Television industry’s growth in FY17 saw a temporary blip because of demonetisation and delay in digitisation of analogue cable subscriber base. However, towards the end of the year, advertising growth returned to normalcy. After multiple extensions of deadline, digitisation of Phase III cable subscriber base was largely completed. Despite these adversities, as per the FICCI-KPMG industry report, Indian television segment registered a growth of 8.5% in CY16 as compared to 14.2% in CY15.

Television remains the prime medium of entertainment for the Indian consumer. During FY17, time spent on watching television at individual and household levels stood at 158 and 287 minutes per day respectively, which remained stable through the year. During the year, there was an increase in viewership of news channels due to significant events, such as surgical strikes, state elections and demonetisation. Hindi GEC remains the most watched genre in the country. Meanwhile, regional channels continued to gain traction.

MOVIES

India is the world’s largest market in terms of movies released annually but ranks fifth in terms of revenues. Although movie-going is a well-entrenched leisure habit in India, its monetisation is low due to smaller ticket size and low screen penetration. However, the scenario is improving, with multiplexes increasing its share at the expense of single screens, driving up average ticket prices. Satellite and digital rights are additional sources of revenue for the movies. While the market for satellite rights remains healthy, digital rights saw a sharp increase in price due to competition from multiple players.

While the South Indian film industry continues its strong growth, other regional markets such as Marathi, Gujarati and Punjabi are also gaining traction. For instance, Sairat, a Marathi movie, grossed more than ` 1 billion in theatrical revenues, a first for a Marathi movie. The Indian movie industry is estimated to grow at 7.7% CAGR during CY16-21 to around ` 207 billion.

Zee Studios, ZEEL’s film production and distribution arm, is well positioned to gain from these market dynamics. It produces Bollywood as well as regional language films in Marathi, Kannada, Telugu and Punjabi.

DIGITAL

During the year, the ecosystem for digital consumption of entertainment content evolved at a fast pace. In India, mobile is the primary device for internet access. According to estimates, India’s 3G and 4G subscriber base stood at 250 million at the end of FY17, and is likely to reach 470 million by 2020. The launch of Reliance Jio and acceleration in 4G rollout by other telecom players has significantly improved data connectivity. Over the past few years, there has been a spurt in the number of OTT service providers, with both the local as well as foreign players vying for consumers’ attention. OTT players are also investing in producing original content for digital platforms, including digital only or digital first content.

MUSIC

Indian music market is set to more than double to ` 25 billion by CY21. Music labels’ revenues are derived from multiple sources, such as online music streaming, airing on radio, and use of audio tracks for various purposes. With the onset of digital revolution, music consumption on digital platforms has become the primary driver of growth for the industry. It now contributes to over 70% of the total revenues. Online streaming platforms already have over 50 million users which will continue to grow on the back of falling data cost and availability of curated music. Like the trend in movies, music consumption in regional languages is also gaining traction.

Zee Music Company, ZEEL’s music publishing label, has a significant presence in Bollywood music as well as regional music.

MOVIES
AND MUSIC

The Movies and Music businesses significantly scaled-up their operations in FY17. Both businesses performed well during the year driven by several marquee properties. These businesses have now started to contribute to overall growth of the Company.

ZEE STUDIOS

During the year, Zee Studios released seven movies across three languages. Zee Studios has adopted a strategy of focusing on Hindi and regional movies, which allows it to leverage its expertise in making content in several languages.

ZEE LIVE focuses on creating memorable on-ground experiences for audiences in the country as well as overseas. It aims to become the gateway for Indian live experiences to the world, while bringing the best of the world to India. Through Zee Theatre, it aims to revive, restore and spread the rich cultural heritage of theatre and bring together some of the finest works for the audience to experience. With stories across genre, from drama and musical to classics, comedy, horror and satires, Zee Theatre believes there is something for everyone.

During the year, ZEE LIVE rolled out its first two properties. Baleno Wicked Weekends created India’s longest party marathon at the biggest hotspots across six cities. Featuring some of the most popular independent artists in India, it has created a strong connect with the young urban audience. Zee Theatre, kick started theatre tour in January 2017 and staged 13 plays across 9 cities in India. ZEE LIVE is looking forward to an exciting calendar of IPs for the upcoming year

Total Expenditure
Total operational expenditure increased by ` 1,713 million or 6%, from ` 30,332 million in FY 2016 to ` 32,045 million in FY 2017. It represents 61% of total revenue in FY 2017, compared to 68% in FY 2016.

