INFORMATION MEMORANDUM Reliance Media World Limited (Formerly known as Reliance Unicom Limited) (Our Company was originally incorporated on December 27, 2005 as Reliance Unicom Limited as a Public Limited Company under the Companies Act, 1956. For details of changes in the name, see “General Information” on Page 21 of this Information Memorandum.) Registered Office: 401, 4 th Floor, INFINITI, Link Road, Oshiwara, Andheri West, Mumbai – 400 053, Maharashtra Contact person: Gururaja Rao, Company Secretary & Compliance Officer Tel: 022 - 3068 9444, Fax: 022 - 3988 8927, Email: [email protected]Website: www.big927fm.com INFORMATION MEMORANDUM FOR LISTING OF 4,61,26,170 EQUITY SHARES OF RS. 5 EACH NO EQUITY SHARES ARE PROPOSED TO BE SOLD OR OFFERED PURSUANT TO THIS INFORMATION MEMORANDUM GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest in the equity shares of Reliance Media World Limited unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in the shares of Reliance Media World Limited. For taking an investment decision, investors must rely on their own examination of the Company including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of the investors is invited to the chapter entitled “Risk Factors” beginning on page 10 of this Information Memorandum. ABSOLUTE RESPONSIBILITY OF RELIANCE MEDIA WORLD LIMITED Reliance Media World Limited having made all reasonable inquiries, accepts responsibility for, and confirms that this Information Memorandum contains all information with regard to Reliance Media World Limited, which is material, that the information contained in this Information Memorandum is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Information Memorandum as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The Equity Shares of Reliance Media World Limited are proposed to be listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. We have received ‘in-principle’ approvals from BSE and NSE for listing the Equity Shares vide letters dated August 24, 2009 and September 25, 2009, respectively. The Bombay Stock Exchange Limited shall be the Designated Stock Exchange. REGISTRAR AND TRANSFER AGENT Karvy Computershare Private Limited (Unit: Reliance Media World Limited) Plot No. 17 – 24, Vittal Rao Nagar, Madhapur Hyderabad - 500 081 Email: [email protected]Tel : +91-40-23420818 - 25 Fax: +91-40-23420859 Contact Person: Praveen Chaturvedi
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INFORMATION MEMORANDUM
Reliance Media World Limited (Formerly known as Reliance Unicom Limited)
(Our Company was originally incorporated on December 27, 2005 as Reliance Unicom Limited as a Public Limited Company under the
Companies Act, 1956. For details of changes in the name, see “General Information” on Page 21 of this Information Memorandum.)
INFORMATION MEMORANDUM FOR LISTING OF 4,61,26,170 EQUITY SHARES OF RS. 5 EACH
NO EQUITY SHARES ARE PROPOSED TO BE SOLD OR OFFERED PURSUANT TO THIS
INFORMATION MEMORANDUM
GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest in the equity shares of Reliance Media World Limited unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in the shares of Reliance Media World Limited. For taking an investment decision, investors must rely on their own examination of the Company including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of the investors is invited to the chapter entitled “Risk Factors” beginning on page 10 of this Information Memorandum.
ABSOLUTE RESPONSIBILITY OF RELIANCE MEDIA WORLD LIMITED
Reliance Media World Limited having made all reasonable inquiries, accepts responsibility for, and confirms that this Information Memorandum contains all information with regard to Reliance Media World Limited, which is material, that the information contained in this Information Memorandum is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Information Memorandum as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.
LISTING
The Equity Shares of Reliance Media World Limited are proposed to be listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. We have received ‘in-principle’ approvals from BSE and NSE for listing the Equity Shares vide letters dated August 24, 2009 and September 25, 2009, respectively. The Bombay Stock Exchange Limited shall be the Designated Stock Exchange.
REGISTRAR AND TRANSFER AGENT
Karvy Computershare Private Limited (Unit: Reliance Media World Limited)
transmission cable cuts, power loss and similar events and to construct networks that are not vulnerable to
the effects of such events. The occurrence of a natural disaster or other unanticipated problem at our
facilities could cause interruptions in broadcasting. Any damage or failure that causes interruptions in the
operations could have a material adverse effect on their business, operating results and financial
condition. Performance may be affected by a number of factors beyond our control including political and
economic developments both inside and outside India.
17. Outstanding litigation.
The results of operations, financial position and liquidity of the company could be affected by legal
proceedings or investigations which are adverse to the interests of the company. Moreover, such litigation
15
or investigations may be time consuming, distracting to management, expensive and difficult to predict,
and this may adversely affect the business.
Cases filed against the Company / Notices received by the Company:
• Summons have been served on the Company with respect to a suit filed by M/s Aces Events and
Promos in the City Civil Court at Secunderabad claiming an amount of about Rs. 3 lakhs towards
services rendered.
• The Jammu and Kashmir sales tax department has served a demand notice for payment of sales tax
amounting to Rs. 68 lakhs.
• Our service tax audit was completed and there are certain audit observations. If the said audit
observations are considered unsatisfactory by the service tax department, then we may incur a liability
of Rs. 1,200 lakhs plus interest.
• The Assistant Controller, Chandigarh Transport Undertaking, Chandigarh (AC, CTU) has served a
notice directing us to deposit an amount of Rs.14.18 lakhs (including interest) for non-payment of
monthly rent for space utilized for advertisements.
• We have received a notice from the Joint Commissioner of Bruhat Bangalore Mahanagara Palike
(BBMP) to pay Rs.48 lakhs as penalty for delay in construction of the bus shelters.
• Five summary suits under order XXXVII rule 2 of the Code of Civil Procedure, 1908 have been filed
against us by Mr. Amin Pawar, proprietor of M/s Leading Edge before the Bombay High Court for
recovery of Rs. 63.2 lakhs.
• Five winding up petitions under sections 433, 434 and 439 of the Companies Act, 1956 have been filed
against the Company by M/s Leading Edge (CP/817/2009, CP/808/2009, CP/805/2009, CP/807/2009
and CP/806/2009) alleging that the Company is indebted to the said party to the tune of Rs. 63.2 lakhs
for which Leading Edge had also filed Summary suits under Order XXXVII rule 2 of the Code of Civil
Procedure, 1908 as stated above.
• Actor Sunny Deol has served a notice on RMWL alleging that he and his family members have been
defamed in a show aired titled “Son Sunny” on Big 92.7 FM. Mr. Deol has also claimed a sum of Rs.
20000 lakhs as damages for defamation.
• Notice has been received from Labour cum conciliation officer, Hisar, to clear a month’s salary and
Provident Fund dues of an employee of one of our Contractor in view of default by the said Contractor.
• Notice has been received from Additional PF commissioner, Jammu for PF contributions not paid by one
of the Contractor engaged by the Company amounting to Rs. 69,024/-.
• Two suits for declaration filed against us in the court of civil judge, senior division, Patiala by two former
employees alleging that their dismissal was wrong and illegal.
• A claim has been filed by a former employee in the Industrial Tribunal, Government of Goa at Panaji
alleging wrongful termination of employment contract and seeking reinstatement along with payment of
outstanding wages.
• Summons have been received from Labour Court, Bhubaneshwar in connection with complaint filed by
an ex-employee claiming an amount of Rs. 2.28 lakhs towards performance incentive for the period 1st
April 2008 to 31st March, 2009.
• A Writ Petition was filed in the High Court of Karnataka at Bangalore by an ex-employee questioning the
jurisdiction of the Civil Court in connection with the case filed by the Company against the said ex-
employee wherein the Company was seeking injunction from the Civil Court restraining him to join the
competitor, when there was an Arbitration Clause in the Agreement.
16
Please also refer Page 140 - section on “Outstanding Litigations and Material Developments.”
18. Any future issuance of Equity Shares may dilute your shareholding.
Any future equity issuances by us may lead to the dilution of investors’ shareholdings in our Company.
Any future equity issuances by us may adversely affect the trading price of the Equity Shares. In addition,
any perception by investors that such issuances might occur could also affect the trading price of our
Equity Shares.
External Risk Factors
1. Our business is substantially dependent on Government policies.
The FM radio broadcasting industry is subject to extensive Government regulation. There is often
significant initial uncertainty concerning the scope and impact of many liberalization and deregulation
measures introduced by the Government and various interested parties often contest such measures.
While proposed Government measures are challenged from time to time, including in the courts in India,
many private FM radio broadcasters, including us, may not be able to properly evaluate whether a
proposed initiative will ultimately be implemented and, if so, in what form, and we may incur expenditure to
take advantage of a liberalization measure that is ultimately not implemented or, if implemented, takes a
form that we did not anticipate. The MIB currently regulates key policy matters relating to licensing,
ownership, content and operation of our network, including the transfer and assignment of licenses and
ownership interests in private FM radio broadcasting entities, the granting, maintenance and renewal of
licenses and frequency spectrum allocations. In addition, the Government also regulates the foreign
investment limits and imposes restrictions on foreign investment in the private FM radio broadcasting
industry. The Government has designated TRAI and the TDSAT, which are autonomous bodies, to
regulate and adjudicate matters in this industry. Our licenses reserve broad discretion to MIB to influence
the conduct of our business by giving it the right to unilaterally modify, at any time, the terms and
conditions of the licenses. The Government has the right to take over networks or terminate or suspend
the licenses in the interests of national security or in public interest or in the event of a national
emergency, war or similar situation. Under the existing terms of our licenses, the Government may also
impose certain penalties including suspension, revocation or termination of a license or suspension of a
license, in the event of default by us.
Our business might suffer in case there are adverse changes to the regulatory framework, which could
include new regulations that we are unable to comply with or those that allow our competitors an
advantage. We cannot assure you that changes in regulations would not adversely impact our ability to
manage and expand our business or our ability to generate income or profits. Our business is also subject
to competition from AIR, the state public service radio broadcaster in India. Unlike private FM operators,
AIR is not required to pay any license fees, and is not subject to various other license conditions that
currently apply to us or may apply to us in future. While TRAI, as the regulator, and TDSAT, as the
appellate authority, have been granted certain powers to ensure a level playing field among various
service providers, there can be no assurance that there will be a level playing field among the private FM
radio broadcasters, or among AIR and private FM radio broadcasters. The Government may introduce
additional legislation and constitute other regulatory bodies in relation to our business. Any of these events
could adversely affect us.
17
2. Future sales by shareholders could cause the price of equity shares to decline.
As there is no lock-in provision on the equity shares after listing (except to the extent of 20% of the total
equity capital of the Company by Promoters for the period of 3 years from the date of Listing) sale of
substantial number of equity shares could lead to fall in market prices of the equity shares.
3. Our Promoters retain majority control of our Company. It may have interests that are adverse to,
and conflict with, the interests of other shareholders.
Our Promoters own or control majority of our total equity share capital. As a result, they will continue to be
able to exert significant influence over our corporate decisions, including the election or removal of
directors of our Board, the approval of our annual financial information, the declaration of dividends and
the determination of other matters to be decided by our shareholders, and will be able to influence other
aspects of our management, strategy and operations. As non promoter and public shareholders hold less
than half of our total capital, they will likely not be able to determine the outcome of any resolution
proposed at a shareholder meeting or influence any decisions made by the Promoters in respect of the
operation of our business.
The interests of the Promoters may be different from our interests or the interests of our other
shareholders and they may take actions with respect to our business that may not be in ours or our other
shareholders’ best interests. By exercising its powers of control, the Promoters could delay, defer or cause
a change of our control or a change in our capital structure, delay, defer or cause a merger, consolidation,
takeover or other business combination involving us, discourage or encourage a potential acquirer from
making a tender offer or otherwise attempting to obtain control of our Company or take actions adverse to
the interests of our other shareholders.
4. Our revenues could decrease due to perceived health risks from radio emissions, especially if
these perceived risks are substantiated.
Public perception of potential health risks associated with wireless communications media could slow the
growth of wireless and radio broadcasting companies, which could in turn slow our growth. In particular,
negative public perception of, and regulations regarding, these perceived health risks could slow the
market acceptance of wireless communications services, which could materially restrict our ability to
expand our business.
The potential connection between radio frequency emissions and certain negative health effects has been
the subject of substantial study by the scientific community in recent years, and numerous health-related
lawsuits have been filed against wireless carriers and wireless device manufacturers in various
jurisdictions. To date, we are not aware that any such petitions have been decided in a manner that would
adversely impact or restrict our business. However, we do not maintain any insurance with respect to
these matters. If a scientific study or court decision resulted in a finding that radio frequency emissions
posed health risks to consumers, it could negatively impact the market for wireless communications and
radio broadcasting services, as well as our customers, which would adversely affect our business,
prospects, results of operations and financial condition.
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5. We will not be in position to pay dividends to our shareholders in the foreseeable future.
The amount of our future dividend payments, if any, will depend upon our future earnings, financial
condition, cash flows, working capital requirements, capital expenditures and other factors. Further, we
plan to make substantial capital expenditures to complete our current expansion plans.
Since we have recently commenced operations as an independent entity pursuant to the Scheme, we do
not expect having distributable funds or paying any dividends in the foreseeable future. Additionally, we
have taken unsecured loans, which may be recalled at any time by the lenders.
We may be unable to pay dividends in the near or medium term, and our future dividend policy will depend
on our capital requirements and financing arrangements for further expansion, financial condition and
results of operations.
6. After this listing, the prices of our Company’s equity shares may be volatile, or an active trading
market for our Company’s equity shares may not develop.
There has been no public market for our Company’s equity shares till now, and no history of public
disclosure of information relating to our company and/or our operating companies, and the prices of our
Company’s equity shares may fluctuate after this listing. There can be no assurance that an active trading
market for the equity shares will develop or be sustained after this listing. Our Company’s share price
could be volatile.
7. A slowdown in economic growth in India could cause our business to suffer.
Our performance and growth are dependent on the health of the Indian economy. The economy could be
adversely affected by various factors such as political or regulatory action, including adverse changes in
liberalization policies, social disturbances, terrorist attacks and other acts of violence or war, natural
calamities, interest rates, commodity and energy prices and various other factors. Any slowdown in the
Indian economy may adversely impact our business and financial performance and the price of our
Shares. Any downgrading of India’s debt rating by an independent agency may harm our ability to raise
debt financing. Any adverse revisions to India’s credit ratings for domestic and international debt by
international rating agencies may adversely affect our ability to raise additional financing and the interest
rates and other commercial terms at which such additional financing is available. This could have a
material adverse effect on our capital expenditure plans, business and financial performance.
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SUMMARY
Please read the following summary together with the risk factors and the more detailed information about us and our financial results included elsewhere in this Information Memorandum. Industry and Business Overview The past couple of years have witnessed a flurry of activity in the radio sector. Radio has accounted for nearly Rs. 8,800 million worth of advertising for the CY 2008 and Rs. 10120 million for the CY 2009 (estimated) (Source: Group M – India Media Forecast 2009). The current situation of the radio industry is akin to that of the TV industry in the early and mid 1990s. Radio today accounts for close to 4% of the Indian advertising industry.
Advertising spend on radio grew by a whopping 49%, from Rs. 590 cr in 2007 to Rs. 880 cr in 2008 and
Radio’s contribution to the overall AdEx rose from 3% in 2007 to 4% in 20081. The opening up of several
new markets in 2008 resulted in growth of 62% for private FM players who contributed Rs. 590 cr. While the
national advertisers buying inventory across markets, contributed to 70% of total revenue and the remaining
30% came from local advertising (which in some cases accounted for 60% in smaller towns), clearly
suggests that radio can no longer be a pushover in any media plan2.
About 80% of the FM stations licensed in January 2006 were on air by the end of 2008. There are currently a total of 238 FM radio stations from 40 broadcasters across 90 cities in India. More than half are in towns of under a million population3. Big FM has the highest number of operational stations with 45 stations. Due to a cap on the number of stations per broadcaster many large players have formed JVs with small regional owners in a bid to offer wider market coverage and to prompt national advertisers to spend more. Combining their synergies, RML along with the Reliance Anil Dhirubhai Ambani Group, are looking at rapidly expanding their presence across all relevant segments of the Entertainment Space and have already taken steps in the direction of Film Production, Production Services, Processing, Film Exhibition, Overseas Distribution and FM Radio. Pursuant to the scheme, the Radio Business of RML stands vested in the Company.
In terms of the Scheme, the Company has issued and allotted equity shares to all shareholders of RML, in
the ratio of 1 (One) Equity Share of the Company for every 1 (One) Equity Share of RML. The Company is
proposed to be separately listed on BSE and NSE, to provide liquidity to all shareholders. The above
demerger will not have any impact on the share capital of RML. The Company’s main source of income presently is from Ad sales and Event Management Activities. Please refer to the section “Risk Factors” and “Overview of FM Radio Industry” at Page No. 10 and Page No. 37 respectively for more details.
1 Source: This Year Next Year – India Media Forecasts, April 2009, Published Group M 2 Source: This Year Next Year – India Media Forecasts, April 2009, Published Group M 3 Source: This Year Next Year – India Media Forecasts, April 2009, Published Group M
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GENERAL INFORMATION
RMWL was originally incorporated on December 27, 2005 as Reliance Unicom Limited, under the
Companies Act, 1956 as a Company limited by shares and obtained the certificate of Commencement of
Business on February 13, 2006. The name of the Company was changed from Reliance Unicom Limited to
Big Radio Limited vide a fresh Certificate of Incorporation consequent upon change of name dated October
6, 2006 issued by the Registrar of Companies, Maharashtra, Mumbai. The name of the Company was then
changed to Reliance Unicom Limited vide a fresh Certificate of Incorporation consequent upon change of
name dated September 18, 2007 issued by the Registrar of Companies, Maharashtra, Mumbai. The name
of the Company was again changed to RMWL vide the fresh Certificate of Incorporation consequent upon
change of name dated July 22, 2009 issued by the Registrar of Companies, Maharashtra, Mumbai. The
Company was wholly owned subsidiary of RML and was reorganized by way of a de-merger pursuant to the
Scheme.
Address of Registered Office of Company
Reliance Media World Limited
401, 4th Floor, INFINITI,
Link Road, Oshiwara, Andheri West,
Mumbai – 400 053
Tel: + 91 22 30689444
Fax: + 91 22 39888927
Registration Number / CIN: U64 200 MH 2005 PLC 158355
ISIN: INE445K01018
Address of Registrar of Companies
Registrar of Companies,
100 Everest, Marine Drive
Mumbai – 400 002, Maharashtra
Board of Directors as on the date of filing of the Information Memorandum
No. Name
1. Shri Gautam Doshi
2. Shri Rajesh Sawhney
3. Shri Anil Sekhri
4. Shri Darius Jehangir Kakalia
5. Shri Pradeep Shah
For further details of the Board of Directors of the Company, please refer the Section titled “Management”
Share Capital: Pre and post Scheme of Arrangement Authorised Share Capital Particulars Pre Scheme Post Scheme No. of Equity Shares 21,10,000 10,00,00,000 Aggregate Nominal Value (Rs.5/- per equity share) (Rs.) 1,05,50,000 50,00,00,000 No. of Preference Shares - 10,00,00,000 Aggregate Nominal Value (Rs.5/- per preference share) (Rs.) - 50,00,00,000 Issued, Subscribed and Paid up Capital Particulars Pre Scheme Post Scheme No. of Equity Shares 21,10,000 4,61,26,170 Aggregate Nominal Value (Rs.5/- per equity share) (Rs.) 1,05,50,000 23,06,30,850
1) The Authorised share capital of the Company at the time of incorporation was Rs. 5,00,000 divided
into 50,000 equity shares of Rs. 10/- each. Subsequently the equity share of the face value of Rs. 10/-
each fully paid up was divided into equity share of Rs. 5/- each fully paid up and Authorised share
capital was increased to Rs. 1,05,50,000 divided into 21,10,000 Equity Shares of Rs. 5/- each vide
Ordinary Resolution passed at the Extraordinary General Meeting held on April 25, 2007. Further, the
Authorised share capital of the Company was increased to Rs. 100,00,00,000 divided into
10,00,00,000 Equity Shares of Rs. 5/- each and 10,00,00,000 Preference Shares of Rs. 5/- each vide
Ordinary Resolution passed at the Extraordinary General Meeting held on July 17, 2009.
