the related service. The Company's obligation is limited to the amounts contributed by it.
Defined Benefits Plan
(a) Gratuity: The Company has a defined benefit gratuity plan. The scheme is funded with an insurance company in the form of a qualifying insurance policy. Every employee who has completed five or more years of service is eligible for gratuity as per the provisions of the Gratuity Act, 1972.
Risks: The Plan is defined benefit in nature which is sponsered by the Company and hence it underwrites all the risks pertaining to the plan. Thus the company is exposed to various risks in providing the gratuity benefit such as fall in interest rates, adverse salary growth, change in demographic experience, change in regulations. This may result in an increase in cost of providing these benefits to employees in future. Since the benefits are lump sum in nature, the plan is not subject to any longevity risk.
(g) Sensitivity Analysis
Significant actuarial assumptions for the determination of the defined benefit obligations are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below
These plans typically expose the Company to actuarial risks such as: Investment Risk, Interest Risk, Longevity Risk and Salary Risk.
Investment Risk - The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.
Interest Risk - A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan's debt investments.
Longevity Risk - The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan's liability.
Salary Risk - The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan's liability.
(h) Expected contribution during the next annual reporting period is '49.25 Million
(i) Asset Liability Matching Strategy
The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity outgoes happening during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in a increase in liability without corresponding increase in the asset).
NOTE-43: EXCEPTIONAL ITEMS
Exceptional items in the standalone financial Statement include :
a) Provision for doubtful debts amounting to NIL (Previous year - ' 200.52 million) from certain identified receivable balances based on management's assessment of Counterparty credit risk.
b) The Company has made an assessment of the recoverable values of certain investments made in subsidiary companies wherever impairment indicators existed.In determining the recoverable values, the Company considered the value in use of the related investments based on the business performance, prevailing business conditions and revised expectations of the future performance. Based on such assessment, the Company has recognised an impairment loss of ' 59.63 Million (Previous year -' 40.99 Million ) in its - GTPL DCPL Private Limited & GTPL VVC Network Private Limited. The total recoverable amount of the CGU is ' 253.89 Million (Previous year - ' 313.52 Million) determined based on its value in use less cost of disposal determined considering a discount rate of 15.75%. (Previous year - 16.80%).
NOTE 44 :EVENTS AFTER REPORTING DATE
The Board of Directors have recommended dividend of ' 4 per fully paid up equity share of ' 10/- each for the financial year ended
(d) Performance Obligation
Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation
related disclosures for contracts as original expected duration is one year or less.
(i) The Contact liability outstanding at the beginning of the year has been recognised as revenue during the year ended on March 31 2024.
(ii) The Company is engaged in distribution of television channels through digital cable distribution network and earns revenue primarily in the form of subscription, placement / marketing and activation. The Company does not give significant credit period resulting in no significant financing component.
(iii) The original contract price is re-negotiated with the customer, the impact of the same is adjusted against the revenue since the re-negotiated price is considered as the revised contract price.
(iv) With reference to the revenue from EPC contract, as per the terms, the revenue is certain on completion of end to end connectivity of each location. Accordingly, the Company recognises the revenue on completion of milestone with reference to end to end connectivity of each location.
March 31, 2024 on outstanding paid up share capital of the Company as on date, in its board meeting held on April 15, 2024, subject
to approval of shareholders at ensuing Annual General Meeting of the Company.
NOTE 45:
a) The Ministry of Corporate Affairs(MCA) has issued a notification(Companies(Accounts) Amendments Rules, 2021) which is effective from April 01, 2023, state that every Company which uses accounting software for maintaining its books of account shall use only such accounting software which has a feature of recording audit trail of each and every transaction, and further creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.
b) The Company uses a SaaS ERP as a primary accounting software for maintaining books of account, which has a feature of recording audit trail edit logs facility and that has been operative throughout the financial year for the transactions recorded in the software impacting books of account at application level. The database of the software is operated by third party software service provider hence audit trail at the database level is not applicable.
c) For subscriber management system for which the audit trail feature related to who has made the changes at price master was not enabled for the period from April 1, 2023 to March 22, 2024. Further, no audit trail was enabled for this secondary Accounting Software at the database level to log any direct data changes.
NOTE 54 :DETAILS OF CRYPTO CURRENCY OR VIRTUAL CURRENCY
The Company has not traded or invested in crypto currency or virtual currency during the financial year.
NOTE 55 REGISTRATION OF CHARGES OR SATISFACTION WITH REGISTRAR OF COMPANIES
The Company does not have any charges or satisfaction, which is yet to be registered with ROC beyond the statutory period.
NOTE 56 COMPLIANCE WITH NUMBER OF LAYERS OF COMPANIES
The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies Act read with the Companies ( Restriction on number of Layers) Rules, 2017.
NOTE 57:
NOTE 48 :DETAILS OF BENAMI PROPERTY HELD
The Company does not hold any benami property as defined under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder. No proceeding has been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
The Company has not advanced or loaned or invested funds (either from borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries), with the understanding whether recoded in writing or otherwise, that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries NOTE 58 :
The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
NOTE 50 BORROWINGS OBTAINED ON THE BASIS OF SECURITY OF CURRENT ASSETS
The Company is required to provide Inventory statement to Banks on quarterly basis. However, as per sanction letter issued by Bank, inventory related to EPC projects are not pledged with banks. Accordingly, the company has submitted NIL inventory in its submission.
As per sanctioned letter issued by Banks, the Company is required to submit Book Debts statement (excluding debtors related to EPC Project) to Banks on quarterly basis. The Books Debts (excluding debtors related to EPC projects) are in agreement with books of accounts and there is no reconciliation items.
NOTE 51 DEVALUATION OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
The Company has not done revaluation of PPE / Intangible assets.
NOTE 52 UTILISATION OF BORROWED FUNDS AND SHARE PREMIUM
As on March 31, 2024 there is no unutilised amounts in respect of any issue of securities and long term borrowings from banks and financial institutions. The borrowed funds have been utilised for the specific purpose for which the funds were raised.
NOTE 53 UNDISCLOSED INCOME
The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 ( Such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
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