Operational Cost / Cost of Goods
Operational cost increased by ` 1,661 million or 9%, from ` 18,298 million in FY 2016 to ` 19,959 million in FY 2017. This increase is primarily due to higher programming cost.

Employee benefits expenses
Employee benefits expenses have decreased by `135 million i.e. 5%, from ` 3,106 million in FY 2016 to ` 2,971 million in FY 2017.

Other expenses
Other expenses have marginally increased by ` 187million or 2%, from ` 8,928 million to ` 9,115 million.

Operating Profit
The Company’s operating profit increased by ` 5,506 million, or 47%, from ` 11,733 million in FY 2016 to ` 17,239 million in FY 2017. The operating margin is at 35% for FY 2017. Increase in operating profit is mainly due to increase in broadcasting revenue coupled with a strong control on operational costs.

Finance Cost
Finance cost has decreased by ` 222 million to ` 1,264 million in FY 2017 from ` 1,486 million in FY 2016.

Depreciation and Amortisation
Depreciation increased by ` 172 million or 29%, from ` 599 million to ` 771 million. Increase in depreciation is mainly on account of depreciation on additions during the year.

Exceptional item represents gain on transfer of entity equity stake held in wholly owned subsidiary viz. Taj Television (India) Private Limited.

Profit before Tax and exceptional items
Profit before tax increased by ` 5,187 million or 46% from ` 11,299 million in FY 2016 to ` 16,486 million in FY 2017. The increase is attributable to strong growth in revenues coupled with operational control on cost.

Provision for Taxation
Net provision for taxation was at ` 6,616 million for FY 2016-17.

Profit for the year
Profit after tax for the year increased by ` 3,758 million to ` 10,340 million from ` 6,582 million.

Other Comprehensive income
Other comprehensive income comprises of re-measurement of defined benefit obligation and fair value changes of equity instruments through other comprehensive income net of income tax thereon. The figures for current year are ` 123 million vis-à-vis ` 56 million for previous year.

B. FINANCIAL POSITION
Non-Consolidated Financial Position as on 31 March, 2017 as compared to 31 March, 2016.

Property, plant and equipment, investment property, capital work-in-progress and intangible assets
During the year, addition to the Company’s block of assets (other than CWIP) is ` 948 million. This is mainly on account of purchase of plant and machinery and computer equipments. The capital expenditure is mainly funded out of internal accruals.

This is partially offset by depreciation / amortisation for the year.

Capital Work-in-Progress increased by ` 524 million to ` 987 million as on 31 March, 2017.

Non-Current Investments
Non-current Investments have decreased from ` 17,942 million as on 31 March, 2016 to ` 11,364 million as on 31 March, 2017. The decrease is mainly on account of certain investments reclassified as current investments based on maturity.

Current Assets
Current Assets mainly represent Current Investment, Inventories, Trade Receivables, Cash & Bank Balances, Loans, Other Financial Assets, and Other Current Assets. The increase in current assets by ` 18,080 million from ` 35,274 million to ` 53,354 million is mainly attributable to increase in current investment by ` 11,629 million, increase in inventories by ` 2,356 million and other current assets by ` 2,627 million and balance on account of others.

Inventories
Programmes and film rights held by the Company increased by ` 2,356 million from ` 13,366 million as on 31 March, 2016 to ` 15,722 million as on 31 March, 2017.

Current Investment
Current Investment has increased by ` 11,629 million to ` 15,029 million as on 31 March, 2017 from ` 3,400 million as on 31 March, 2016. This is mainly due to certain investments being reclassified as current investments based on maturity and additional short-term investments in mutual funds.

Trade Receivables
Trade receivables net of provision for bad and doubtful debts stood at ` 9,801 million in FY 2017 as against ` 9,539 million in FY 2016. The age of net debtors is 73 days of sales in FY 2017 as against 83 days of sales in FY 2016.

Cash and Bank Balances
The cash and bank balances lying with the Company, as on 31 March, 2017 was ` 5,431 million as against ` 3,851 million on 31 March, 2016.

Loans and Advances (Current)
Loans have decreased to ` 1,542 million from ` 1,750 million on account of repayment.