2) Prior to the allotment of shares as per the Scheme, the Issued, Subscribed and Paid up share capital
of the Company was Rs.1,05,50,000 divided into 21,10,000 equity shares of Rs. 5/- each which was
entirely held by RML and its nominees. As per the Clause 3.3.1 of the Scheme the existing
shareholding of RML (i.e. 21,10,000 equity shares of Rs. 5/-) in the Company stands cancelled.
3) As per Clause 3.1.1 of the Scheme the Company has issued and allotted 4,61,26,170 equity shares to
the eligible members of RML on August 8, 2009.
4) The Paid up share capital of the Company is Rs. 23,06,30,850/- divided into 4,61,26,170 equity shares
of Rs. 5/- each.
Notes to Capital Structure
1) Equity Share Capital History of the Company:
Sr.
No.
Date of
Allotment
Date when
Fully Paid-
up
Consideration No of
Equity
Shares
Face
Value
(Rs.)
Issue
Price
(Rs.)
Share
Premium
(Rs.)
% of post
Arrangement
paid-up
Capital
Lock-
in
period
1 27.12.2005 27.12.2005 Cash 50,000 10 10 Nil Pre
Arrangement
Capital
No
lock in
Period
23
Sr.
No.
Date of
Allotment
Date when
Fully Paid-
up
Consideration No of
Equity
Shares
Face
Value
(Rs.)
Issue
Price
(Rs.)
Share
Premium
(Rs.)
% of post
Arrangement
paid-up
Capital
Lock-
in
period
2 Sub divided
into equity
Shares of
Es.5/- each*
25.04.2007* Nil 1,00,000# 5 N.A. Nil No
lock in
Period
3 30.04.2007# 30.04.2007 Cash 20,10,000 5 50 45 Per
Share
No
lock in
Period
4 08.08.2009 08.08.2009 Pursuant to
the Scheme
4,61,26,170 5 5 Nil 100% 3
years**
* The equity share of the face value of Rs. 10/- each fully paid up was divided into equity share of Rs. 5/- each
fully paid up vide Ordinary Resolution passed at the Extraordinary General Meeting held on April 25, 2007.
# Prior to the allotment of shares as per Scheme, the Issued, Subscribed and Paid up Share Capital of the
Company was Rs.1,05,50,000 divided into 21,10,000 equity shares of Rs. 5/- each which was entirely held by
RML and its nominees. As per the Clause 3.3.1 of the Scheme the existing shareholding of RML (i.e. 21,10,000
equity shares of Rs. 5) in the Company stands cancelled.
** 92,25,234 equity shares of Rs. 5 each representing 20% of the Company’s total paid up equity share capital
(after effectuating the Scheme) held by Promoters will be locked in for the period of 3 years from the date of
Listing of Shares.
2) The Promoters of the Company and associates and their directors have not purchased or sold or
financed, directly or indirectly, any equity shares of the Company from the date of approval of the
Scheme till the date of submission of this Information Memorandum.
3) Shareholding pattern of the Company:
Before the Scheme
Prior to the effectiveness of the Scheme, the Company was a wholly owned subsidiary of RML and
the entire share capital of the Company comprising 21,10,000 equity shares of Rs. 5 each were held
by RML and its nominees. Pursuant to the scheme such shares stand cancelled.
After the Scheme (as on the date of Information Memorandum)
Total shareholding as a percentage of total number of shares
Category code
Category of Shareholder
No. of Shareholders
Total number
of shares
No. of shares held in
dematerialized form As a % of
(A+B) As a % of (A+B+C)
(A) Shareholding of Promoter and Promoter Group
(1) Promoters
(a) Reliance Land Private Limited
1 20600000 20600000 44.66 44.66
24
(b) Reliance Capital Limited 1 2955000 2955000 6.41 6.41
Sub Total (A)(1) 23555000 23555000 51.07 51.07
(2) Person Acting in concert
(PAC)
(a) AAA Entertainment Pvt. Ltd. 1 4800000 4800000 10.40 10.40
1. The Company is required to pay a ‘dividend distribution tax’ currently at the rate of 16.995% (including
applicable surcharge and education cess) on the total amount distributed or declared or paid as dividend.
Under Section 10(34) of the IT Act, income by way of dividend referred to in Section 115-O received on the
Shares of the Company is exempt from income tax in the hands of shareholders. However, the allowability of
expenses incurred for earning dividend income claimed as exempt is restricted under Section 14A of the IT
Act read with Rule 8D of the IT Rules.
2. The characterization of the gains/losses, arising from sale of shares, as capital gains or business income
would depend on the nature of holding in the hands of the shareholder and various other factors.
3. (a) The long-term capital gains accruing to the shareholders of the Company on sale of the Company’s
Shares in a transaction carried out through a recognized stock exchange in India, and where such
transaction is chargeable to STT, is exempt from tax as per provisions of Section 10(38).
(b) The short-term capital gains accruing to the members of the Company on sale of the Company’s Shares
in a transaction carried out through a recognized stock exchange in India, and where such transaction is
chargeable to STT, tax will be chargeable at 15% plus applicable surcharge and education cess as per
provisions of Section 111A. In other case, i.e. where the transaction is not subjected to STT, as per the
provisions of Section 115AD of the Act, the short term capital gains would be chargeable to tax at 30% plus
applicable surcharge and education cess.
(c) As per the provisions of Section 115AD of the Act, long term gains accruing to the shareholders of the
Company from the transfer of Shares of the Company being listed in recognized stock exchanges and
purchased in foreign currency, otherwise than as mentioned in point 3(a) above, are chargeable to tax at
10% Plus applicable surcharge and education cess. The benefit of indexation and the adjustment with
respect to fluctuation in foreign exchange rate would not be allowed to such shareholders. The filing of
return under section 139(1) for income computed under Section 115AD is mandatory. Further, where the
Gross Total Income (GTI) of the members includes any income on which tax has been paid as per special
35
rates provided under Section 115AD, then the GTI shall be reduced by the amount of such income and
deduction under chapter VIA shall be allowed in respect of reduced GTI.
(d) The shareholders are entitled to claim exemption in respect of tax on long term capital gains under
Section 54EC of the IT Act, if the amount of capital gains is invested in certain specified bonds /securities
within six months from the date of transfer subject to the fulfilment of the conditions specified therein. The
maximum investment permissible for the purposes of claiming the exemption in the above bonds by any
person in a financial year is Rs. 5 million. However, according to section 54 EC(2) of the IT Act, if the
shareholder transfers or converts the notified bonds into money within a period of three years from the date
of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long
term capital gains in the year in which such bonds are transferred or otherwise converted into money.
4. Under the provisions of Section 90(2) of the IT Act, if the provisions of the Double Taxation Avoidance
Agreement (DTAA) between India and the country of residence of the non-resident are more beneficial, then
the provisions of the DTAA shall be applicable.
a. Tax Benefits available to the shareholders under the Wealth-Tax Act, 1957
Shares of company held by the shareholder will not be treated as an asset within the meaning of Section
2(ea) of Wealth Tax Act, 1957. Hence no Wealth Tax will be payable on the market value of Shares of the
Company held by the shareholder of the Company.
b. Benefits available to Mutual Funds
As per the provisions of Section 10(23D) of the IT Act, any income of Mutual Funds registered under the
SEBI Act, 1992 or regulations made thereunder, Mutual Funds set up by public sector banks or public
financial institutions and Mutual Funds authorised by the Reserve Company of India would be exempt from
income tax, subject to the conditions as the Central Government may by notification in the Official Gazette
specify in this behalf. However, Mutual Funds will be liable to pay tax on distributed income to unit holders
under Section 115R of the IT Act.
c. Tax Deduction at Source
No income-tax is deductible at source from income by way of capital gains under the present provisions of
the IT Act, in case of residents. However, as per the provisions of section 195 of the IT Act, any income by
way of capital gains, payable to non residents (long-term capital gains exempt under section 10(38) of the IT
Act), may be eligible to the provisions of with-holding tax, subject to the provisions of the relevant DTAA with
the country of Residence of the non-resident. Accordingly income tax may have to be deducted at source in
the case of a non- resident at the rate under the domestic tax laws or under the DTAA, whichever is
beneficial to the non-resident, unless a lower withholding tax certificate is obtained by the non-resident from
the Indian Tax authorities and the same is submitted to the Company.
36
OVERVIEW OF FM RADIO INDUSTRY
A. Industry Overview
India has been among the fastest growing economies in the world. From the fiscal 2005 to 2009, the
average GDP growth is 8.7%. According to CSO estimates, nominal GDP growth for fiscal 2009 is at
14.2%. As the Indian economy has grown, the upwardly mobile Indian is able to allocate a higher
percentage of monthly expenditure on services including ‘Entertainment & Media’ (E&M). The key drivers of
the revenue growth in the E&M industry in recent years include improving literacy levels, penetration of
internet and mobile telephony, and an expanding audience base. Thus, there is an established correlation
between the economic growth rates of a country and growth rates of the advertising industry.1 Industry size as % of GDP INDIA
ADVANCED MARKET
Source: PWC, FICCI Report, 2008
In India, radio broadcasting started on July 23, 1927 at Mumbai and a month later on August 26, 1927 in
Kolkata with two privately owned transmission stations. In 1930, the government acquired these stations and
started operating them under the Indian Broadcasting Service. This service was later renamed AIR in 1936
and has since been operated as an independent Government Department. Radio service from the year 1957
also came to be referred to as 'Akashvani.'
Vividh Bharati, AIR's main entertainment channel, was started in the 1960s. Commercial Broadcasting was
first introduced on Indian radio in 1967. In the mid-1970s, AIR started offering sponsored programs. Radio's
commercials started during the early 1980s on its primary channel Vividh Bharati and were extended to
other channels by the mid-1980s. All these initiatives increased the popularity of radio in the country and
also generated huge revenues for AIR (from sponsorship fees and commercial advertisements).
AIR also operated an External Services Division (ESD) that broadcasted programs in 24 languages (16
foreign and 8 Indian, languages). These programs generally consisted of commentaries on current affairs;
1This Year Next Year, Indian Media Forecast, 2009 and The Entertainment Law Book – FICCI, 2009
37
review of Indian press coverage; news bulletins; talk shows on socio-economic, cultural, historical and
political subjects; and classical, folk and popular music from all corners of the country. The major ESD
services included the General Overseas Service, Hindi Service and Urdu Service. Though FM radio had
long been popular in Western countries, AIR started offering FM channels only in 1977. The first FM station
was started in Chennai.
In 1999, during the first phase of the licensing, 32 circles were opened up, for private players to broadcast
and eventually 21 stations were set up across 12 cities. Big players who entered the foray were
Entertainment Network (India) Limited (Radio Mirchi), Music Broadcast Pvt. Ltd. (Radio City), Radio Mid-Day
West (India) Ltd (GO), Radio Today Broadcasting Private Ltd. (Red FM). The private participation was
shadowed by strict governmental policies, unviable high license fee and low advertisement flow. The major
economic deterrent in terms of an annually escalating license fee, limited duration of license for 10 years
with no provision for renewal, restricted FDI inflow at 20% for raising capital and high reserve entry fees
dampened the commitment of many bidders. The radio industry was plagued with many problems - although
listenership improved, it remained stagnant beyond a point, no industry standard for ‘reach’ measurement is
present and lastly music rights issues, forced channels to limit playlists.
The Tenth Five Year Plan (2002 - 2007) emphasized the need for substantially enhancing the FM coverage
from present 30% population coverage to 60% by the end of the plan. One of the thrust areas of the plan
was to encourage private participation in providing quality services and replacing the existing system of
bidding for licenses with a revenue sharing mechanism. In the light of the above facts and the report of the
Radio Broadcast policy Committee, Govt. of India, MIB opened up Phase II of FM Radio Broadcasting
recommended, inter alia, revision of license fee structure and migration and migration of license terms from
fixed license fee basis to a one time entry fee with an annual revenue sharing arrangement. 1
Salient features of the current Radio industry
� 338 frequencies in 91 cities for Private FM Players
� One time entry fee
� Annual Revenue sharing at 4% of gross revenue
� Submission of Bank Guarantee (50% of financial bid) as tender deposit
� License valid for 10 years.
� Only 1 channel per city, per applicant.
� No single player can operate more than 15% of the total operational stations
� FDI limit of not more than 20% of paid up equity capital
� No news and current affairs programs are permitted.
1The Entertainment Law Book – FICCI, 2009
38
Indian Ad Industry Snapshot:
Source: FICCI KPMG Media Entertainment Industry Report, 2009 • Industry size expected INR 396.8 Bn in 2013 up from INR 221.6 Bn in 2008 • Healthy CAGR of 19.7 %
MIB had opened up Phase II of FM Radio Broadcasting to private participation with the objective of
attracting private agencies to complement the efforts of All India Radio by operationalising radio stations that
provide programmes with local content and relevance, improve the quality of fidelity in reception and
generation, encouraging local talent and generating employment. RML has been awarded license to provide
FM Radio services in 45 locations across India. The license would be period of 10 years from the date of
operationalisation of the stations.
The Government is currently in the stages of formulating the policies for Phase – III licensing. To give effect
to the TRAI recommendations on utilization of spectrum resource, it has been recommended that there is
change in the bidding from City level to District level. 1
The next licensing tender is likely to attract bidding for 700 new FM channels in 237 cities, several not
presently served by FM2. Telecom Regulatory Authority of India (TRAI), the regulatory body for radio in
India, has proposed many reforms which could stimulate revenue growth. The growth in Radio will be
primarily driven by:
• Increased spends on radio from categories like Telecom, Media and FMCG who now have a more
cost effective option compared to TV and Print to reach more markets
• Radio being an effective and efficient medium for local advertisements, smaller markets will gain
from categories like retail and education
• Six-city coverage by RAM, plus AdEx tracking, increasing credibility of the medium2
Key milestones for Radio in India
• 1927 First ever News Bulletin went on air
• 1935 Radio broadcast begins with AIR
• 1977 First FM service begins in Chennai
1 Comments of TRAI on the views of the Government on recommendations on 3rd Phase of FM Radio Broadcasting, 28.11.2008, The Entertainment Law Book, 2009. 2 Group M, TYNY India Media Forecasts, April 2009 and FICCI Report, 2009
39
• 1993 AIR sells time slots to Private FM players
• 1999 Privatization of FM – PHASE I
• 2001 Licenses given to Private radio broadcasters
• 2005 PHASE II of the privatization policy announced
• 2007 Establishment of RAM
• 2008 Formation of Association of Radio Operators of India (AROI)
• 2009 Announcement of Phase III Indian Media & Entertainment Industry:
Source: FICCI KPMG Media Entertainment Industry Report, 2009 As regional business in India start to spend more aggressively on advertising to build brand consciousness,
they are likely to turn to media like print and radio which are highly cost effective for regional ad campaigns.
Advertising revenues is one of the main drivers behind the growth of the Indian Media & Entertainment
Industry. Over the past three years, the advertising industry has grown at a CAGR of 17.1%1, whereas the
growth of Radio industry is ahead of the industry growth at 19.7%. I. Revenue Intensification
Advertisement revenues are one of the growth drivers of the Indian Media & Entertainment industry. Radio
ad spends account for about 4% of the total advertising spends in India today having grown from just 2% in
2004.2 The growth has been propelled by the emergence of the private FM industry in India. Due to the
Phase II policy success story, the numbers of stations have shot up from 21 to over 205 by March 2005.3
Consequently the radio industry is estimated to have grown at an impressive CAGR of 19.7% over 2006 –
2008 and is expected to have reached a size of INR 9.2 billion by end of 2009.
1 KPMG Analysis, FICCI KPMG Media Entertainment Industry Report, 2009 1. KPMG Analysis, FICCI KPMG Media Entertainment Industry Report, 2009 3 KPMG Analysis, FICCI KPMG Media Entertainment Industry Report, 2009
40
Source: Group M KPMG Interviews, KPMG Analysis, FICCI KPMG Media Entertainment Industry Report, 2009 On the Whole, the Radio Industry is expected to grow at a CAGR of 14.2% over the 2009 – 2013 (compared
to 19.7% over 2006 -2008) and reach a size of INR 16.3 billion by 20131.
Source: FICCI KPMG Report, 2009 Ad revenues are expected to maintain healthy double digit growth rate over next 4 years ie, from Rs. 221.6 Billion in 2009 to Rs. 396.8 Billion in 2013.The Radio and outdoor will grow faster than the Indian Media & Entertainment industry.
II. The FM Radio Industry- An International Perspective As per 2008 estimates of PWC and Industry analysis, Radio in India is today a Rs. 830 crore business and its share of the Rs. 21,600 crore total ad spends is about 4%. Globally in growing markets share is 10% - 12% and in mature markets between 8% to 10%. Comparison of global region wise spend is given in the chart below. Radio As % Of Ad Spent:
Source: FICCI Report
1 FICCI KPMG Media Entertainment Industry Report, 2009
3.24.4
6.5
9.4
12.5
15.3
8.7
0
2
4
6
8
10
12
14
16
18
India China Thailand Singapore New Zealand Philppines World
41
The radio industry is expected to grow globally at 8.7% in 2009. The global share of radio of total Ad Spend
is 9%, and in matured markets the share is 12 % - 14%. Global Radio Market by region (US $Millions):
Source:PwC Global Entertainment & Media Outlook 2009 -2013 (Indian Entertainment and Media Outlook, 2009, Pricewaterhouse
Coopers) III. International Perspective Learning’s:
• The right product can create a vibrant & profitable Radio Industry, in any type of economy
• Sustained growth is possible, despite increasing intrusion of newer media – internet, mobile phones,
Ipods etc.
• The right mix and content, for the right Target Audience (TA), can deliver loyal and profitable listeners.
• Brands have been able to corner a higher share, despite the presence of multiple players in a
market.
B. Strengths
Inherent Strengths
• Private FM now reaches close to 400 Million Indians
• Powerful Interactive, personal and localized medium
• Low content cost for creation of advertisements
• Cost effectiveness combined with local reach
• One of the “Best Mass Localised Reach vehicle in India”
Evolution Post Privatisation
The significant changes in the industry post the Phase II are as follows:
42
i. Programming & Promotion
• More competition has bred better quality and more innovation in programming.
• Increased category promotion has led to consumption increase.
ii. Improved Investment options for advertisers
• From Vanilla spots to Content integrations, activations, events, digital solutions etc.
• Pan India FM networks now attracts multi-city campaigns for major brands in India.
• This has led to upsell opportunities for Radio medium like ours, for advertisers who require multi-city
presence, and so far, had to make do with far more expensive options in TV and/ or Print media for
their advertising requirements.
• With changing trends in economic scenario, increasingly businesses are shifting their focus beyond
Metros. With Tier II focus as a core strategy, and with the Indian Youth being a key driver target
audience for brands, FM Radio has emerged as the lead medium for many advertisers. BIG FM’s
strong presence in these markets coupled with the medium’s inherent strengths of “built in
interactivity” and low threshold advertising costs, make us the first choice for key advertisers across
categories.
With the array of media, BIG FM offers opportunities for brands to extend their campaigns and thrusts
beyond Metros into Tier II markets and Rural areas (through solutions offered on Radio & Activations),
leveraging multiple partners by the creation of properties besides providing a single point contact to
enable all of the above.
iii. Measurement
• Advent of RAM- a measurement instrument introduced by TAM/AC NIELSEN.
• Measurement has resulted in better yields growth in the overall Radio pie.
iv. Industry Integration
• Formation of AROI (Association of Radio Operators of India)
• Championing the Cause of the Industry with Government & Legislative bodies
C. Weakness
I. Regulatory Challenges
• FDI capped at 20% of the paid up equity capital
• No broadcast of Live sports, News & current affairs
• No Multiple frequency ownership, even in A+ markets
• Non tradable licenses for first 5 years
• 10 year license tenure puts pressure on cost recovery
• Co Channel Spacing 800 khz against 200 khz in US cities
• Limitations on networking of stations.