Other current assets
Other current assets have increased by ` 2,627 million, from ` 2,432 million on 31 March, 2016 to ` 5,059 million on 31 March, 2017 mainly on account of operational advances given during the year.

Share Capital
There is no change in the Paid-up Equity Share Capital of the Company. The Paid-up Equity Share Capital of the Company as at 31 March, 2017 stands to ` 960 million.

Borrowings
Borrowings represent non-current portion of fair value of redeemable preference shares (RPS) and vehicle loans. Vehicle loan funds as on 31 March, 2017 stood at ` 8 million, down from ` 9 million. RPS aggregates ` 15,262 million in current year vis-à-vis ` 17,140 million in previous year. This is on account of reclassification of current maturity of RPS transferred to current liabilities of ` 3,815 million.

Non-current provisions
Non-current provisions pertain to retirement benefits, and have marginally increased from ` 411 million as on 31 March, 2016 to ` 441 million as on 31 March, 2017.

Current Liabilities and Provisions
Current Liabilities and Provisions mainly represents Trade Payables, Statutory Dues, Unearned revenue, provisions and other payables etc. The same has increased by ` 6,200 million to ` 14,496 million as on 31 March, 2017 from ` 8,296 million as on 31 March, 2016. The increase is mainly attributable to reclassification of current maturity of redeemable preference shares of ` 3,815 million and increase in trade payables by ` 1,233 million.

CONSOLIDATED
FINANCIALS

A. RESULTS OF OPERATIONS
We have provided a comparison between Audited figures for FY 2017 and FY 2016. The financial results includes share of associates and joint ventures based on equity accounting.

REVENUE
Total revenue increased by ` 6,506 million, or 11% from ` 60,076 million in FY 2016 to ` 66,582 million in FY 2017 on account of revenue growth across businesses.

Revenue from Operations
The Company’s operating revenue increased by ` 6,217 million or 11%, from ` 58,125 million in FY 2016 to ` 64,342 million in FY 2017.

Advertising revenues witnessed a growth of ` 3,083 million (9%), from ` 33,652 million in 2016 to ` 36,735 million in 2017. Subscription Revenue increased by ` 2,050 million (10%), from ` 20,579 million in FY 2016 to ` 22,629 million in FY 2017.

Other operating income includes syndication and sale of sports rights, programmes and film rights, commission on space selling etc. which has increased by ` 1,084 million (28%) to ` 4,978 million in FY 2017 from ` 3,894 million in FY 2016.

Other Income
Other income increased by ` 289 million (15%) from ` 1,951 million in FY 2016 to ` 2,240 million in FY 2017. Increase in other income is mainly on account of interest received.

Expenditure
Total operational expenditure increased by ` 2,084 million (5%), from ` 42,989 million to ` 45,073 million. This increase in cost is attributable to higher content costs.

Operational Cost / Cost of Goods
Operational cost has increased by ` 1,841 million (7%) to ` 27,825 million in FY 2017 as against ` 25,984 million in FY 2016. The overall increase in operational cost is mainly attributable to increase in cost of amortisation of programming and film content.

Employee Benefit Expenses
Employee cost increased by ` 1,057 million, or 21%, from ` 4,986 million in FY 2016 to ` 6,043 million in FY 2017.

Other expenses
Administrative and other expenses decreased by ` 814 million (7%), from ` 12,019 million in FY 2016 to ` 11,205 million in FY 2017. The reduction is mainly on account of marketing and distribution expense.

Operating Profit
The Company’s operating profit increased by ` 4,133 million (27%), from ` 15,136 million in FY 2016 to ` 19,269 million in FY 2017. The operating margin is at 30% for FY 2017. The increase in operating profit is mainly attributable to increase in revenue during the year coupled with optimisation in operating costs.

Finance Costs
Finance costs decreased by ` 226 million (14%) from ` 1,598 million to ` 1,372 million.

Depreciation and Amortisation
Depreciation increased by ` 375 million (48%), from ` 777 million in FY 2016 to ` 1,152 million in FY 2017. Increase is mainly on account of depreciation on additions during the year.

Fair value loss on financial instruments at fair value through profit and loss is mainly on account of fair valuation of redeemable preference shares and fair value change in financial instruments.

Exceptional item for the current year represents gain on sale of major part of sports broadcasting business alongwith transfer of entire equity stake held in wholly owned subsidiary viz. Taj Television (India) Private Limited.

Profit before Tax
Profit before tax increased by ` 15,281 million or 111% from ` 13,728 million in FY 2016 to ` 29,009 million in FY 2017. The current and previous year’s figures are not comparable on account of exceptional item.

Provision for Taxation
Provision for taxation increased by ` 1,313 million, to ` 6,804 million in FY 2017 from ` 5,491 million in FY 2016.

Profit for the year
Profit for the year increased by ` 13,968 million (170%) to ` 22,205 million from ` 8,237 million. Figures are not comparable on account of profit generated during the current year from sale of major part of sports broadcasting business.

B. FINANCIAL POSITION
Consolidated Financial Position as on 31 March, 2017 as compared to 31 March, 2016.

Property, plant and equipment, Investment Property, Capital Work-in- Progress and Intangible assets and Intangible assets in progress.

During the year, the additions to the block is of ` 2,418 primarily in plant and machinery and buildings.

In the current year, the goodwill has reduced ` 6,167 million. This is mainly on account of derecognition of goodwill relating to sports business.

Capital work-in-progress increased by ` 166 million to ` 1,270 million as on 31 March, 2017.

Non-current Investments
The increase of ` 4,276 million in non-current investments to ` 11,868 million as at 31 March, 2017 from ` 7,592 million mainly represents treasury investments.

Non-current assets
The non-current assets consisting of capital advances, income tax assets, claim receivables and other assets have decreased by ` 117 million to ` 6,992 million in FY 2017 as against ` 7,109 million in FY 2016. The decrease is mainly attributable to decrease in capital advances by ` 260 million partially offset by marginal reduction in advance taxes.

Current Assets
There has been an overall increase in current assets by ` 26,708 million, from ` 54,233 million in FY 2016 to ` 80,941 million in FY 2017.

Inventories
Programmes and film rights held by the Company have increased from ` 13,180 million on 31 March, 2016, to ` 16,843 million on 31 March, 2017. The increase mainly represents unamortised film rights and programmes.

Investments
The increase of ` 4,276 million from ` 7,592 million to ` 11,868 million in current year is mainly due to certain investments reclassified as current investments based on maturity and additional current investments made during the year.

Trade Receivables
Trade receivables net of provision for bad and doubtful debts stood at ` 13,059 million in FY 2017 as against ` 13,482 million in FY 2016, reflecting an reduction of ` 423 million. The age of net debtors is 74 days of sales in FY 2017, as against 85 days of sales in FY 2016.

Cash and Bank Balances
The cash and bank balances lying with the Company, as on 31 March, 2017 were ` 26,133 million as against ` 9,631 million on 31 March, 2016 reflecting a strong cash position in the Company.

Other financial assets includes loans, deposits and other assets aggregating to ` 3,755 million as on 31 March, 2017 vis-à-vis 3,773 million as on 31 March 2016.

Other current assets comprises of trade advances, prepaid expenses, and indirect taxes aggregating to ` 9,283 million as on 31 March, 2017 vis-à-vis ` 6,575 million as on 31 March, 2016. The increase is primarily on account of operational advances.

EQUITY AND LIABILITIES
Equity Share Capital
During the year, there is no change in the equity share capital of the Company.

Borrowings
Borrowings represent non-current portion of fair value of redeemable preference shares (RPS) and vehicle loans. Vehicle loan funds as on 31 March, 2017 stood at ` 11 million,down from ` 9 million. RPS aggregates ` 15,262 million in current year vis-à-vis ` 17,140 million in previous year. This is on account of reclassification of current maturity of RPS transferred to current liabilities (` 3,815 million).

Long-term Provisions
Long-term provisions consisting of retirement benefits have increased by ` 233 million, from `534 million to ` 767 million as on 31 March, 2017.

Non-Current liabilities
Non-current liabilities represent the advance received towards syndication of sports content which is Nil for the current year.

Current Liabilities and Provisions
Current liabilities and provisions mainly represent trade payables, statutory dues, unearned revenue, provisions and other payables etc.

Current liabilities and provisions as on 31 March, 2017 have increased by ` 4,139 million, at ` 17,750 million as on 31 March, 2017 vis-a-vis ` 13,611 million on 31 March, 2016.

The increase is mainly attributable to reclassification of current maturity of redeemable preference shares of ` 3,815 million.