• High rentals payable for Government owned infrastructure - transmission towers
43
II. Operational Issues
Music Royalties
• Music Royalties range between 7% and 43% of total costs.
• No scientific measurement to determine Royalty rates by Music Labels.
• Impacts financials of smaller stations
III. Operating processes and controls
• Credit Control mechanism currently absent for Radio
• Compulsory Co Location of Transmission facilities at Prasar Bharati
IV. License Fees
• Payable even on Service Tax and Agency Commission.
V. Revenue Challenges and Opportunities
• Category still nascent and requires educating advertisers, agency buyers & planners
• Smaller buys in smaller cities.
• Retail Advertising growth can be driven only through adoption of more “feet on the street”, which
requires investments
• Greater measurement system coverage would enable better yields
• Prohibition of Multiple frequencies in one city, prevents players from offering platforms that cater to
niche but monetizable segments.
D. The Future – Phase III Radio Licensing
• The Government is currently in the stages of formulating the policies for Phase – III licensing. Growth in the future is likely to come through continued increase in the number of radio stations after Phase III licensing, further liberalization of regulations as well as better ability of the radio stations to sell ad space.
• TRAI has given some very important recommendations for Phase III licensing of the sector:
o Allowing radio stations to broadcast news & current affairs.
o Increase in FDI limits from current 20%.
o Allow networking within the radio stations owned by the same company.
o Tradability of licenses and allowing ownership of multiples frequencies.
The recommendations could help in improving the operational efficiencies of radio companies, getting in
more foreign investments in the sector as well as moving the industry from being centered on a single
genre (i.e., hit music) to offering more differentiated content. Emergence of niche radio stations could
help the industry in attracting new listeners and driving up overall radio listenership1.
1 Source: FICCI KPMG Media Entertainment Industry Report, 2009
44
BUSINESS
Pursuant to “the Scheme”, the Radio Business of RML stands vested in the Company. RML had signed 45
GOPA with MIB in the name of RML itself. Pursuant to the Scheme, post the permission from MIB, these will
have to be vested in the Company. For content and music, the Company has commissioned research by
agencies like IMRB, Probe Qualitative Research etc., in all the markets it is entering to understand the music
likeability of the target audience to ensure that the music playlists reflect the market preference and retain
the local flavor. On the technology front RML has imported equipments to be used in the Radio Stations
from United States of America, United Kingdom, Austria, Denmark, Singapore, Hong Kong, Australia and
Ireland.
Our primary business is radio broadcasting and we operate radio broadcasting stations in forty five cities in
India, including the four metropolitan cities of Delhi, Mumbai, Chennai and Kolkata under the name and
style/brand of BIG 92.7 FM. In all we have obtained 45 licenses. All our stations are fully operational. Our
stations are located in the following cities as per the category detailed below:
Category A+ Bhubaneswar
Chennai Bikaner
Delhi Chandigarh
Kolkata Guwahati
Mumbai Gwalior
Category A Jalandher
Bangalore Jammu
Hyderabad Jhansi
Kanpur Jodhpur
Surat Kota
Category B Mangalore
Agra Mysore
Allahabad Patiala
Amritsar Pondicherry
Asansol Ranchi
Bhopal Rourkela
Indore Sholapur
Jamshedpur Srinagar
Rajkot Thiruvananthapuram
Vadodara Tirupathi
Vishakhapatnam Udaipur
Category C Category D
Ajmer Hisar
Aligarh Panaji
Bareily Simla
45
Big FM’s Radio Business and Allied Activities
A. BIG 92.7FM
I. ADVANTAGE BIG 92.7 FM
BIG 92.7 FM offers advertisers a plethora of advantages over conventional media. i. Reach On the back of a network of 45 stations, our brand reaches out to approximately 25 millions listeners across India, each week. (Source: RAM, IRS 2009, Internal Dipsticks) The network itself has the potential to touch 200 Millions Indians across both urban and rural markets. ii. Cost Effectiveness BIG 92.7 FM’s reach far exceeds that of leading print publications in the measured Metros:
46
Source: RAM 2009.
Give this clear superiority in reach at very reasonable rates, the Cost Per Thousand (CPT) that advertisers
need to pay for similar reach, if far lower on BIG FM as compared to even leading print.
BIG 92.7 FM CPT Vs Leading Print in RAM Markets:
Source: RAM 2008
iii. Stickiness Time Spent Listening (TSL) to a radio station is a measure of the stickiness of the content of that radio station. From an advertiser’s perspective higher TSL means more engaged customers and therefore higher probability of cut through of their advertising.
Radio’s TSL as compared to print is another area of clear dominance:
47
Source: RAM Establishment Study, 2007 and IRS 2008 R2
iv. Versatility
As a Radio brand BIG 92.7 FM, offers advertisers a truly versatile medium, with benefits that other
media cannot compete on.
a. Contextualization of messages:
Advertising for products/brands placed in day parts when consumption of those categories is high
resulting in higher impact of communication. Eg: Tea Brands advertising in the Morning and Early
Evenings
b. Frequency Of Messaging:
Radio is a 24X7 Live medium on which advertising can be played out of high frequency through the
day creating great impact than print ads.
c. Customization of communication strategy by region/cluster:
Given the size of the BIG FM network advertisers have the option of choosing sets of stations for
specific communication messages based on their regional strategy. While Television cannot be
isolated for the majority of regions in India, the BIG FM network allows advertisers to run specific
campaigns in regions of their choice, without any worries of spillover into other regions.
d. Localization of creatives:
Language plays a critical roll in the impact of creatives. India has numerous dialects that come into
play within states itself. BIG FM offers advertisers the distinct advantage of being able to run the
same communication in numerous dialects thereby positively impacting effectiveness of campaigns. II. BRAND BIG 92.7 FM 1. Positioning As the largest FM network in the country, taking FM to new markets across the country, the brand is positioned to create greater affinity and loyalty for the category.
48
Suno Sunao, Life Banao! signifies our commitment to always broadcast content that not only entertains but
makes a positive difference in consumers lives. 2. Metro Vs Non Metro Strategy:
Extensive research carried out across markets has indicated that consumers affinity for the medium lies in
two areas: FUN (entertainment) and SUBSTANCE (Locally relevant information). All our stations
programming is designed to deliver a consistent experience based on these 2 pivots.
The above strategy ensures that BIG 92.7 FM stations are always in sync with local consumer needs
delivering entertainment that resonates with local tastes, while being distinct from other FM brands
While the above is essential in the new Non Metros markets, in the more evolved Metro stations we have
created further differentiation in our product by localising our positioning in metros. While competitive brands
choose to have a single positioning across stations, we recognised that Metros demand greater localization
in order to be successful.
This super localization strategy, gives each of our 6 Metro stations a distinct sound and personality in sync
with local tastes leading to greater affinity. We believe that avoiding the ‘one shoe fits all’ strategy that
competition follows, is a more long strategic advantage for us.
Mumbai Delhi Bangalore Hyderabad Chennai Kolkatta BIG FM
BIG CHILLAX
HITS
BIG CHILLAX
HITS
BEJAN HITS MASTU MUSIC
MUSIC THAT TOUCHES
MONER GAAN,
PRANER SUR
RED FM Super Hits!
RADIO CITY
Whatte Fun! NA
Mirchi sunnewale humesha khush ! RADIO MIRCHI
III. BRAND PERFORMANCE
BIG 92.7 FM has made great strides despite being a late entrant in the market, having launched only in PHASE II.
Across the RAM markets BIG 92.7 FM’s performance is follows:
Station Mumbai Bangalore Delhi Kolkata
Market Share 12.52% 18.95% 6.89% 16.34%
Source: RAM, Last 26 weeks
IV. RECOGNITION
In a short period of time BIG 92.7 FM has not only won numerous awards nationally but has also performed
exceedingly well on the International Arena.
49
Both in 2008 and 2009, BIG 92.7 FM won awards at the prestigious New York Festival in the programming &
Creative categories.
In 2009, BIG 92.7 FM was responsible for creation and implementation of an on ground property for Nokia
8300 Xpress, which won a Cannes Lion for excellence in Activation.
In 2008, BIG 92.7 FM won the Initiative Media True Award for the fastest, growing Media brand in 2007.
In India, the brand has won awards across many platforms – RAPA, ABBYS, Promax Radio Excellence
Awards, HR Forums and Technical Awards etc.
V. CLIENT SOLUTIONS APPROACH
At BIG 92.7 FM, building Value Creating Solutions for clients, has always been our approach when dealing
with client communication or marketing issues.
We believe that clients are increasingly looking for more holistic solutions, which we need to be geared to
deliver to.
To facilitate better servicing of clients, we are one of the few Radio Networks to have a specialised Client
Solutions team, which works closely with clients to arrive at more effective and efficient solutions for their
specific brand problems.
We are committed to adding value to clients businesses by creating solutions that deliver:
• Build brand messages
• Build brand affinity/loyalty
• Create the urge to try
• Provide a holistic brand experience to consumers
• Leverage our Multi platform advantage
• Use the scale and reach of the network
B. ALLIED ACTIVITIES
I. BIG STREET - OOH MEDIA
• OOH today contributes to 7.26% (INR 16.1 Billion) of the total advertising spend; Total Advertising
Spend: INR 221.6 Billion (Period: 2008(E), Source: FICCI-KPMG Media & Entertainment Industry
Report FICCI Frames 2009)
• Is currently controlled more by local regional players and there is a sign of more corporate
companies entering into the fray – Times OOH, Laqshya, Jindal, Jagran Group, JC Decaux (JCD)
(International) etc.
• Changes in infrastructure developments, urbanization notwithstanding a change in mass media
habits (Multiplex, Malls, Game Zones) is creating more growth opportunities for this medium
50
• OOH media is an unavoidable media by consumers; hence messages in relevant locations tend to
deliver high rates of recall by potential consumers and build a certain familiarity for the
brand/Product with the consumer, which is critical for trials and enquiries.
• Income is generated from the sale of Outdoor space (Formats) facing moving traffic – static Formats
(Hoardings, billboards, Bus Shelters, Public Utility, Bus Panels, Gantries etc), Dynamic Formats
(LCD/LED Screens – Video Advertising)
• In India, OOH business is largely contributed by Billboard formats followed by Street Furniture and
Transit; it has been observed that as the economy grows and modernizes, Street furniture and
Transit contribute more than Billboards due to evolution in regulatory laws favoring aesthetics.
• OOH media is sold on the blocks of 7 days (Weekly, Fortnightly, monthly etc)
• OOH media is created through – Government body tenders, Permission from Municipal
Corporations for hosting out to Media on private spaces facing road/traffic, through Public Private
Partnerships and Build Operate Transfer models.
o There is different expertise in the business of OOH that exists: Identifying properties, getting
requisite permissions in time, Design/Erection and finally trading and marketing, Sales and
operation of those properties.
o Hence it employs different types of skill levels – Business Management, Engineers,
Designers, Logistics and Operations, Sales Professionals and lastly manual labor for
maintenance.
• OOH remains an unmeasured medium hence pricing is key, but with entry of Corporates like BIG
Street, Measurement is being commissioned through recognized research firms like AC Nielson and
IMRB to demonstrate Value besides building transparency/Accountability.
• BIG Street was started about two years back, given synergy with our FM business and associate
services like BIG Events, BIG Reach etc.
• The vision is to “ENHANCE PEOPLE’S LIFE OUT OF HOME”, ensuring the relevance of OOH at all
times and thereby creating a customer pull (Advertisers)
• BIG Street’s key properties acquired /traded include: Delhi Metro Line II, Airoli Bridge Pole Kiosks
and Gantries, Mobile Vans in Hyderabad and Cochin, Bus Panels in Intercity and Intra City buses in
Chandigarh etc.
• Delhi Metro Line II remains our key contributing inventory (On the average 63% of the total revenue
– Last three months average, 42% of the total revenue – Last Fiscal)
• Focus will continue to build Smart OOH properties using tenders from different government entities
(Central / State / PSU etc) besides looking at investing behind Public Private Partnership and Build
Transfer Operate models to expand into Tier 1 and 2 cities to start with: PPP / BOT models while
having higher initial investment give the opportunity to monetize over longer term (10-15 years).
• Business growth arises out of better yield and occupancy of current properties besides getting high
demand properties at reasonable costs.
• Key costs that are directly related to our business: License Fee for properties leased and tendered
Electricity and Maintenance costs besides Capital Expenditures on erection and fabrication. II. BIG DIGITAL Big Digital is BIG 92.7 FM’s initiative in the digital space formed with the following objectives:
• To create & strengthen value-preposition for internal & external customers by providing a surround of
Digital media integration. Digital media integration covers both mobile as well as online service.
51
• To be the first port of recall for quality content deployed in a device-agnostic environment
Services offered by Big Digital 1 a. Integration across All GSM & CDMA Operators In India:
• SMS, Content, Wap, CRBT, Voice Activities across all Operators
• Integration support to customized/standard SMS Applications
• Content/Contests with Promotion & Sponsorship Options
• Suffix Support: Client can use the Suffix Short code of 55454 like 5545456, 5545459 etc.
b. Offerings in the Mobile Space
• Pull SMS Services:
� Keyword Specific Eg. sms BIG to 55454
� Application Based SMS Services: Contests, Polls, Comments etc…
• Push SMS Services:
� Lead Generation Activity
� Sender ID customisation
� URL Push (integrate with Existing CRM/other software)
� Reach to the target audience. Extensive Database Available for Bulk Push (City/Age/Gender
Specific) • CRBT – Festive, Humor, Greetings, Jokes & Mimicry in all languages • IVR Services on 5055454 – Contests, Advertisement & Sponsorship options, leave a Message, Requests etc.
• Content (Audio, Video, Text): Ringtones, Wallpapers, Animations etc. - These are GPRS dependant
for downloading
2. Offerings In The Online Space
• Online Banners on our website : www.big927fm.com
• Microsites customised to meet client communication needs. These micro sites are developed and
deployed by the BIG DIGITAL team, on www.big927fm.com.
• SMS Pull/Push based services for clients across sectors
• IVR Activities
52
Client Base – Apart from various companies and division in Reliance Anil Dhirubhai Ambani Group, the other major corporate and retail clients are as follows:
MCX South African Airways
Mahendra British Airways
HLL British Council
Fame Cinemas Cadbury
United Spirits TVS Tyres
Tata Lufthansa
Panasonic Godrej – Good Night
ICICI McDonalds
III. BIG REACH – ACTIVATIONS
Big Reach conducts activities on ground for a direct interface with the consumer and Air Integration on the
basis of a client brief. Activation briefs are received from brands, which often see diminishing returns from
only on-air campaigns and wish to renew their consumer interface.
Our revenues are accrued from the management fees as well as the expertise and economies of scale
derived from multiple activities. The Primary source of revenue is from hiring venues and other required
infrastructure, besides the management fees. The organising, control and reporting are key aspects of the
revenue stream too.
Leveraging our network of over 54 Offices and multiple execution platforms besides Radio Coverage helps
us differentiate in the market. Big Reach helps brands reach out:
o Across multiple cities
o Across Target Audience (TA’s)
o Across Touch Points
Few Key Activations done are as follows:
o Wagon R Smart Challenge (7 cities)
o Dabur Chawanprash School Champs (12 cities)
o Nokia 5800 – Xpress Music (Winner of Prestigious Cannes Award)
o NIIT – Hunt for the Network Kings (5 Metro)
o Good Year Long Drive 20 City Car Rally
o Cadilla Sugar Free – Sampling at parks
o Thums Up – Thunderwheels License Hai Kya (13 Cities activity)
o Mountain Dew – Darr ke aage jeet hai, Goa Beach
o Nestle Milky Bar School Activation (7 Cities)
IV. BIG LIVE – ACTIVATION PROPERTIES
On the basis consumer needs Big Live conceptualises activation properties where brands targeting the
same consumer can be part of. These properties help address key consumer needs thus aiding a high
53
footfall / participation into the activations. Leveraging multiple media, (often within the reliance network) we
enable a higher participation and amplification to the event. The combination of both above, enables high
return for the sponsors as compared to a brand activation or on air campaign only.
The execution on ground is the conduct of activities for a direct interface with the consumer and Air
Integration on the basis of property construct. The Primary source of revenue is from hiring venues and
other required infrastructure. The other sources of revenues are from management fees, expertise and
economies of scale as also the revenues from multiple sponsors. The organising, controlling and reporting
are key aspects of the revenue stream too.
Leveraging our network of Reliance Entertainment Media Assets, a great concept for the activation property,
54+ Offices and multiple execution platforms helps us differentiate in the market.
Properties done till date
o Close Up SING WITH SONU - India’s first radio singing reality show.
o LIVE Concerts 5 cities - 5 days with the winners
o IDEA ITA Awards – Television’s BIGGEST Celebration successfully executed for last two years
o Kodak – Paper Ganesh (Eco Friendly Celebrations)
V. BIG EVENTS
BIG Events cover the entire live entertainment universe, ranging from corporate events to lifestyle shows
covering a vast gamut of events including Conferences, Product Launches, Live concerts, Television shows
(non fiction), Fashion etc. The clientele is from media companies, corporate houses, Banking, Financial
Services, Insurance Sector and major consumer durable companies, Consulates and trade commissions
etc.
Big Events handle events for various clients. Post the brief from the client we conceptualize, design and
execute events for the target audiences. The event is taken on a turnkey basis with in house teams for
servicing, creative and operations.
The revenues are largely, from the management fee and in some cases from design fee. Also, the margins
are drawn with strong vendor management and negotiation skills.
54
HISTORY
The Company was originally incorporated as Reliance Unicom Limited on December 27, 2005 under the Companies Act, 1956 with CIN U64200MH2005PLC158355.
The objects for which the Company has been established are set out in its Memorandum of Association. The main objects are set out hereunder:
1 To own, establish, manage and operate Radio Broadcast Station(s), subject to necessary governmental
approvals, allotment of frequency, license(s) on FM / MW / SW / AM, if any, anywhere in India or out of
India, including but not limited to digital broadcast, web broadcast, satellite broadcast and broadcast by
any medium now known or that may be developed in the future and to produce talk shows, promos,
jingles, capsules, serials, program software, advertisements etc., and to make, buy, sell and/or trade in
content, programmes, software either produced by the Company or outsourced; to hire equipments and
to set up transponders to broadcast programmes subject to necessary approvals and to own, establish,
run and operate a recording studio, sound mixing studio, dubbing studio, editing unit and theatre.
2* To broadcast television programmes by hiring, leasing, buying transponders on satellites and also to
carry on, subject to the necessary government and other approvals, the activities or businesses of
broadcasters of sound and/or audio-visual recordings and cable and wireless communications.
* Substituted vide Special Resolution passed at the Extraordinary General Meeting held on
September 21, 2006.
Changes in Memorandum of Association since the Company’s inception
Date Particulars
October 6, 2006 Change of object clause by replacement of Main Objects of the Company to undertake Radio Business
October 6, 2006 Change of Name Form “Reliance Unicom Limited” to “Big Radio Limited”.
April 25, 2007 Equity share of the face value of Rs. 10/- each fully paid up was divided into equity share of Rs. 5/- each fully paid up. Increase in Authorised Share Capital from Rs. 5,00,000 (Rupees Five lacs) divided into 50,000 (Fifty thousand) Equity Shares of Rs. 10/- (Rupees Ten) each to Rs.1,05,50,000/- (Rupees One Crore Five Lakh Fifty Thousand) comprising of 21,10,000 (Twenty One Lacs Ten Thousand) Equity Shares of Rs. 5/- each
September 18, 2007 Change of Name Form “Big Radio Limited” to “Reliance Unicom Limited”.
July 17, 2009 Increase in Authorised Share Capital from Rs.1,05,50,000/- (Rupees One Crore Five Lakh Fifty Thousand) divided into 21,10,000 (Twenty One Lacs Ten Thousand) Equity Shares of Rs.5/- (Rupees Five) each to Rs.1,00,00,00,000/- (Rupees One Hundred Crore ) comprising of 10,00,00,000 (Ten crore) Equity Shares of Rs.5/- (Rupees Five) each and 10,00,00,000 (Ten Crore) Preference Shares of Rs. 5/- (Rupees Five) each.
July 22, 2009 Change of Name from “Reliance Unicom Limited” to “Reliance Media World Limited”.
Subsidiaries We do not have any Subsidiaries.
55
MANAGEMENT Under our Articles of Association we cannot have fewer than three directors or more than such number of
directors as may be stipulated by the Companies Act for the time being in force. We currently have five
directors on our Board.
The following table sets forth details regarding our Board as of the date of filing the Information
Memorandum with BSE/NSE:
Board of Directors as on the date of the Information Memorandum:
I. Shri Gautam Doshi
Sr. No. Requirements Details
1 Fathers’ name Late Shri Bhailal K Doshi
2 Address 402, Hamilton Court, Tagore Road, Santacruz (W),
Sales & Other Income 8,838.6 20,797.9 30,172.90 PAT 6,461.8 10,254.5 9,680.2 Equity Capital 2,461.6 2,461.6 2,461.6 Reserves (excluding revaluation reserves)* 49,150.7 57,790.7 64,512.70 EPS (Rs.) 28.4 41.8 39.4 Book Value (Rs.) 210.1 245.3 272.60 * Reserves are net of miscellaneous expenditure to the extent not written off.
Total Income 1,070.00 1,064.70 3,980.00 2,175.50 5,370.00 2,228.60
Profit After Tax 460.00 463.70 1,190.00 1,109.20 1,380.00 1,015.10
Earnings per
Share (Rs.)
7.80 7.40 9.40 9.30 10.90 8.20
Dividend (%) 22.00 24.00 25.00 27.00 25.00 28.00
1994-1995: There was no material variation between the projected and actual figures in this period.
1995-1996: The variation between the projected and actual figures is attributable to tight money conditions
impacting resource mobilization and depressed capital markets.
1996-1997: The variation between the projected and actual figures is attributable to the then depressed
conditions in the capital markets which affected resource mobilization and the overall volume of business;
higher provisioning and write offs; and incidence of corporate tax consequent to legislative amendments. Mechanism for Redressal of Investor Grievance
All share related matters namely transfer, transmission, transposition, nomination, dividend, change of
name, address and signature, registration of mandate and power of attorney, replacement, split,
consolidation, demat and remat of shares, issue of duplicate certificates etc. are handled by RCap’s
Registrars and Transfer Agents (“R&TA”) Karvy Computershare Private Limited (“Karvy”).
Investors correspond directly with Karvy, on all share related matters. RCap has an established mechanism
for investor service and grievance handling, with Karvy and the Compliance Officer appointed by RCap for
this purpose being the important functional nodes. RCap has appointed two firms of Chartered Accountants
as Internal Security Auditors to concurrently audit the transactions and to communicate with investors,
regulatory and other concerned authorities.
RCap has prescribed service standards for various investor related activities that are handled by Karvy. Any
deviation there from is examined by the Internal Security Auditors who also advise the corrective action
thereon and inform RCap on these matters on a monthly basis.
The Board of Directors of RCap has constituted a Shareholder/Investor Grievance Committee which, inter
alia, approves the issue of duplicate certificates and oversees and reviews all matters connected with
securities transfers and other processes.
67
The Committee also looks into redressal of shareholders’ complaints related to transfer of shares, non-
receipt of declared dividend, etc. The Committee oversees performance of the R&TA and recommends
measures for overall improvement in the quality of investor services. The summary statement of investor
related transactions and details are also considered by the Board of Directors of RCap.
As of October 30, 2009, there are 208 investor complaints pending against RCap.
There are certain investor related disputes pending before various courts.
For more details, see “Outstanding Litigation and Material Development” on Page140 of this Information
Memorandum.
Other Information
RCap is neither a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act,
1985 nor is it under the process of winding up.
Reliance Land Private Limited Reliance Land Private Limited (RLPL ) was incorporated as Reliance Homes Limited, a public limited
company on December 23, 1993 under the Companies Act, 1956. RLPL obtained the certificate of
commencement of business on January 3, 1994. Subsequently, the name of the Company was changed to
‘Reliance Land Limited’ pursuant to fresh certificate of incorporation dated May 25, 1995. The company was
then converted into a private limited company and was renamed as ‘Reliance Land Private Limited’ pursuant
to a fresh certificate of incorporation, consequent to conversion, dated September 7, 2001. The Promoters of
RLPL are listed below under the head ‘Shareholding Pattern of RLPL’ below.
The registered office of the company is situated at Avdesh House, 2nd Floor, Pritam Nagar, 1st Slope,
Ellisbridge, Ahmedabad – 380 006. Main business of RLPL Reliance Land Private Limited is engaged in the real estate sector apart from holding strategic investments. Board of Directors of RLPL
The board of directors of RLPL, as of October 30, 2009 is set out below:
Name Age Designation Date of Appointment
Mr. Surendra Pipara 45 Director June 19, 2005
Mr. Nilesh Doshi 56 Director June 30, 2006
Mr. Vinod K. Tripathi 52 Whole-time Director June 12, 2008
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Shareholding Pattern of RLPL
The shareholding pattern of RLPL as on October 30, 2009 is set out below:
S. No. Category No. of shares % of Shareholding
1. Reliance Capital Limited 5,000,000 50
2. Body Corporate 5,000,000 50
Total 10,000,000 100
Financial Performance of RLPL
(Rs. in million, except share data)
Particulars Fiscal 2006 Fiscal 2007 Fiscal 2008
Sales & Other Income 374.73 1,421.44 2,326.79
PAT 1.92 408.46 1,056.19
Equity Capital 1,000.00 1,000.00 1,000.00
Reserves (567.58) (159.13) 897.07
EPS (Rs.) 0.02 4.08 9.76
Book Value (Rs.) 4.32 8.41 18.97
Promoter of the Promoters Mr. Anil Dhirubhai Ambani, age 50 years, is the promoter of our Promoters. He holds a Bachelor’s Degree in
Science from the University of Bombay and a Master’s Degree in Business Administration from The Wharton
School, University of Pennsylvania, USA. Mr. Ambani is also the Chairman of Reliance Communications
Limited, Reliance Capital Limited, Reliance Infrastructure Limited, Reliance Natural Resources Limited and
Reliance Power Limited. He is a member of the Wharton Board of Overseers, The Wharton School, USA,
the Central Advisory Committee, Central Electricity Regulatory Commission, and the Board of Governors of
the Indian Institute of Management (IIM), Ahmedabad and the Indian Institute of Technology, Kanpur (IIT),
and Executive Board, Indian School of Business (ISB), Hyderabad. Mr. Ambani is also the Chairman of the
Board of Governors of Dhirubhai Ambani Institute of Information and Communication Technology,
Gandhinagar, Gujarat.
OUR GROUP COMPANIES
The following are details of top five group companies, on the basis of turnover. Except as specifically mentioned the EPS and diluted EPS data for all the companies mentioned below are identical.
1. Reliance MediaWorks Limited (formerly Adlabs Films Limited) (RML)
Reliance MediaWorks Limited (formerly Adlabs Films Limited) (RML) is a public limited company
incorporated in India on November 30, 1987. The registered office of the RML is situated at Film City
Complex, Goregaon East, Mumbai – 400 065.
69
Principal business of RML
It is involved in the business of entertainment and media sector including production, distribution, exhibition
and post production services for the motion picture films.
Board of Directors:
Name Age Designation
Date of appointment
Mr. Gautam Doshi 57 Non Executive Director October 7, 2005
Mr. Amit Khanna 58 Non Executive Director April 26, 2007
Mr. Sujal Shah 41 Non Executive Independent Director April 26, 2007
Mr. Darius Kakalia 60 Non Executive Independent Director September 13, 2007
Mr. Anil Sekhri 53 Non Executive Independent Director September 13, 2007
Mr. Prasoon Joshi 42 Non Executive Independent Director September 3, 2009
Shareholding Pattern of RML as on October 30, 2009:
Category No. of equity shares % shareholding
Promoter Shareholding 2,83,55,000 61.47
Non-Promoter Shareholding 1,77,71,170 38.53
Total 4,61,26,170 100
Financial Performance of RML (Consolidated) for the last three years:
(Rs. in million)
Particulars 2006-07 2007-08 2008-09
Sales & Other Income 4312.54 3644.48 7333.32
PAT 904.88 474.73 (513.78)
Equity Capital 199.0 230.63 230.63
Reserves 3153.53 6665.52 5334.03
EPS(Rs.) 22.74 11.28 (11.33)
Book Value(Rs.) 84.23 149.50 113.63
Contingent liability as of March 31, 2009 is Rs. 889.39 millions. Details of listing and particulars of high, low and average prices of the shares of RML during preceding three years The equity shares of RML are listed on BSE and NSE:
NSE 2007 2008 2009 Month High Low Average High Low Average High Low Average
Jan 457.84 439.90 448.87 1939.90 650.00 1294.95 230.00 152.60 191.30
Feb 482.92 453.98 468.45 1144.70 727.00 935.85 180.80 152.15 166.47
Mar 425.46 428.31 426.88 829.10 485.50 657.30 184.00 136.10 160.05
Oct 863.30 487.25 675.28 354.00 130.15 242.08 369.50 250.40 309.95
Nov 1030.00 802.00 916.00 211.00 140.00 175.50 - - -
Dec 1495.00 965.25 1230.13 197.30 141.00 169.15 - - - Source: NSE and BSE websites The share price of RML on BSE was Rs. 253.15 as on October 30, 2009. The market capitalization on the BSE was Rs.1,16,768 lakhs as on October 30, 2009. The share price of RML on NSE was Rs. 253.35 as on October 30, 2009. The market capitalization on the
NSE was Rs.1,16,860 lakhs as on October 30, 2009. Promise vs Performance In December 2000, RML made an IPO of 44,00,000 equity shares for cash, at a price of Rs. 120 per equity
share (including a premium of Rs. 115) aggregating Rs. 5,280 lakhs through a prospectus dated November
21, 2000. As stated in that prospectus, the proceeds of the issue were used to establish the IMAX Dome
theatre and a four screen multiplex capable of accommodating 1,225 persons, in Mumbai and to upgrade its
film processing facilities. The IMAX Dome theatre scheduled to be established in December 2000 was
established in March 2001 and the four screen multiplex project scheduled to be operational in September
2001 was opened to the public in phases, in October and November 2001.
Mechanism for Redressal of Investor Grievance
RML has a Shareholders / Investor Grievance Committee which meets as and when required, to deal and
monitor redressal of complaints from shareholders. Generally, the investor grievances are dealt within seven
working days of the receipt of the complaint. RML has adequate arrangements for redressal of Investor
complaints. Well-arranged correspondence system developed for letters of routine nature. Letters are filed
category wise after having attended to. Redressal norm for response time for all correspondence including
71
shareholders complaints is 15 working days. In case of non-routine complaints and complaints where
external agencies are involved, RML seeks Redressal of these complaints as expeditiously as possible.
As of October 30, 2009, there were Nil investor complaints pending against RML.
For more details, see “Outstanding Litigation and Material Development” on page 140 of this Information
Memorandum.
Other Information
RML is neither a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act,
1985 nor is it under the process of winding up.
2. Reliance Capital Asset Management Limited (RCAM) Reliance Capital Asset Management Limited (RCAM) is a public limited company incorporated in India on
February 24, 1995. RCAM has its registered office at Reliance House, Near Mardia Plaza, Off C.G. Road,
Ahmedabad, Gujrat.
Primary Business of RCAM
It is primarily engaged in the business of providing investment management and advisory services to mutual
funds. Board of directors
Name Age Designation Date of appointment
Mr. Kanu Doshi 72 Director August 12, 2005
Mr. Manu Chadha 55 Director January 18, 2006
Mr. S. C. Tripathi 63 Director February 1, 2007
Mr. Soumen Ghosh 50 Additional Director October 28, 2009 Shareholding Pattern RCAM is subsidiary of RCap with 93.37% shareholding. Financial Performance (Rs in Lakhs except per share data) (on standalone basis)
Particulars Fiscal 2007 Fiscal 2008 Fiscal 2009 Sales and Other Income 20,264.2 37,764.5 44,435.37 PAT 5,065.4 9,618.0 13,294.55 Equity Capital 750.07 1051.0 1051.0 Reserves (excluding revaluation reserves)
10,356.9 69,887.5 83,182.07
EPS (Rs.)/Diluted EPS 67.81 107.55 126.49 Book Value (Rs.) 148.08 662.54 786.68
For more details, see “Outstanding Litigation and Material Development” on page 140 of this Information
Memorandum.
72
3. Reliance General Insurance Company Limited (RGICL)
Reliance General Insurance Company Limited (RGICL) is a public limited company incorporated in India on
August 17, 2000. RGICL has its registered office at Reliance Centre, 19, Walchand Hirachand Marg, Ballard
Estate, Mumbai – 400 001. Principal business of RGICL It is engaged in the business of providing general insurance services. Board of Directors
Name Age Designation Date of appointment
Mr S. P.Talwar 70 Director 29.8.2005
Mr D. Sengupta 67 Director 29.8.2005
Mr Rajendra P Chitale 48 Director 29.12.2005
Mr Soumen Ghosh 50 Director 21.4.2008
Mr K.A.Somasekharan 60 Director & CEO 24.10.2009
Shareholding Pattern RGICL is subsidiary of RCap with 96.20% shareholding. Financial Performance (Rs in Lakhs except per share data)
Particulars Fiscal 2007 Fiscal 2008 Fiscal 2009 Sales and Other Income 91,441.3 2,10,394.4 2,07,532.1 PAT 162.9 (16,555.1) (5,232.0) Equity Capital 10,307.2 10,715.4 11,308.0 Reserves (excluding revaluation reserves)
15,633.2 38,670.0
51,851.6 EPS (Rs.) 0.16 (15.92) (4.81) Book Value (Rs.) 25.17 46.09 55.85
Contingent liability as of March 31, 2009 is Rs. 4,620.88 lakhs.
For more details, see “Outstanding Litigation and Material Development” on page 140 of this Information
Memorandum.
4. Reliance Securities Limited (RSL) Reliance Securities Limited (RSL) is a public limited company incorporated in India on June 17, 2005. RSL
has its registered office at 4th Floor, Parijat House, Manjrekar Lane, Off Dr. E. Moses Road, Worli Naka,
Mumbai – 400 018. Principal business of RSL It is primarily engaged in the business of stock brokering and acting as a depository participant of CDSL.
RSL also provides portfolio management and merchant banking services.
73
Board of Directors
Name Age Designation Date of appointment
Mr.Vikrant Gugnani 39 Additional Director October 14, 2009
Mr. Ramesh Shenoy 60 Director June 17, 2005
Mr. Soumen Ghosh 50 Director June 27, 2008 Shareholding Pattern RSL is a wholly owned subsidiary of RCap. Financial Performance (Rs in lakhs except per share data)
Particulars Fiscal 2007 Fiscal 2008 Fiscal 2009 Sales and Other Income 990.8 6,853.7 28,048.3 PAT (1,013.7) 637.9 2,046.2 Equity Capital 2,500.0 2500.0 2,500.0 Reserves (excluding revaluation reserves)
- - 1,846.6
EPS (Rs.) (6.13) (2.22) 1.17 Book Value (Rs.) 5.00 9.20 17.38 For more details, see “Outstanding Litigation and Material Development” on page 140 of this Information
Memorandum.
5. Reliance Life Insurance Company Limited (RLICL) Reliance Life Insurance Company Limited (RLICL) is a public limited company incorporated in India on May
14, 2001. RLICL has its registered office at H Block, Ist Floor, Dhirubhai Ambani Knowledge Centre, Kopar
Khairne, Navi Mumbai, Maharashtra – 400 710. Principal business It is engaged in the business of life insurance and annuity Board of Directors
Name Age Designation Date of appointment
Mr. Gautam Doshi 57 Director October 4, 2005
Mr. S.P. Talwar 70 Director October 4, 2005
Mr. Soumen Ghosh 50 Director April 23, 2008 Shareholding Pattern The major shareholders of RLICL are as follows:
Name of shareholders % of shareholding Viscount Management Services (Alpha) Limited 47.89 Viscount Management Services Limited 35.92 Reliance Capital Limited 15.96
74
Financial Performance (Rs in Lakhs except per share data)
Particulars Fiscal 2007 Fiscal 2008 Fiscal 2009 Sales and Other Income 1,36,387.8 3,94,773.4 5,05,047.0 PAT (31,510.8) (76,806.8) (1,08,491.0) Equity Capital 66400.0 114770.0 1,16,233.5 Reserves (excluding revaluation reserves) - 36630.0 1,58,101.4
EPS (Rs.) (7.29) (8.10) (9.40) Book Value (Rs.)* 1.91 1.80 2.98 For more details, see “Outstanding Litigation and Material Development” on page 140 of this Information
Memorandum. The other listed Companies belonging to Reliance Anil Dhirubhai Ambani Group are as follows:
• Reliance Capital Limited
• Reliance Communications Limited
• Reliance Infrastructure Limited
• Reliance Power Limited
• Reliance Natural Resources Limited
The details of the above listed companies belonging to Reliance Anil Dhirubhai Ambani Group are given as
under, as additional information:
Reliance Capital Limited
For details, see “Our Promoters and Group Companies” on page 64 above.
Reliance Communications Limited Reliance Communications Limited (“RCOM”) was incorporated on July 15, 2004, as Reliance Infrastructure
Developers Private Limited. The status of this company was changed to public limited company on July 25,
2005. The name was changed to Reliance Communication Ventures Limited on August 3, 2005 and to
Reliance Communications Limited on June 7, 2006. RCOM has its registered office at H Block, 1st Floor,
Dhirubhai Ambani Knowledge City, Navi Mumbai 400 710, India. The promoters of RCOM are listed below
under the head “Shareholding Pattern of RCOM”. Principal Business of RCOM
RCOM is an integrated communications service provider in the private sector having pan-India operations
across the spectrum of wireless, wireline, and long distance, voice, data, and internet communication
services. RCOM also has an international presence through the provision of long distance voice, data and
internet services and submarine cable network infrastructure.
75
Board of Directors of RCOM
Name Age Designation Date of Appointment
Mr. Anil Dhirubhai Ambani 50 Chairman February 7, 2006
Mr. S.P. Talwar 70 Independent Director February 7, 2006
Mr. J. Ramachandran 52 Independent Director February 7, 2006
Mr. Deepak Shourie 60 Independent Director April 30, 2006
Mr. A.K.Purwar 63 Independent Director July 17, 2007 Shareholding Pattern of RCOM as of October 30, 2009
Book Value (Rs.) 100.4 120.35 250.44 * Financial Year from January 1, 2006 to March 31, 2007. # Financial Year from April 2007 to March 31, 2008. @ Financial Year from April 2008 to March 31, 2009 Financial Performance of RCOM (Consolidated)* (Rs. in Million, except share data)
Particulars ** FY 2007# FY 2008 FY 2009@
Sales and Other Income 174,402.5 190,677.6 229,484.6
* RCOM has prepared consolidated results for the first time for Financial Year 2007. ** The consolidated figures reflect the impact of the financial performance of the subsidiaries, which may
have made losses. # Financial Year from January 1, 2006 to March 31, 2007. ## Reserves are net of miscellaneous expenditure to the extent not written off. @ Financial Year from April 1, 2008 to March 31, 2009 Details of listing and Highest & Lowest market price during the preceding six months The equity shares of RCOM are listed on BSE and NSE and its GDRs are listed at the Luxembourg Stock Exchange.
77
Monthly High and Low price of the equity shares of RCOM at BSE and NSE:
BSE NSE Month
High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)
May 2009 322.30 218.95 324.10 219.45
June 2009 349.30 218.95 350.25 289.45
July 2009 298.55 237.05 298.65 236.75
August 2009 289.90 240.25 290.00 240.20
September 2009 311.60 264.00 312.65 263.80
October 2009 319.70 175.00 319.85 175.00
(Source: BSE and NSE websites) The share price of RCOM on BSE was Rs. 175.95 as on October 30, 2009. The market capitalization of
RCOM on BSE was Rs. 36,316.55 crore as on October 30, 2009.
The share price of RCOM on NSE was Rs. 175.85 as on October 30, 2009. The market capitalization of
RCOM on NSE was Rs. 36,295.91 crore as on October 30, 2009. Promise vs. Performance RCOM has not made any public or rights issue since its inception. Mechanism for Redressal of Investor Grievance All share related matters, namely, transfer, transmission, transposition, nomination, dividend, change of
name, address and signature, registration of mandate and power of attorney, replacement, split,
consolidation, demat and remat of shares, issue of duplicate certificates etc. are handled by RCOM’s
Registrars and Transfer Agents (“R&TA”), Karvy Computershare Private Limited (“Karvy”).
Investors correspond directly with Karvy on all share related matters. RCOM has an established mechanism
for investor service and grievance handling, with Karvy and the Compliance Officer appointed by RCOM for
this purpose being the important functional nodes. RCOM has appointed two firms of Chartered Accountants
as Internal Security Auditors to concurrently audit the transactions and to communicate with investors,
regulatory and other concerned authorities.
RCOM has prescribed service standards for various investor related activities that are handled by Karvy.
Any deviation there from is examined by the Internal Security Auditors who also advise the corrective action
thereon and inform RCOM on the matters on a monthly basis.
The Board of Directors of RCOM has constituted a Shareholder/Investor Grievance Committee which, inter
alia, approves the issue of duplicate certificates and oversees and reviews all matters connected with
securities transfers and other processes.
The Committee also looks into the redressal of shareholders’ complaints related to transfer of shares, non-
receipt of declared dividend, etc. The Committee oversees performance of the R&TA and recommends
measures for overall improvement in the quality of investor services. The summary statement of investor
related transactions and details are also considered by the Board of Directors of RCOM.
78
As of October 30, 2009, there were Nil investor complaints pending against RCOM.
Further, there are certain investor related disputes pending before various courts.
For more details, see “Outstanding Litigation and Material Development” on page 140 of this Information
Memorandum.
Other Information
RCOM is neither a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act,
1985 nor is it under the process of winding up.
Reliance Infrastructure Limited
Reliance Infrastructure Limited (RINFRA) was incorporated on October 1, 1929 under the Indian Companies
Act, VII of 1913, as Bombay Suburban Electric Supply Limited. It changed its name on December 23, 1992
to BSES Limited and to Reliance Energy Limited on February 24, 2004 consequent to the Reliance Anil
Dhirubhai Ambani Group acquiring the management and control and on April 28, 2008 the name of the
Company changed to Reliance Infrastructure Limited. RINFRA’s registered office is situated at Reliance
Energy Centre, Santa Cruz (E), Mumbai 400 055, India. The promoters of RINFRA are listed below under
the head the ‘Shareholding Pattern of RINFRA’.
Principal Business of RINFRA
RINFRA is an integrated private sector power utility company. RINFRA is engaged in generation,
transmission, distribution and trading of power. It also provides a portfolio of value-added services in
electrical contracting, engineering, EPC contracts. RINFRA is participating in emerging opportunities in the
areas of trading and transmission of power. RINFRA along with Power Grid Corporation of India Limited is
setting up the transmission network for Parbati and Koldam hydro electric projects in Himachal Pradesh.
RINFRA has also entered in to the exploration and production business segment. RINFRA, through a
consortium with its group company RNRL, has been awarded four CBM blocks. It has also been awarded
one Mizoram block for exploration and production of petroleum and natural gas. RINFRA has entered the
infrastructure business by developing and operating the Versova-Andheri-Ghatkopar and Charkop-Bandra-
Mankhurd rail-based mass rapid transit system in Mumbai through a joint venture by an affiliate company.
RINFRA has also been awarded Five road projects from the National Highways Authority of India.
The Shareholders of Rinfra has approved a Scheme of Arrangement envisaging transfer of Dahanu Thermal
Power Station Division, Goa & Samalkot Power stations Divisions, Power Transmission Division, Power
Distribution Division, Toll Roads Division and Real Estate Division of Rinfra to various wholly owned
Resulting subsidiary companies. The certified copy of the order of the High Court approving the Scheme is
awaited.
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Board of Directors of RINFRA:
Name Age Designation Date of Appointment
Mr. Anil Dhirubhai Ambani 50 Chairman January 18, 2003
Mr. Satish Seth 53 Vice Chairman November 24, 2000
Mr. S. C. Gupta 60 Director (Operations) January 18, 2003
Mr. Lalit Jalan 52 Whole-time Director April 25, 2007
Gen V.P. Malik 69 Director April 21, 2003
Mr. S. L. Rao 73 Director April 21, 2003
Dr. Leena Srivastava 48 Director April 21, 2003
Mr. V. R. Galkar 65 Director June 9, 2003 Shareholding Pattern of RINFRA as of October 30, 2009 Category Code (I)
Book Value (Rs.) 386.66 667.08 721.51 ** The consolidated figures reflect the impact of the financial performance of the subsidiaries, which may have made losses. # Reserves are net of miscellaneous expenditure to the extent not written off.
Details of listing and Highest & Lowest market price during the preceding six months Equity shares of RINFRA are listed on BSE and NSE. GDRs of the company are listed at London Stock Exchange. Monthly High & Low price of the Equity shares of RINFRA at BSE and NSE
BSE NSE
Month High (Rs) Low (Rs) High (Rs) Low (Rs)
May 2009 1321 705.25 1165.00 715.00
June 2009 1373.70 1098 1324.20 1095.35
July 2009 1346.55 951.60 1346.95 951.00
August 2009 1222.85 1080.55 1221.95 1081.30
September 2009 1261.85 1105.00 1261.00 1108.10
October 2009 1,404.45 1,048.00 1,404.50 1045.00
(Source: BSE and NSE websites)
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The share price of RINFRA on BSE was Rs. 1058.40 as on October 30, 2009. The market capitalization of
RInfra on BSE was Rs.23842 Crores as on October 30, 2009.
The share price of RINFRA on NSE was Rs.1056.35 as on October 30, 2009. The market capitalization of
RInfra on NSE was Rs.23796 Crores as on October 30, 2009.
Promise v/s Performance
In December 1993 RINFRA made a public issue of 25,269,000 - 15% secured fully convertible debentures
of Rs. 70 each, each of which was converted into one equity share of Rs. 10 each, at a premium of Rs. 60
each, for cash at par. RINFRA simultaneously also made a rights issue of 28,851,760 fully convertible
debentures of Rs. 60 each, each of which was converted into one equity share of Rs. 10 each at a premium
of Rs. 50 each.
The proceeds from the aforesaid issues were used for the objects as stated in the offer document. The
following table compares the performance vis a vis the projections given in the offer document for the
11.03 * The Financial for the Fiscal 2007 was for a period 15 months and there were no subsidiaries for that period # Reserves are net of miscellaneous expenditure to the extent not written off. ^ The consolidated figures reflect the impact of the financial performance of the subsidiaries, which may have made
losses.
Details of listing and Highest & Lowest market price during the preceding six months
Equity shares of RNRL are listed on BSE and NSE. GDRs of the company are listed at Luxembourg Stock
Exchange.
Monthly High & Low price of the equity shares of RNRL at BSE and NSE
BSE NSE Month
High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)
May 2009 84.90 55.75 84.90 54.00
June 2009 112.25 82.25 112.45 80.70
July 2009 90.75 67.15 90.80 67.00
August 2009 89.2 76.6 90.90 75.10
September 2009 92.90 83.75 92.95 83.7
October 2009 92.40 63.00 96.00 62.75
The share price of RNRL on BSE was Rs.63.65 as on October 30, 2009. The market capitalization of RNRL
on BSE was Rs. 1,03,94 Crores as on October 30, 2009.
91
The share price of RNRL on NSE was Rs. 63.70 as on October 30, 2009. The market capitalization of RNRL
on BSE was Rs.1,04,03 Crores as on October 30, 2009.
Promise v/s Performance
RNRL has not made any public issue or rights issue since its inception.
Mechanism for redressal of investor grievance
All share related matters, namely, transfer, transmission, transposition, nomination, dividend, change of
name, address and signature, registration of mandate and power of attorney, replacement, split,
consolidation, demat and remat of shares, issue of duplicate certificates, etc. are handled by RNRL’s
Registrars and Transfer Agents (“R&TA”) Karvy Computershare Private Limited (“Karvy”).
Investors correspond directly with Karvy, on all share related matters. RNRL has an established mechanism
for investor service and grievance handling, with Karvy and the Compliance Officer appointed by RNRL for
this purpose being the important functional nodes. RNRL has appointed two firms of Chartered Accountants
as Internal Security Auditors to concurrently audit the transactions and communication with investors,
regulatory and other concerned authorities.
RNRL has prescribed service standards for various investor related activities that are handled by Karvy. Any
deviation there from is examined by the Internal Security Auditors who also advise the corrective action
thereon and inform RNRL on the matters on a monthly basis.
The Board of Directors of RNRL has constituted a Shareholder/Investor Grievance Committee which, inter
alia, approves issue of duplicate certificates and oversees and reviews all matters connected with securities
transfers and other processes.
The Committee also looks into redressal of shareholders’ complaints related to transfer of shares, non-
receipt of annual report, etc. The Committee oversees performance of the R&TA and recommends
measures for overall improvement in the quality of investor services. The summary statement of investor
related transactions and details are also considered by the Board of Directors of RNRL.
As of October 30, 2009 , there were nil investor complaints pending against RNRL.
There are certain investor related disputes pending before various courts.
For more details see “Outstanding Litigation and Material Development” on page 140 of this information
memorandum.
Other Information
RNRL is neither a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act,
1985 nor it is under the process of winding up.
92
CURRENCY OF PRESENTATION
In this Information Memorandum all references to “Rupees” or “Rs.” are to Indian Rupees, the legal currency
of the Republic of India.
DIVIDEND POLICY
There is no set dividend payment policy. Dividend is intended to be declared based on the quantum and
availability of future profits and will be disbursed based on shareholder approval based on the recommendation of
the Board of Directors.
We have not paid any dividend in the past.
93
FINANCIAL INFORMATION OF THE COMPANY
AUDITORS’ REPORT ON FINANCIAL INFORMATION
To,
The Board of Directors
Reliance Media World Limited,
401, 4th Floor, Infiniti,
Link Road, Oshiwara,
Andheri (West),
Mumbai – 400 053
Dear Sirs,
1. We have examined the attached restated financial statements of Reliance Media World Limited (formerly
Reliance Unicom Limited upto July 17, 2009, Big Radio Limited upto September 18, 2007, Reliance Unicom
Limited upto October 6, 2006) (“the Company”) as approved by the Board of Directors of the Company,
prepared in terms of the requirements of Paragraph B, Part II of Schedule II of the Companies Act, 1956
(“the Act”) and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines
2000 as amended to date (SEBI Guidelines) and in accordance with the terms of our engagement agreed
upon with you in accordance with our engagement letters in connection with listing of its fully paid up Equity
Shares.
2. We have examined the accounts of the Company for financial year ended March 31, 2009 comparing the
information in the restated financial statements for the year / period ended March 31, 2006, March 31, 2007
and March 31, 2008 with the accounts as audited by M/s S.V. Doshi & Co., Chartered Accountants.
3. As the Company was incorporated on December 27, 2005, the restated financials of the Company as
attached herewith are for the period / year ended March 31, 2006, March 31, 2007, March 31, 2008 and
March 31, 2009.
4. We draw attention to note no.1(B) of Annexure - 4 regarding the audited accounts of the Company for the
year ended March 31, 2009 has been adopted by the Board of Directors and approved by the Shareholders
in the Annual General Meeting held on May 25, 2009 and the scheme was effective on June 30, 2009
pursuant to filing the same with registrar of Companies, hence, the radio business of Adlabs Films Limited
has not been incorporated into the books of account for the purpose of presenting the restated financial
statements.
5. In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the SEBI
guidelines and terms of our engagement agreed with you, we further report that:
a. The restated assets and liabilities of the Company as at March 31, 2006, March 31, 2007, March 31, 2008
and March 31, 2009 are set out in Annexure - 1 to this report to be read together with significant accounting
policies and notes to accounts appearing in Annexure - 4 to this report.
94
b. The restated profit and loss account of the company for the year / period ended March 31, 2006, March
31, 2007, March 31, 2008 and March 31, 2009 are set out in Annexure - 2 to this report to be read together
with significant accounting policies and notes to accounts appearing in Annexure - 4 to this report.
c. The restated cash flows of the Company for the year / period ended March 31, 2006, March 31, 2007,
March 31, 2008 and March 31, 2009 are set out in Annexure - 3 to this report to be read together with
significant accounting policies and notes to the accounts appearing in Annexure - 4 to this report.
d. We have examined the following financial information relating to the Company and as approved by the
Board of Directors for the purpose of inclusion in the Information Memorandum:
i. Statement of Fixed Assets, as restated enclosed as Annexure – 5
ii. Statement of Loans and Advances, as restated enclosed as Annexure – 6
iii. Statement of Unsecured Loans, as restated enclosed as Annexure – 7
iv. Statement of Current Liabilities, as restated enclosed as Annexure – 8
v. Statement of Provisions, as restated enclosed as Annexure – 9
vi. Statement of Other Operating and General Administrative Expenses, as restated, enclosed as
Annexure – 10
vii. Summary of Accounting Ratios, as restated enclosed as Annexure - 11
viii. Capitalization statement, as restated enclosed as Annexure – 12
ix. Statement of Tax Shelters, as restated enclosed as Annexure - 13
x. Statement of Related Party Disclosure, as restated, enclosed as Annexure – 14
xi. The Company does not have investments as at March 31, 2006, March 31, 2007, March 31, 2008
and March 31, 2009; hence the information regarding details of Investments in accordance with the
paragraph 6.10.2.2(b) of the SEBI Guidelines have not been disclosed
xii. The Company has not declared dividends during any financial year / period covered in this report
hence, the information regarding rates of dividend in respect of each class of shares in accordance
with the paragraph 6.10.2.1(b) of the SEBI Guidelines have not been disclosed.
6. In our opinion the financial information of the Company and notes attached to this report, after making
adjustments and re-grouping as considered appropriate has been prepared in accordance with Part II of
Schedule II of the Act and SEBI Guidelines.
7. We have no responsibility to update our report for events and circumstances occurring after the date of the
report.
8. This report is intended solely for your information and for inclusion in the Information Memorandum in
connection with the listing of the equity shares of the Company and is not to be used, referred to or
distributed for any other purpose without our prior written consent. For Chaturvedi & Shah Chartered Accountants C. D. Lala Partner Membership No.35671 Place: Mumbai Date: September 16, 2009
95
Reliance Media World Limited (Formerly Known as Reliance Unicom Limited) ANNEXURE - 1 STATEMENT OF ASSETS AND LIABILITIES, RESTATED
B Current assets, loan and advancesCash and bank balances 118,503,240 336,327,788 689,730,246 101,000,000 Loans and advances 14,970,474 10,538,112 14,897,006 - Total 133,473,714 346,865,900 704,627,252 101,000,000
C Current liabilities and provisionsUnsecured loans - 234,894,871 600,000,000 - Current liabilities 17,588,751 2,985,382 4,475,740 16,836 Provision 798,461 - - - Deferred tax liability (net) - 15,600 - - Total 18,387,212 237,895,853 604,475,740 16,836
D Net Worth (A+B-C) 115,156,933 109,057,197 100,151,512 100,983,164
E Represented byPaid Up Share Capital 10,550,000 10,550,000 500,000 500,000 Share Application Money - - 100,500,000 100,500,000 Total (i) 10,550,000 10,550,000 101,000,000 101,000,000 Reserve and surplusProfit and Loss Account 14,156,933 8,057,197 - - Share Premium Account 90,450,000 90,450,000 - - Less : - Debit balance in Profit & Loss Account - - 848,488 16,836 Total (ii) 104,606,933 98,507,197 (848,488) (16,836)
F Net Worth ( i+ ii ) 115,156,933 109,057,197 100,151,512 100,983,164
As at March 31,
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Reliance Media World Limited (Formerly Known as Reliance Unicom Limited) ANNEXURE - 2 STATEMENT OF PROFIT AND LOSS, AS RESTATED Amount in Rupees
Particulars 2009 2008 2007 2006
A. Income
Interest Income 11,132,283 42,632,803 19,044,176 - Total 11,132,283 42,632,803 19,044,176 -
B. Expenditure
Operating and general administrative expenses 172,416 608,900 9,951,170 16,836 Interest 1,628,767 28,424,154 9,924,658 - Depreciation/ amortisation 16,719 15,987 - - Total 1,817,902 29,049,041 19,875,828 16,836
C Profit before tax (A-B) 9,314,381 13,583,762 (831,652) (16,836)
less - Provision for taxes- Current tax 3,230,245 4,662,477 - - - Deferred tax charge/ (credit) (15,600) 15,600 - - - Fringe benefit tax - - - -
D Profit after tax 6,099,736 8,905,685 (831,652) (16,836)
E Accumulated balance brought forward 8,057,197 (848,488) (16,836) -
F Balance carried to balance sheet 14,156,933 8,057,197 (848,488) (16,836)
AppropriationsTransfer to general reserveProposed dividendDividend taxBalance carried to balance sheet 14,156,933 8,057,197 (848,488) (16,836)
For the year/ period ended on March 31,
97
Reliance Media World Limited (Formerly Known as Reliance Unicom Limited) ANNEXURE - 3 CASH FLOW STATEMENT, AS RESTATED
Amount in Rupees
Particulars 2009 2008 2007 2006
A Cash Flow from operating activitiesNet Profit/(loss) before tax 9,314,381 13,583,762 (831,652) (16,836)Adjustment for Depreciation/ amortization 16,719 15,987 - - Interest Income (11,132,283) (42,632,803) 9,924,658 - Interest expenses 1,628,767 28,424,154 - - Operating profit (loss) before working capital changes (172,416) (608,900) 9,093,006 (16,836)
Adjustment for :(Increase) / decrease in loans and advances - (303,583) (14,897,006) - Increase / (decrease) in trade and other payable (2,920,269) 3,172,119 - 16,836Cash generated/ (used in) operating activities (3,092,685) 2,259,636 (5,804,000) -
Taxes paid (net of refunds) (2,431,784) (4,662,477) - -
B Cash flow from investing activitiesPurchase of fixed assets - (103,137) - - Interest Income 6,699,921 42,632,803 - - Net Cash (used)/ generated in investing activities (B) 6,699,921 42,529,666 - -
C Cash flow from financing activitiesProceeds from issue of shares - - - 500,000Share application money received - - - 100,500,000Proceeds from Unsecured Loan - 234,894,871 600,000,000 - Repayment Unsecured Loan (219,000,000) (600,000,000) - - Interest paid - (28,424,154) (5,465,754) - Net cash flow from financing activities ( C ) (219,000,000) (393,529,283) 594,534,246 101,000,000Net increase in cash and cash equivalent (A+B+C) (217,824,548) (353,402,458) 588,730,246 101,000,000
Cash and cash equivalents as at beginning of the period/year 336,327,788 689,730,246 101,000,000 - Cash and cash equivalents as at end of the period/year 118,503,240 336,327,788 689,730,246 101,000,000
For the year / period ended March 31,
98
Reliance Media World Limited (Formerly Known as Reliance Unicom Limited) ANNEXURE - 4 NOTES TO RESTATED ASSETS AND LIABILITIES, RESTATED PROFIT AND LOSS ACCOUNT AND RESTATED CASHFLOW STATEMENT FOR THE YEAR/PERIOD ENDED MARCH 31, 2009 A - Significant accounting policies 1. Basis of preparation The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting and in accordance with the Accounting Standards (‘AS’) as prescribed under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956 (‘the Act’), to the extent applicable. 2. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles (‘GAAP’) in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. 3. Revenue recognition Interest income is recognized on a time proportion basis. 4. Fixed assets and depreciation/ amortisation Tangible fixed assets are stated at cost less accumulated depreciation and any provision for impairment. Cost includes freight, duties, taxes (other than those recoverable from tax authorities) and other expenses related directly/indirectly to the acquisition/ construction and installation of the fixed assets for bringing the asset to its working condition for its intended use. Depreciation on fixed assets is provided on the straight line method, at Schedule VI rates which, in management’s opinion, reflects the estimated useful lives of those fixed assets. 5. Taxation Income-tax expense comprises current tax expense and fringe benefit tax computed in accordance with the relevant provisions of the Income tax Act, 1961 and deferred tax charge or credit. Current tax provision is made based on the tax liability computed after considering tax allowances and exemptions, in accordance with the Income tax Act, 1961. Deferred tax charge or credit and the corresponding deferred tax liability or asset is recognized for timing differences between the profits/ losses offered for income taxes and profits/ losses as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realized in future. However, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down/up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realized.
99
Reliance Media World Limited (Formerly Known as Reliance Unicom Limited) B – Notes to Accounts 1. Demerger of the Radio Division of Adlabs Films Limited (AFL), to the Company The accounts of the Company for the financial year 2008-09 have been approved by the shareholders in the Annual General Meeting held on May 25, 2009. The Scheme of Arrangement between the Company and AFL was approved by the High Court of Judicature at Bombay on April 4, 2009 and the same was filed with the Registrar of Companies, Mumbai, Maharashtra on June 30, 2009, the effective date. As per the Scheme the radio business of AFL stands transferred to the Company from April 1. 2008. In the preparation of the restated financials the accounts approved by the shareholders in the Annual General Meeting have been considered for financial year 2008-09. The accounts for financial year 2008-09 with the demerger effect would be separately presented in the Information Memorandum. Details of the Scheme are as below a. The Scheme of Arrangement (the Scheme) under Section 391 to 394 of the Companies Act 1956, between Adlabs Films Limited, the Company and their respective Shareholders is sanctioned by the honorable High Court of Judicature at Bombay vide Order Dated April 4, 2009 and copy of the Order has been filed with the Registrar of Companies, Mumbai, Maharashtra on June 30, 2009. Pursuant to the Scheme, the radio business stands de-merged from AFL and transferred to and vested in the Company on a going concern basis. b. The Scheme of Arrangement provided for the following-
1. Transfer of the Radio business of AFL to the Company with effect from April 1, 2008 2. Extinguishment of shares held by AFL in the Company 3. Issue of shares of the Company to shareholders of AFL as of the record date to be decided by the Board of Directors
of AFL and the Company in the ratio of 1:1. 4. Transfer of Reserves created under demerger upto Rs 1,000,000,000 to Securities Premium and balance to Capital
Reserve. In case of there being shortfall, the same shall be debited to and carried forward as Goodwill. 5. Cost of the Scheme to be borne by the Company
As per the Scheme, the radio business of AFL stands transferred to the Company. All assets and liabilities of the radio business of AFL as at April 1, 2008 have been transferred at their respective book values. Further, general borrowings of AFL as on April 1, 2008 have been allocated between AFL and the Company on the basis of ratio of net assets. c. The following assets and liabilities of Radio Business are transferred as on April 1, 2008 pursuant to the Scheme Particulars Amount Gross Block of Fixed Assets 3,272,822,986 Less: Depreciation 384,538,275 Net Block of Fixed Assets 2,888,284,711 Capital Work In Progress 230,916,872 Current Assets , Loans and Advances 1,392,795,262 Total – A 4,511,996,845 Loan Funds 204,627,687 Current Liabilities and Provisions 497,564,555 Total –B 702,192,242 Net Balance 3,809,804,603
100
Reliance Media World Limited (Formerly Known as Reliance Unicom Limited) As per the provisions of the scheme, excess balances of assets transferred over liabilities and the gain on cancellation of shares held by AFL will be credited to Securities Premium Account and Capital Reserve as follows:
Amount in Rupees Particulars Amount Allocated net assets of Radio Division as of April 1,2008 transferred as per the provisions of the Scheme (A)
3,809,804,603
Less: General borrowings of the Company as of April 1,2008 allocated between the Company and AFL as per the provisions of the Scheme (B)
2,240,000,000
Excess of net assets transferred to the Company (Radio Division) (A-B) 1,569,804,603
Less: Issue of Shares to Shareholders of AFL 230,630,850
Add: Cancellation of Share Capital held by AFL 10,550,000
Reserves Created under demerger 1,349,723,753 Recognised as Securities Premium Account as per Scheme Para 5.1.3 1,000,000,000
Balance Recognised as Capital Reserve 349,723,753
As explained above the Scheme has not been given effect to in these financial statements. 2. Sundry creditors There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2009. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development. Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. 3. Deferred Tax Since there is no timing difference between the expenses offered for income tax and expenses as per financial statements no deferred tax liability needs to be recognised in the financial statements. Hence the deferred tax liability for depreciation recorded in the previous year has been reversed. 4. Disclosure of Related Party under AS 18 Parties where control exists Holding Company Adlabs Films Limited Transactions with Related Parties
Particulars Year ended
March 31,2009 Year ended
March 31,2008 Holding Company Transactions during the year
Loan & Advances Taken - 219,000,000
Loan & Advances Repaid 219,000,000 -
Interest Income - 23,378,767
Interest Expenses 1,629,767 13,033,743
Amounts Payable As on 31 March 17,523,638 237,848,317
101
Reliance Media World Limited (Formerly Known as Reliance Unicom Limited) 5. Earnings per Share (‘EPS’) Particulars Year ended
March 31,2009 Year ended
March 31,2008
Net Profit/(loss) available for equity shareholders 60,99,736 8,905,685
Weighted average number of equity shares outstanding during the year 2,110,000 2,110,000
Basic/ Diluted EPS 2.89 4.22
Nominal value per share 5.00 5.00 6. Prior year comparatives The figures for the previous years/period have been regrouped/ rearranged as necessary to conform to current years presentation.
102
Reliance Media World Limited (Formerly Known as Reliance Unicom Limited) ANNEXURE – 5 STATEMENT OF FIXED ASSETS, AS RESTATED ANNEXURE – 5A – FIXED ASSETS AS RESTATED FOR THE YEAR ENDED MARCH 31, 2009
Reliance Media World Limited (Formerly Known as Reliance Unicom Limited) ANNEXURE - 10 STATEMENT OF OTHER OEPRATING AND GENERAL ADMINISTRATIVE EXPENSES AS RESTATED Amount in Rupees
Particulars 2009 2008 2007 2006Bank charges 1,512 4,407 9,903,010 - Rent, rates and taxes - 178,084 - - Remuneration to Auditors 55,150 410,096 - - Legal and professional fees 115,754 1,250 11,224 - Other miscellaneous expenses - 15,063 16,836 16,836 Preliminary Expenses Written off - - 20,100 -
Total 172,416 608,900 9,951,170 16,836
For the year / period ended 31 March
106
Reliance Media World Limited (Formerly Known as Reliance Unicom Limited) ANNEXURE - 11 STATEMENT OF ACCOUNTING RATIOS AS RESTATED Amount in Rupees
2009 2008 2007 20061 Earnings Per Share
Net Profit / (Loss) After Tax 6,099,736 8,905,685 (831,652) (16,836)Weighted average number of equity shares 2,110,000 2,110,000 50,000 50,000 Earnings Per Share (Basic/ Diluted) 2.89 4.22 (16.63) (0.34)
2 Return on Net WorthNet Profit / (Loss) After Tax 6,099,736 8,905,685 (831,652) (16,836)Net Worth 115,156,933 109,057,197 100,151,512 100,983,164 Return on Net Worth (%) 5.30 8.17 (0.83) (0.02)
3 Net Assets ValueNet Assets 115,156,933 109,057,197 100,151,512 100,983,164 Number of Shares 2,110,000 21,10,000* 50,000 50,000 Net Assets Value per share 54.58 51.69 2,003.03 2,019.66
Particulars For the period / year ended on March 31,
*The equity share of the face value of Rs.10/- each fully paid up was subdivided into equity share of Rs.5/- each fully paid up vide ordinary resolution passed at the Extra Ordinary General Meeting held on April 25, 2007. The paid up equity share capital of the Company was further increased by allotment of 2,010,000 shares of Rs. 5/- each fully paid up on April 30, 2007. ANNEXURE - 12 CAPITALISATION STATEMENT AS RESTATED
Amount in Rupees Particulars Pre Issue Post Issue A Borrowing : Short Term Debt - 2,814,079,098 Long Term Debt - - Total Debt - 2,814,079,098 B Shareholders Funds Share Capital Equity Share Capital 10,550,000 230,630,850 Reserves and Surplus Securities Premium Account 90,450,000 10,904,50,000 Capital Reserve arising pursuant to demerger 349,723,753 Profit and Loss account 14,156,933 (975,323,143) Total 115,156,933 695,481,460 Debt - Equity Ratio (A/B) 0.00 4.05
107
Reliance Media World Limited (Formerly Known as Reliance Unicom Limited) ANNEXURE - 13 STATEMENT OF TAX SHELTERS
Amount in Rupees
2009 2008 2007 2006
Profit / (Loss) before current and deferred taxes, as restated 9,314,381 13,583,762 (831,652) (16,836)
Add: Expenses and depreciation not offered for tax 189,135
Fixed Assets 5Gross Block 3,483,865,558 Less : Depreciation 836,073,838 Net Block 2,647,791,720 Capital Work in Progress (Including Capital Advances) 95,845,176
2,743,636,896 Current Assets, Loans and AdvancesInventories 6 2,263,312 Sundry Debtors 7 742,776,643 Cash and Bank Balances 8 238,229,843 Loans and Advances 9 456,508,990
1,439,778,788 Current Liabilities and ProvisionsCurrent Liabilities 10 851,847,375 Provisions 11 31,558,940
883,406,315 Net Current Assets 556,372,473
Profit and Loss Account Debit Balance 3A 1,246,525,186
4,546,534,555
Significant accounting policies 1Notes to the accounts 18
As per our report of even date attached.
For Chaturvedi & Shah For and on behalf of the BoardChartered Accountants
C. D. Lala Gautam DoshiPartner DirectorMembership No.35671
Place: Mumbai Gururaja RaoDate: 30 October 2009 Company Secretary
111
Reliance Media World Limited (Formerly Reliance Unicom Limited)
0.41 PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 30 JUNE 2009
(Currency: Indian Rupees) Sch. Period ended 30 June
2009
INCOME
Service Revenue and Other Operating Income 12 450,345,316 Other Income 13 9,768,085
460,113,401
EXPENDITURE
Direct Costs 14 201,031,005 Personnel Costs 15 121,101,291 Other Operating and General Administrative Expenses 16 252,042,027 Interest & Finance Charges 17 67,583,562 Depreciation/Amortisation 5 89,557,561
731,315,446
Profit/(loss) Before Tax (271,202,045)
Less : Provision for taxation -
Net Profit / (loss) After Tax (271,202,045)
Balance Carried to Balance Sheet (271,202,045)
Earnings Per Share Basic/ Diluted (Not Annualised) (5.88) (Refer note 14 of Schedule 18)
Significant accounting policies 1Notes to the accounts 18
As per our report of even date attached.
For Chaturvedi & Shah For and on behalf of the BoardChartered Accountants
C. D. Lala Gautam DoshiPartner DirectorMembership No.35671
Place: Mumbai Gururaja RaoDate: 30 October 2009 Company Secretary
112
Reliance Media World Limited (Formerly Reliance Unicom Limited)Radio Consolidated
CASH FLOW STATEMENT FOR THE PERIOD ENDED 30 JUNE, 2009(Currency: Indian Rupees) 30 June 2009
A Cash flows from operating activities
Net profit / (loss) before taxes (271,202,045) Less: Interest Income (3,086,787) Add: Interest Expense 67,583,562 Add: Depreciation/Amortisation 89,557,561 Add: Provision for Doubtful debts 1,254,748 Less: Provision for Doubtful advances written back (141,334) Less: Income Accrued (868,679) Less: Profit on sale of fixed assets (61,516) Operating profit/ (loss) before working capital changes (116,964,490) (Increase)/ Decrease in Inventories 260,082 (Increase)/ Decrease in Loans and Advances 22,976,527 (Increase)/ Decrease in Debtors 67,908,979 Increase/(Decrease) in Current Liabilities and Provisions 45,899,156 Cash generated from operations 20,080,254 Taxes Paid (5,600,741) Net cash generated from / (used in) operating activities (A) 14,479,513
B Cash flows from investing activities
Purchase of fixed assets 882,198 Sale Proceeds from Fixed Assets 89,348 Interest Income 8,832,643 Net cash generated from investing activities (B) 9,804,189
C Cash flows from financing activities
Interest Payment on Unsecured Loan (4,525,978)
Net cash used in financing activities (C) (4,525,978)
Net increase in cash and cash equivalents (A + B + C) 19,757,724
Cash and cash equivalents at beginning of the period 218,472,119
Cash and cash equivalents at end of the period 238,229,843
As per our Report of even date attachedFor Chaturvedi & Shah For and on behalf of the BoardChartered Accountants
C. D. Lala Gautam DoshiPartner DirectorMembership No.35671
Gururaja RaoPlace: Mumbai Company SecretaryDate: 30 October 2009
Note: Transaction arising out of Scheme of Arrangement, as stated in Note No.1 of Schedule 18 is a non cash transaction and not considered in the above cash flow workings.
113
Reliance Media World Limited (Formerly Reliance Unicom Limited)
SCHEDULES TO THE FINANCIAL STATEMENTS
Schedule – 1
Summary of significant accounting policies
1. Basis of preparationThe financial statements are prepared and presented under the historical cost convention on the accrual basis ofaccounting and in accordance with the Accounting Standards (‘AS’) as prescribed under the Companies(Accounting Standards) Rules, 2006, and the relevant provisions of the Companies Act, 1956 (‘the Act’), to theextent applicable.
2. Use of estimatesThe preparation of financial statements in conformity with generally accepted accounting principles (‘GAAP’) inIndia requires management to make estimates and assumptions that affect the reported amounts of assets andliabilities and the disclosures of contingent liabilities on the date of the financial statements. Actual resultscould differ from those estimates. Any revision to accounting estimates is recognised prospectively in currentand future periods.
3. Fixed assets and depreciation/ amortisation
a. Tangible assetsTangible fixed assets are stated at cost less accumulated depreciation and any provision for impairment. Costincludes freight, duties, taxes (other than those recoverable from tax authorities) and other expenses relateddirectly/indirectly to the acquisition/ construction and installation of the fixed assets for bringing the asset to itsworking condition for its intended use.
Depreciation on fixed assets is provided on the straight line method, at following rates which, in management’sopinion, reflects the estimated useful lives of those fixed assets:
Particulars of Fixed AssetsPlant and Machinery excluding Bus Queue Shelters 10%Furniture and Fixture 10%Office Equipments for Radio Division 10%Office Equipments for OOH Division 20%Data Processing equipments 20%Motor car 20%Display Vans 11.31%
Leasehold improvements are depreciated over the lower of the useful life of the asset and the lease term, on astraight line basis.
Bus Queue Shelters under BOT Schemes are depreciated over the useful life being the contract period onuniform basis.
Individual assets costing up to Rs 5,000 are depreciated fully in the year of acquisition.
Rate of Depreciation
114
Reliance Media World Limited (Formerly Reliance Unicom Limited)
SCHEDULES TO THE FINANCIAL STATEMENTSb. Intangible assets
Intangible assets, all of which have been acquired and are controlled through custody or legal rights, arecapitalised at cost, where they can be reliably measured. Where capitalised, intangible assets are regarded ashaving a limited useful economic life and the cost is amortised over the lower of useful life and 10 years.
Application software purchased, which is not an integral part of the related hardware, is shown as intangibleassets and amortised on a straight line basis over its useful life, not exceeding ten years, as determined bymanagement.
One Time Entry Fees paid for acquiring FM radio broadcasting licenses has been capitalised as an asset and isamortised over a period of ten years, being the period of the license, from the date of operationalisation of thestation.
4. Impairment
In accordance with AS 28 – ‘Impairment of Assets’, where there is an indication of impairment of the Company’sasset, the carrying amounts of the Company’s assets are reviewed at each balance sheet date to determinewhether there is any impairment. The recoverable amount of the asset (or where applicable, that of the cashgenerating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use.An impairment loss is recognised whenever the carrying amount of an asset or a cash generating unit exceeds itsrecoverable amount. Impairment loss is recognised in the profit and loss account.
Value in use is present value of estimated future cash flows expected to arise from the continuing use of theasset and from its disposal at the end of its useful life.
5. Inventories
Inventories (comprises of content cost not aired and events in progress) are stated at lower of cost and netrealisable value.
6. Employee benefits
Short-term employee benefits are recognised as an expense at the undiscounted amount in the profit and lossaccount of the year in which the related service is rendered.
The Company’s contribution to provident fund, which is a defined contribution scheme, is charged to the profitand loss account as incurred.
Post employment and other long term employee benefits are recognised as an expense in the profit and lossaccount for the year in which the employee has rendered services.
The expense is recognised at the present value of the amount payable determined using actuarial valuationcarried out by an independent actuary at the balance sheet date using Projected Unit Credit Method.
115
Reliance Media World Limited (Formerly Reliance Unicom Limited)
SCHEDULES TO THE FINANCIAL STATEMENTS7. Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company andthe revenue can be reliably measured. The amount recognised as Revenue is net of trade discounts and servicetax.
Revenue from sale of airtime
Revenue from radio broadcasting is recognised on an accrual basis on the airing of the customers commercials.
Out of Home Media
Advertising space revenue, net of taxes, rebate and discount is recognised on the display of advertisementsover the period of the contract.
Revenue from event management and activation activities
Revenue from event management and activation is recognised on the completion of the event and on the basisof related services performed, as per the contracted terms.
Interactive Revenue
Revenue from short code short messaging service (‘SMS’) is recognised on acceptance of the hits by telecomoperators.
Interest income
Interest income is recognised on a time proportion basis.
8. License Fees
As per the new Frequency Module (FM) broadcasting policy, effective 1 April 2005 license fees are charged torevenue at the rate of 4% of gross revenue for the period or 10% of Reserve One Time Entry Fee (ROTEF) forthe concerned city, whichever is higher. Gross Revenue for this purpose shall mean revenue on the basis of billingrates without deduction of taxes and agency commission and net of discounts to advertisers. Barter advertisingcontracts shall also be included in the gross revenue on the basis of relevant billing rates. ROTEF means 25% ofhighest valid bid in the city.
9. Foreign currency transactions
Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of thetransactions. Exchange differences arising on foreign exchange transactions settled during the year arerecognised in the profit and loss account of the year.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated atthe closing exchange rates on that date; the resultant exchange differences are recognised in the profit and lossaccount.
In respect of integral foreign operations of the company, fixed assets are translated at the rates on the date ofacquisition, monetary assets and monetary liabilities are translated at the rate on the date of the balance sheetand income and expenditure are translated at the average of weekly average rates during the year.
116
Reliance Media World Limited (Formerly Reliance Unicom Limited)
SCHEDULES TO THE FINANCIAL STATEMENTS10. Taxation
Income-tax expense comprises current tax expense computed in accordance with the relevant provisions of theIncome tax Act, 1961 and deferred tax charge or credit.
Current tax provision is made based on the tax liability computed after considering tax allowances andexemptions, in accordance with the Income tax Act, 1961. Deferred tax charge or credit and the correspondingdeferred tax liability or asset is recognised for timing differences between the profits/ losses offered for incometaxes and profits/ losses as per the financial statements. Deferred tax assets and liabilities are measured usingthe tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realizedin future. However, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferredtax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets arereviewed as at each balance sheet date and written down/up to reflect the amount that is reasonably/virtuallycertain (as the case may be) to be realized.
11. Provisions and contingencies
Provisions comprise liabilities of uncertain timing or amount. Provisions are recognised when the Companyrecognizes it has a present obligation as a result of past events, it is more likely than not that an outflow ofresources will be required to settle the obligation and the amount can be reasonably estimated.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation thatmay, but probably will not require an outflow of resources. When there is a possible obligation or a presentobligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure ismade.
Loss contingencies arising from claims, litigation, assessment, fines, penalties, etc. are recorded when it isprobable that a liability has been incurred and the amount can be reasonably estimated.
12. Leases
The Company has various operating leases, principally for radio stations and office space, with various renewaloptions. Substantially all operating leases are cancellable as well as renewable on expiry of lease term. Rentalexpense in agreements with scheduled rent increases is recorded on a straight-line basis as applicable over thelease term.
13. Borrowing costs
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets arecapitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantialperiod of time to get ready for its intended use. All other borrowing costs are charged to revenue.
117
Reliance Media World Limited (Formerly Reliance Unicom Limited)
0.41 SCHEDULES TO THE FINANCIAL STATEMENTS(Currency: Indian Rupees) 30 June 2009
2 Share CapitalAuthorised:21,10,000 Equity Shares of Rs.5/- each 10,550,000
Issued, Subscribed and Paid Up:21,10,000 Equity Shares of Rs.5/- each 10,550,000 Less: Cancelled pursuant to Scheme of Arrangement * (10,550,000)
Share Suspense Account *46,126,170 Equity Shares of Rs.5/- each to be issued to the Shareholders of Reliance MediaWorks Ltd. (Formerly Adlabs Films Ltd.)
230,630,850
230,630,850
3 Reserves and Surplusa Securities premium account:
At the commencement of the year 90,450,000 Additions during the yearAddition pursuant to Scheme of Arrangement* 1,000,000,000
1,090,450,000
b Capital Reserves:Arising pursuant to Scheme of Arrangement* 349,723,753
349,723,753
1,440,173,753
3A Profit & Loss Account:Profit at the commencement of the year 14,156,933
Add : Profit / (Loss) for the year 2008-09 of RadioDivision pursuant to the Scheme of Arrangement(Refer Note 3 of Schedule 18) (989,480,074)
Add : Profit / (Loss) for the period (271,202,045)
(1,246,525,186)
4 Unsecured LoansShort Term Loan from Body Corporates * 2,875,729,952 [Repayable On Demand]
2,875,729,952 * Refer Note 1 of Schedule 18
118
Reliance Media World Limited (Formerly Reliance Unicom Limited)
SCHEDULES TO THE FINANCIAL STATEMENTS(Currency: Indian Rupees)
Total 103,137 212,852,595 3,272,822,988 1,913,162 3,483,865,558 32,706 452,586,132 384,538,275 1,083,275 836,073,838 2,647,791,720 Capital Work In Progress (Including Capital Advances) 95,845,176
Note: - - 29,163,620 16,719 - 89,496,051 (60,332,432) 1. Intangible assets are other than internally generated2. Balance Life of Intangible Assets is 7-10 years3. Additions include assets for the period from 1 April 2008 to 31 March 2009 of radio division transferred from Reliance MediaWorks Ltd. (Formerly Adlabs Films Limited)4. Depreciation for the period also includes depreciation on the assets acquired for the period from 01/04/2008 to 31/03/2009 and on the assets acquired pursuant to the Scheme.5. Capital Work In Progress comprises of the following :Particulars AmountCapital Advances 47,082,807 Capital Stores/Inventory 48,762,369
95,845,176
Gross Block Depreciation/Amortisation
Particulars
119
Reliance Media World Limited (Formerly Reliance Unicom Limited)
0.41 SCHEDULES TO THE FINANCIAL STATEMENTS(Currency: Indian Rupees) 30 June 2009
6 InventoriesContent 2,263,312
2,263,312
7 Sundry debtors (Unsecured)Debts outstanding for a period exceeding six months- Considered Good 387,324,860 - Considered Doubtful 50,320,801
437,645,661 Other debts- Considered Good 355,451,783 - Considered Doubtful 14,712,328
370,164,111 807,809,772
Less: Provision for doubtful debts 65,033,129 742,776,643
8 Cash and Bank BalancesCash in Hand 562,245 Balance with Scheduled Banks
In current accounts 47,196,876 In fixed deposit 190,470,722
238,229,843
9 Loans and Advances Loans and advances to employees 825,000 Advances recoverable in cash or in kind or for value to be received- Considered Good 135,079,835 - Considered Doubtful 12,265,961
147,345,796 Less: Provision for doubtful advances 12,265,961
135,079,835 2,071,419
Prepaid Expenses 76,077,588 Deposits- Considered Good 194,074,364 - Considered Doubtful 79,000,000
273,074,364 Less: Provision for doubtful deposits 79,000,000
194,074,364
48,380,784 456,508,990
10 Current Liabilities Due to Micro Small and Medium Enterprises 48,719 (Refer Note 6 of Schedule 18)Sundry Creditors for Goods and Services 182,142,782 Sundry Creditors for Expenses 460,400,957 Advance Payments by Customers 77,282,301 Other Current Liabilities 131,972,616
851,847,375
Income Accrued but not due
Advance tax, including Fringe Benefit Tax (Net of Provision for Taxation 37,872,556)
120
Reliance Media World Limited (Formerly Reliance Unicom Limited)
0.41 SCHEDULES TO THE FINANCIAL STATEMENTS(Currency: Indian Rupees) 30 June 2009
12Sale of Airtime 378,272,315 Activation Revenue 27,364,787 Event Income 20,672,943 Out of Home Media Income 22,949,809 Others 1,085,462
450,345,316
13 Other IncomeInterest income from: -Bank deposits (TDS: 5,95,416) 3,086,787 Income from facility sharing 4,836,999 Miscellaneous income 4,117 Profit on sale of assets (net) 61,517 Provision for Doubtful Advances Written Back 141,334 Foreign Exchange Gain (net) 1,637,331
9,768,085
14 Direct Costs
Royalty 47,851,415 Event Expenses 37,288,605 Agency Commission and Incentive 40,369,581 Transmission Expenses 15,297,551 Out of Home Media Expenses 28,537,199 Revenue Sharing License Fees 21,042,615 Other Production Expenses 10,644,039
201,031,005
15 Personnel Cost
Salaries, Wages and Allowances 111,459,815 Contribution to Provident Fund 5,214,132 Gratuity 280,265 Leave encashment 1,962,202 Staff Welfare Expenses 1,615,964 Provident Fund Admin Expenses 568,913
121,101,291
Service Revenue and Other Operating Income
121
Reliance Media World Limited (Formerly Reliance Unicom Limited)
0.41 SCHEDULES TO THE FINANCIAL STATEMENTS
(Currency: Indian Rupees) Period ended 30 June 2009
16Other Operating and General Administrative Expenses
Advertisement 58,314,095 Bank Charges 2,122,328 Bad Debts 17,430,921 Business Promotion 355,181 Rent, Rates and Taxes 40,624,122 Travelling and Conveyance 11,712,157 Audit Fees 1,125,000 Electricity Charges 10,491,089 Insurance Charges 497,692 Legal and Professional Fees 5,546,517 Membership and Subscription 81,927 Other Miscellaneous Expenses 1,675,102 Communication Expenses 3,893,099 Printing and Stationery 512,495 Provision for Doubtful Debts 1,254,748 Provision for Doubtful Deposits 79,000,000 Repairs and Maintenance
- Repairs to Machinery 1,976,326 - Repairs to Others 4,907,901
Reliance Media World Limited (Formerly Reliance Unicom Limited)
SCHEDULES TO THE FINANCIAL STATEMENTS(Currency: Indian Rupees)
18 Notes to the accounts
1. Demerger of the Radio Division of Reliance MediaWorks Ltd. (Formerly Adlabs Films Limited) (AFL) with theCompany.
a The Scheme of Arrangement (the Scheme) under Section 391 to 394 of the Companies Act 1956, between Reliance MediaWorksLtd. (Formerly Adlabs Films Limited) and Reliance Media World Limited (formerly Reliance Unicom Limited) and their respectiveShareholders is sanctioned by the honorable High Court of Judicature at Bombay vide Order Dated 4 April 2009 and copy of theOrder has been filed with the Registrar of Companies, Mumbai , Maharashtra on 30 June 2009. Pursuant to the Scheme , the radiobusiness stands de-merged from AFL and transferred to and vested in the Company on a going concern basis. The Scheme has beengiven effect to in these financial statements.
b The Scheme of Arrangement provided for the following-
1. Transfer of the Radio business of AFL to the Company with effect from 1 April 20082. Extinguishment of shares held by AFL in the Company3. Issue of shares of the Company to shareholders of AFL as of the record date to be decided by the Board of Directors of
AFL and the Company in the ratio of 1:1.4. Transfer of Reserves created under demerger upto Rs 1,000,000,000 to Securities Premium and balance to Capital Reserve5. Cost of the Scheme to be borne by the Company
As per the Scheme, the radio business of AFL stands transferred to the Company.All assets and liabilities of the radio business of AFL as at 1 April 2008 have been transferred at their respective book values.Further, general borrowings of AFL as on 1 April 2008 have been allocated between AFL and the Company on the basis of ratioof net assets.
c The following assets and liabilities of Radio Business are transferred as on 1 April 2008 , pursuant to the Scheme
Particulars AmountGross Block of Fixed Assets 3,272,822,986 Less: Depreciation 384,538,275 Net Block of Fixed Assets 2,888,284,711 Capital Work In Progress 230,916,872 Current Assets , Loans and Advances 1,392,795,262 Total - A 4,511,996,845 Loan Funds 204,627,687 Current Liabilities and Provisions 497,564,555 Total -B 702,192,242 Net Balance 3,809,804,603
As per the provisions of the scheme, excess balances of assets transferred over liabilities and the gain on cancellation of shares heldby AFL is credited to Securities Premium Account and Capital Reserve as follows:
Particulars AmountAllocated net assets of Radio Division as of 1 April 2008 transferred as per the Scheme (A) 3,809,804,603 Less: General borrowings of the Company as of 1 April 2008 allocated between the Company and the AFLas per the provisions of the Scheme (B) 2,240,000,000 Excess of net assets transferred to the Company (Radio Division) (A-B) 1,569,804,603 Less: Issue of Shares to Shareholders of AFL 230,630,850 Add: Cancellation of Share Capital held by AFL 10,550,000 Reserves Created under demerger 1,349,723,753 Recognised as Securities Premium Account as per Scheme Para 5.1.3 1,000,000,000 Balance Recognised as Capital Reserve 349,723,753
Had the Scheme been accounted for in compliance with the Accounting Standard 14 "Accounting for Amalgamation" as prescribedby the Companies (Accounting Standards) Rules 2006, the Capital Reserves would have been stated at Rs. 1,349,723,753.
123
Reliance Media World Limited (Formerly Reliance Unicom Limited)
SCHEDULES TO THE FINANCIAL STATEMENTS(Currency: Indian Rupees)
d The assets and liabilities taken over pursuant to the Scheme of Arrangement is considered as per the certificate received by theStatutory Auditors of AFL.
e The shares to be issued to the shareholders of AFL has been shown as share suspense account. The same has been subsequentlyissued to the shareholders of AFL.
2 The accounts of the Company for the financial year 2008-09 have been approved by the shareholders in the Annual General Meetingheld on May 25, 2009, without considering the effect of the transfer of radio business from AFL to the Company. The Scheme of arrangement between the Company and AFL was approved by the High Court of Judicature at Bombay on April 4, 2009 and thesame was filed with the Registrar of Companies, Mumbai, Maharashtra on June 30, 2009, the effective date. As per the Scheme theradio business of AFL stands transferred to the Company from April 1 2008. These accounts are intended solely for the use by themanagement of the Company for submitting the Information Memorandum with the Bombay Stock Exchange, National StockExchange and Securities and Exchange Board of India.
3 The net results for the period 01.04.2008 to 31.03.2009 of Radio Division as shown in the Profit & Loss Appropriation Accountcomprises of the following:
Particulars Amount Rs.
IncomeService Revenue & Other Operating Income 1,962,540,372 Other Income 30,391,153
1,992,931,525 ExpenditureDirect Costs 1,003,720,969 Personnel Costs 575,920,671 Other Operating and General Administration Expenses 707,795,249 Interest & Finance Charges 282,487,674 Depreciation/Amortisation 363,028,564
2,932,953,127
Profit / (Loss) Before Tax & Prior Period Adjustments (940,021,602) Less : Prior Period Adjustments 35,293,472 Profit / (Loss) Before Tax (975,315,074) Fringe Benefit Tax 14,165,000 Net Profit / (Loss) After Tax (989,480,074)
4 Contingent Liabilities
30 June 2009
Bank Guarantees 286,342,044 Claims against the company not acknowledged as debt 19,719,890
306,061,934
5 Capital Commitment
30 June 2009
Estimated amount of contracts remaining to be executed on capital account not providedfor (net of advances) 4,118,688
Particulars
Particulars
124
Reliance Media World Limited (Formerly Reliance Unicom Limited)
SCHEDULES TO THE FINANCIAL STATEMENTS(Currency: Indian Rupees)
6 Sundry creditors
Under the Micro, Small and Medium Enterprise Development Act, 2006 which came into force from 2nd October 2006, certaindisclosures are required to be made relating to micro and small enterprises. The Company has taken necessary steps to seek relevantinformation from its suppliers about the coverage under the Act. According to the information available with the management,outstanding amount pertaining to covered creditors for a period of more than 45 days is Rs. 9,170/-.
7 Remuneration to Directors
Remuneration to the director and manager as appointed under Section 269 of Companies Act, 1956:
Period Ended 30 June, 2009
Salary 4,484,499 Contribution to provident fund 190,500
4,674,999
The above does not include gratuity and leave encashment benefits as the provision for these are determined for the Companyas a whole and therefore separate amounts for the directors are not available.
No commission is paid to directors and hence disclosure under Section 198 of the Companies Act,1956 is not made.
The Company has taken various office premises, towers and other licenses on cancellable operating lease, where the leaseagreements are normally renewed on expiry. The Lease rentals recognised in the profit and loss account is amounting toRs.56,319,353.
Particulars
Particulars
Particulars
125
Reliance Media World Limited (Formerly Reliance Unicom Limited)
SCHEDULES TO THE FINANCIAL STATEMENTS(Currency: Indian Rupees)
11 Deferred Tax
Deferred tax asset of Rs.381,231,274 as at 30th June, 2009 comprises of the following:
30 June 2009
Deferred Tax Asset
Carry forward loss 524,272,269 Disallowances which would be allowed on payment basis 31,833,950 Employee Benefits 9,751,712
(A) 565,857,931 Deferred Tax Liability
On account of Depreciation 184,626,657 (B) 184,626,657
Net deferred tax asset/ (liability) (A-B) 381,231,274
As a matter of prudence, deferred tax asset to the extent of deferred tax liability has been recognised and the balance has notbeen recognised in the books of account.
12 Disclosure of Segment Reporting under AS 17
Radio Broadcasting Outdoor Others Total
RevenueOperating Revenue 415,440,064 27,574,809 11,955,443 454,970,316 Other Income 6,360,709 253,681 62,791 6,677,181 Net Revenue 421,800,773 27,828,490 12,018,234 461,647,497 Inter Segment Sales - (4,625,000) - (4,625,000) Total Segment Revenue 421,800,773 23,203,490 12,018,234 457,022,497
ResultSegment Result (97,242,245) (99,950,199) 499,672 (196,692,772) Unallocated Corporate Expenses (Net of Income) 10,012,498 Interest Income 3,086,787 Interest Expenses 67,583,562 Income Taxes - Net Profit After Tax (271,202,045) Other InformationSegment Assets 3,652,155,507 392,383,342 43,377,555 4,087,916,404 Unallocated Corporate Assets 133,450,216
Capital Expenditure 25,490,981 3,761,987 - 29,252,968 Depreciation and amortisation 87,361,751 2,192,655 3,155 89,557,561 Non cash expenses other than depreciation - - - -
Particulars
126
Reliance Media World Limited (Formerly Reliance Unicom Limited)
SCHEDULES TO THE FINANCIAL STATEMENTS(Currency: Indian Rupees)
The group has disclosed the Business Segment as primary segment The business of the group is primarily divided into three segments– Radio Business, Outdoor Business and Others. The segments have been identified taking into account the nature of the business,the differing risk and returns, the organization structure and internal reporting system. Radio operations primarily consist of FM radio broadcasting services in the cities where the company have been allotted radio broadcasting licenses. Radio business also includes allied businesses like Activation, Live and Digital. Outdoor operations primarilyconsists of operating advertisement contracts on outdoor media properties awarded under tender and through private tenders /contracts. Segment Revenues, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to eachsegment as also the amounts allocable on a reasonable basis. Income and Expenses which are not directly attributable to anyBusiness Segment as shown as unallocated corporate income / expenses. Assets and Liabilities that cannot be allocated between thesegments are shown as part of unallocated corporate as sets and liabilities respectively.The Company's operations are mainly confined within India. The Company does not have material earnings outside India. As suchthere are no reportable geographical segments
13 Disclosure of Related Party under AS 18
Parties where control exists
Holding CompanyReliance MediaWorks Ltd. (Formerly Adlabs Films Limited) ( upto 31 March 2008) (Refer Note 1 )
Other related parties with whom transactions have taken place during the period
Significant Shareholders, Key Management Personnel and their relatives
Contribution to Defined Contribution Plan, recognised as expense for the period are as under :
ParticularsPeriod Ended 30
June, 2009
Employers contribution to Provident fund and other funds 5,214,132
Other long term employee benefits comprises encashment of leave. Total expenses recognised for the period Aprilto June, 09 is Rs. 19,62,202/-.
Defined Benefit PlanGratuityThe present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, whichrecognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unitseparately to build up the final obligation. The obligation for leave encashment is recognised in the same manner as gratuity.
I. Reconciliation of opening and closing balances of Defined Benefit obligation
ParticularsPeriod Ended 30
June, 2009
Gratuity (Unfunded)
Defined Benefit obligation at beginning of the period 8,718,748 Transferred as per provisions of Scheme -
(Refer Note 1 above)Current Service Cost 1,078,029 Interest Cost 255,404 Actuarial (gain)/loss (1,053,168) Defined Benefit obligation at the end of the period 8,999,013
Period Ended 30 June, 2009
128
Reliance Media World Limited (Formerly Reliance Unicom Limited)
SCHEDULES TO THE FINANCIAL STATEMENTS(Currency: Indian Rupees)
II. Reconciliation of opening and closing balances of fair value of plan assets
ParticularsPeriod Ended 30
June, 2009Gratuity (Unfunded)Fair value of plan assets at beginning of the period - Actuarial (gain)/loss - Expected return on plan assets - Employer Contribution - Benefits paid - Settlement cost - Fair value of plan assets at the end of the period - Actual return on plan assets -
III. Reconciliation of fair value of assets and obligations
ParticularsPeriod Ended 30
June, 2009
Gratuity (Unfunded)Fair value of plan assets at the end of the period - Present value of obligation at the end of the period 8,999,013 Liability recognised in the Balance Sheet 8,999,013
IV. Expense/(Income) recognised during the period
ParticularsPeriod Ended 30
June, 2009
Gratuity
Current Service Cost 1,078,029 Interest Cost 255,404 Expected return on plan assets - Actuarial (gain) / loss (1,053,168)Expense/(Income) recognised during the period 280,265
V. Investment details NIL
129
Reliance Media World Limited (Formerly Reliance Unicom Limited)
SCHEDULES TO THE FINANCIAL STATEMENTS(Currency: Indian Rupees)
VI. Actuarial assumptions
Gratuity (Unfunded)
LeaveEncashment (Unfunded)
Mortality Table (LIC) 1994-96 (Ultimate) 1994-96 (Ultimate)Discount rate (per annum) 7.75% 7.75%Expected rate of return on plan assets (per annum) - -
Rate of escalation in salary (per annum)
10% for the first three years and 7% thereafter
10% for the first three years and 7%
thereafter
The estimates for rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotionand other relevant factors including supply and demand in the employment market. The above information is certified by theactuary.
17 As the financial statements in accordance with the Accounting Standard -25 "Interim Financial Reporting" as prescribed under the Companies (Accounting Standards) Rules, 2006 has been prepared by the Company for the first time, hence, the comparable figuresin the financial statements has not been shown.
As per our report of even date attached.
For Chaturvedi & Shah For and on behalf of the BoardChartered Accountants
C. D. Lala Gautam DoshiPartner DirectorMembership No.35671
Place: Mumbai Gururaja RaoDate: 30 October 2009 Company Secretary
Particulars
130
MANAGEMENT DISCUSSION & ANALYSIS
Forward Looking Statement
You should read the following discussion of our financial condition and results of operations together with
our financial statements, as restated, for each of the fiscal years ended March 31, 2009 and March 31,
2008, including the notes thereto and the reports, schedules and annexures thereon, which appear in the
Auditor’s Report included elsewhere in this Information Memorandum. These financial statements are
prepared in accordance with Indian GAAP and the Companies Act and are restated in accordance with SEBI
Guidelines. Financial information relating to the year ended March 31, 2009 included in this Draft Information
Memorandum have been derived from the audited financial statements for such period, prepared in
accordance with Indian GAAP as set forth in a report of the Auditors which has not been included herein. Industry Overview Please refer “Overview of FM Radio Industry ” section in Page No. 37. Business and Financial Performance
Our primary business is radio broadcasting and we operate radio broadcasting stations in 45 cities in India,
including the four metropolitan cities of Delhi, Mumbai, Chennai and Kolkata. The details of the broadcasting
stations are given in Page No. 45 under section “Business” .
Radio Business
We derive income primarily from the sale of commercial airtime on our radio channels. In fiscal ended June
30, 2007 (i.e. 15 months), fiscal ended March 31, 2008 (i.e. 9 months), fiscal ended March 31, 2009 and
Quarter ended June 30, 2009 income from airtime sales Rs. 299.22 million, Rs. 925.15 million, Rs. 1561.64
million and Rs. 378.27 million respectively.
The Company incurred losses from fiscal 2007 to fiscal 2009. In fiscal 2007 (15 months), fiscal 2008 (9
months), fiscal 2009 and Quarter ended June 30, 2009, the Company had net loss before tax and
adjustment of Rs. 937.47 million, Rs. 670.57 million, Rs. 881.40 million and Rs. 97.24 million respectively.
The Company’s license fees in fiscal 2007 (15 months), 2008 (9 months), 2009 and Quarter ended june 30,
2009 were Rs. 24.83 million, Rs. 53.73 million, Rs. 88.33 million and Rs. 21.04 million respectively.
OOH Business
Income from the OOH Business in fiscal 2009 and Quarter ended June 30, 2009 was Rs. 156.03 million and
Rs. 22.95 million respectively.
The OOH division incurred loss in fiscal 2009 and Quarter ended June 30, 2009. The division had net loss
before tax and adjustment of Rs. 87.83 million and 99.95 million respectively.
The Company’s license fees in fiscal 2009 and Quarter ended June 30, 2009 was Rs. 129.30 million and Rs.
24.38 million respectively.
131
International foray
BIG 92.7 FM, has also launched Singapore’s only Bollywood Radio Station aptly christened ‘BIG Bollywood
96.3 FM’. The Station, launched in June 2008 is a result of an alliance with MediaCorp, Singapore’s leading
media company with the most complete range of platforms spanning radio, television, newspapers,
magazines, movies and digital media. BIG Bollywood 96.3 FM marked the first foray for BIG 92.7 FM into
territories outside of India which have a strong Indian diaspora. The radio station broadcasts ‘live’ Bollywood
entertainment everyday, prime time, from 5:00pm to 8:00pm, which includes Bollywood Hits from the 2000’s
onwards. The Station is targeted at Asians who love Bollywood and seek Bollywood entertainment. This
collaboration between the two media powerhouses caters to the entertainment requirements of not only the
fast growing Indian expat community in Singapore, but also all Asians who enjoy Bollywood music and
content.
The wholesome entertainment mix has been put together, after much research of the local tastes and
requirements to ensure ultimate listener pleasure. The Station, after 10 months of operations reaches out
to about 50% Indians in Singapore (expats & locals).The Station extremely popular amongst not just Indians
but also Malays & local Singaporeans who have a penchant for Bollywood Music. However, in view of the
current depressed economic scenario, especially in Singapore, the Company has decided to discontinue its
Singapore operations.
Sources of Income
Our airtime sales income is derived primarily from the sale of radio broadcasting time to national and local
agencies and advertisers. Our licenses to operate FM radio channels are ‘free to air’ and therefore we are
dependent upon the sale of advertisements to generate income. Our income is recognized on an accrual
basis once we play the advertisement on-air and invoice the client. This income is recognized gross of
agency commissions and other discounts. Income from national advertising consists of sales made to
advertisers that operate in more than one city (irrespective of whether they advertise only in a single city)
and income from local advertising is comprised of advertising sales advertisers that operate only in a single
city. Within each market, we have separate teams that focus on corporate accounts and retail accounts. Our
airtime sales are supervised by our head of sales that is based in Delhi. We do not have an external sales
agency to assist us with our sales and marketing efforts. Most of our sales are made to agencies that
negotiate with us for advertising rates and capacity on-air; however, some sales are also made directly to
end clients, such as to companies in the local markets.
Our airtime sales income also includes income from sponsorship of event and promotional activities relating
to our radio broadcasting, which we term as “BIG Reach” events. We utilize our airtime inventory to promote
an event, which also increase our brand profile and generates an additional source of income. For example,
we organized a event to launch new car, where we arranged the attendance of certain celebrities for such
event and also promoted the event on-air in the local station. We charge a fixed-fee for such activities and
the income is recognized once we invoice the client upon the completion of such event. We also offer
customized deals with incentives to large value customers and advertisements for multiple reasons. Our
airtime sales are a function of the amount of airtime utilised for advertising and the rates we are able to
effectively realize from the sale of this airtime. Our income from airtime sales is based primarily on the
following factors:
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• the radio station’s reach and listenership, within each market and across multiple markets;
• share of radio broadcasting in a client’s total advertising budget and competition from other media,
including print and television;
• the size of the market;
• the time of the day the advertisement airs; and
• the amount of airtime used for advertisements.
Radio listenership in India is currently being measured by the Radio Audience Measurement system being
maintained by TAM Media Services. This system is currently operational in Mumbai, Delhi, Bangalore and
Kolkata.
Our advertising rates are based typically on 5 time slots in a 24-hour period, comprising Male & Family (7am
to 12 noon), Family/Youth/Housewives (12 noon to 5pm), Male/ Youth (5pm to 9pm), Male/ Youth (9pm till
Midnight), and BPO Employees & Youth (12am to 7:00 am).
Our effective advertising rates are higher in the morning (7:00 am to 12:00 pm) and evening (5:00 pm to
9pm) time slots. Our content consists primarily of music and programs based on the Indian film and
entertainment industry.
Under our licenses, we are not permitted to broadcast news or current affairs programs.
We monitor our capacity utilisation for each of our radio broadcasting stations. The amount of airtime utilised
in advertisements compared to airtime for radio jockey talk and music broadcast is an important determinant
of our income. Our capacity utilization depends on factors such as the city, time of the day, as well as the
time of the year in which the advertisement is broadcast. During peak times in a day and in busy months, we
increase the amount of airtime for advertisements, and experience an increase in capacity utilisation.
Typically, we allocate 10 minutes every hour from 7:00 am until 11:00 pm for advertisers. During months of
peak demand, typically between September and February, we may increase the time available for
advertisements. Our future capacity utilisation may be affected by many factors, including an increase in
competition and our ability to increase our effective advertising rates.
Our operations are in forty five cities spread across different regions in India. This gives access to a higher
number of listeners compared to any other private FM radio operator in the country. We use our multiple
stations and market presence to negotiate favorable rates with advertisers. Our markets have differing
demographics and listener preferences and effective advertising rates and capacity utilisation differ among
these cities. Four Metros and two major cities, viz Delhi, Mumbai, Kolkata, Bangalore, Chennai and
Hyderabad are our most important markets and we expect them to continue to be important to our business
and results of Operations. We also focus to the non-metro and tier II & III markets to identify advertising
potentials in Small and Medium size Enterprises (SMEs).
In the radio broadcasting industry, seasonal fluctuations in income are common and are due primarily to
variations in expenditures by advertisers. Typically, our income is higher between the months of September
and February, when there are greater numbers of festivals and holidays in India and demand for radio
advertising time is high.
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We generate income from multiple advertisers and advertiser segments including companies in sectors such
as fast moving consumer goods (“FMCG”), banking and financial services, consumer durables,
relationship is primarily with the advertising agency representing the end client, although we also have direct
relationships with many clients.
Components of Expenditure
• Production expenses,
• Employee costs
• Administration and General Operating expenses
• License fees.
Production Expenses
Production expenses primarily consist of music royalty, other programming costs and transmission expenses
Music Royalty
We pay royalty to PPL, an industry organization, and various music companies that are not a part of PPL. In
addition, for each sound recording from PPL, we also pay royalty to IPRS, a collective society that
represents artists. We pay royalty on a per needle hour basis, which is based on the duration of sound
recordings of the licensor that we broadcast.
We pay royalties to PPL and Super Cassettes industries Limited for sound recordings at our radio stations at
rates negotiated with them. We pay IPRS for musical and lyrical works on behalf of its members at rates
negotiated with them. For some of the cities we have regional agreements with various regional film
production and music companies. If we expand our business and operate additional radio broadcasting
stations, the number of songs we play will increase and our expenditure on music royalty will
correspondingly increase.
Other Production expenses
Other production expenses include tower rents payable to Prasar Bharati, power and fuel expenses,
transmitter link chargesand fees paid to external talent.
Employee Cost / Human Capital
As at 30th June, 2009, we had 740 employees, of whom more than 241 comprised sales personnel. We have
not experienced significant attrition in our senior management and radio talent. As competition increases we
may face difficulty in retaining employees, including our sales force since we are the largest FM radio
operator in the country. Employee costs relate to salaries, wages, commissions and allowances, contribution
to provident fund and other medical and retirement benefits.
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Administration and General Operating Expenses
Administration expenses consist primarily of marketing, advertising and publicity expenses, traveling and
conveyance, premises related cost including rent, electricity, communications, legal and consultancy costs,
software costs and other general operating expenses.
License Fees
License fees are paid to the MIB separately for each radio broadcasting station and to the WPC and SACFA
for frequency and spectrum allocation.
Under the Phase II Policy, a licensee is required to pay license fees based on a revenue sharing formula,
which is the higher of:
(1) 4% of Gross Revenues for each year, which includes income from airtime sales, service tax and
agency commissions as specified in our invoice and
(2) 10% of the “Reserve OTEF” limit for the concerned city, which is equal to 25% of the highest financial
bid received for such city (or region, as applicable) under the Phase II bidding process.
Once the final fee for the financial year is determined on the basis of Gross Revenue share formulae, and is
higher than 10% of the Reserve OTEF for the city, the Permission holder shall pay the balance in one lump
sum within a period of one month from the date of such determination and in any case not later than 30th
September of the following year.
From the second year onwards, the permission holder shall pay advance Annual fee @ 4% of gross revenue
of the previous year or the last year for which the gross revenue has been determined or 10% of reserve
OTEF, whichever is higher, within the first fortnight of each quarter and the balance due of final annual fee
by 30th September each year.
License fees are paid Quarterly in advance.
Acquisition of Licenses under the proposed Phase III Policy
Our income and expenditure will increase if we acquire new licenses under the Phase III Policy. We will
incur expenses to acquire licenses and meet other operating expenses, including production, administration
and employee expenses, and other costs, such as depreciation. Therefore, we expect that in the initial
phase, the growth in income from such new stations may not be commensurate with the growth in expenses.
Other restrictions in our licenses or permissions under the Phase II Policy
We have separate license agreements for each of the forty five radio channels that we currently operate.
These license agreements were granted under the Government’s Phase II Policy. Each license is valid for a
period of ten years from the date of the grant of the operational license by the WPC, and payment of license
fees for each channel commences from such date. The license states that the ten-year period is fixed and is
not subject to change or extension on any ground whatsoever. Currently, the ten-year period expires
between 2016 and 2018 for all our licenses.
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The licensor has extensive rights under these licenses, including the ability to revoke our license if we
commit a breach or the right to take-over our broadcasting station or revoke, suspend or terminate the
license in the interest of national security or in the event of a national emergency or conflict or other
situations of public interest as determined by the licensor.
Our licenses terms requires us to co-locate our transmission facilities on the same transmission tower as
that of the Government operator, AIR, and pay fees to Prasar Bharati for the use of such tower. We require
security clearance prior to employing foreign personnel in certain operations. There are restrictions on
foreign ownership under our licenses and the Phase II Policy, which are also reflected in regulations issued
by the Ministry of Finance and the Reserve Bank of India. These limit foreign investment in the Company to
20%, with certain restrictions, and may affect our ability to raise additional capital.
Under the Phase II Policy, the term of the new licenses will be ten years from the date of operationalisation.
We will also need to comply with additional conditions under the Phase II policy, the Tender Document and
any further amendments, including as may be stated in any grant of permission or license. These
conditions/restrictions currently include the following:
• Permission is non-transferable and non-assignable.
• No hire or lease of more than 50% of broadcast equipment.
• More than 50% content cannot be outsourced.
• More than 25% content cannot be outsourced to a single entity.
• No borrowing or lending arrangement with other Permission holders, which may restrict its
management or creative discretion to procure or broadcast content or its marketing rights.
• No linkage between outsourced Producer and Advertising Agency.
• No change in ownership pattern except with MIB's permission.
• One hour time slot reservation per day for public announcement.
• At least 50% of content produced in India.
• No networking with other channels except in C & D category in same region.
• Studio should be exclusively devoted to FM and located within city.
• Not to use existing brand names, company names, etc.
• Radio to be Free- to-air service.
• No broadcasting of News and Current affairs.
• Content not to be objectionable, obscene, unauthorized or inconsistent with the laws
• Compliance with government guidelines pertaining to cross media ownership
• Abide by certain technical standards and parameters for the transmission and quality of its services;
and
• Co-locate transmission facilities on either existing AIR/DD towers or new towers to be constructed by
the Government.
• Continued compliance with eligibility and disqualification criteria,
The above restrictions may limit our ability to conduct our operations, obtain financing or expand our
business.
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Opportunities
Future Opportunities
• Satellite Radio / Digital Audio Broadcast (“DAB”)
o High quality music, news, weather, sports, talk radio.
o Currently, World Space India Private Limited is the only player of Satellite radio in India,
providing about 40 radio channels.
• Internet Radio
o Free, downloadable audio players. Gives stations the advantage of delivering graphics, data
and video at the same time, to enhance the audiences listening experience.
o Extends the reach of radio stations beyond broadcasting limits.
• Privatization of AM
• FM Phase III increase cities and geographical coverage per licence
New Revenue Opportunities
• Telephony
- Short-code & Premium Telephony – Audio content leverage on the telephone platform.
• Ground Activation
- On ground solutions with radio amplification for clients across the country.
• Content Syndication
• LIVE Sports
• Multiple Frequencies
• Tradability of licenses
• Event management
• Talent Management Cell
• Leveraging network strength to effectively manage Talent both music and Non music.
Threats
• Continued prohibition on Private players in certain key areas:
- News & Current Affairs
- Multiple Frequencies
- Growth of new media & entertainment platforms like DTH, Internet, Mobile etc
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KEY INVESTMENTS
The Company does not have any investment as on June 30, 2009.
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CONSOLIDATED FINANCIAL STATEMENTS
The Company does not have any subsidiary or associate as on June 30, 2009, hence preparation of
consolidation financial statements is not required.
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OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS
Except as described below, in relation to the persons named as Promoters, to the best of knowledge of the
Company, there are no outstanding material litigations against or any disputes, tax liabilities, non payment of
statutory dues, overdues to banks / financial institutions, defaults against banks / financial institutions,
defaults in dues towards instrument holders like debenture holders, fixed deposits and arrears on cumulative
preference shares issued by the Company, defaults in creation of full security as per terms of issue/ other
liabilities, proceedings initiated for economic/ civil/ any other offences (including past cases where penalties
may or may not have been awarded and irrespective of whether they are specified under paragraph (i) of
part 1 of Schedule XIII of the Companies Act, 1956), no disciplinary action has been taken by SEBI / Stock
Exchanges against the Company, its Directors, its promoters, and the companies/firms promoted by the
Promoters.
I. Cases filed for and against the Company / Notices received by the Company
Cases filed against the Company / Notices received by the Company
• There are two suits for declaration filed against us in the court of civil judge, senior division, Patiala by two
former employees alleging that their dismissal was wrong and illegal. These former employees have also
sought re-instatement along with a payment of their outstanding wages. We had offered to pay them three
months’ salary as per the terms of their employment contract. A reply has been filed to the petition, along
with an application for referring the matter to arbitration in accordance with the terms of the employment
contract. Application for referring the matter to arbitration was disallowed. The matter is currently pending.
• A claim has been filed by a former employee in the Industrial Tribunal, Government of Goa at Panaji
alleging wrongful termination of employment contract and seeking reinstatement along with payment of
outstanding wages. We have filed our written statement. The matter is currently pending.
• Summons have been received from Labour Court, Bhubaneshwar in connection with complaint filed by
an ex-employee claiming an amount of Rs. 2.28 lakhs towards performance incentive for the period 1st April
2008 to 31st March, 2009.
• Notice has been received from Labour cum conciliation officer, Hisar, to clear a month’s salary and
Provident Fund dues of an employee of one of our Contractor in view of default by the said Contractor.
• Notice has been received from Additional PF commissioner, Jammu for PF contributions not paid by one
of the Contractor engaged by the Company. In view of the default by the said Contractor, the company has
been asked to pay an amount of Rs. 69,024/- towards PF contributions of persons employed by the said
Contractor.
• Our service tax audit was completed in August 2009. The audit observations pertain to various services
provided and Central VAT credit availed. If the observations are considered unsatisfactory by the service tax
department, then we may incur a liability of Rs. 1,200 lakhs plus interest.
• The Jammu and Kashmir sales tax department has served a demand notice for payment of sales tax
amounting to Rs. 68 lakhs. The department has alleged evasion of sales tax dues to be paid by us for our
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advertising services. An appeal has been filed with the Deputy Commissioner of Commercial Taxes
(Appeals) Jammu against this notice.
• Actor Sunny Deol has served a notice on RMWL alleging that he and his family members have been
defamed in a show aired titled “Son Sunny” on Big 92.7 FM. Mr. Deol has also claimed a sum of Rs. 20000
lakhs as damages for defamation. RMWL has sent a detailed response to the said notice through its
advocate.
• The Assistant Controller, Chandigarh Transport Undertaking, Chandigarh (AC, CTU) has served a
notice dated February 2, 2009 for non-payment of monthly rent for space utilized for advertisements. We
had entered into an agreement with the Chandigarh Transport Undertaking for display of advertisements in
417 buses run under its authority. The AC, CTU has alleged that monthly dues for December 2008 and
January 2009 have not been paid on the respective due dates, i.e., December 10, 2008 and January 10,
2009 and therefore, in addition to payment of the outstanding amount, we are also liable to pay a penalty at
the rate of 1%. Accordingly, we have been directed to deposit a total amount of Rs.14.18 lakhs. We have
taken up the issue with the concerned authority justifying the delay and requesting for waiving off the
penalty. The matter is under consideration.
• A notice dated August 6, 2009 from the Joint Commissioner of Bruhat Bangalore Mahanagara Palike
(BBMP) was received instructing us to stop work on the bus shelters which we had undertaken to construct
pursuant to a license granted for the erection of 172 bus shelters. Under that license, these shelters were to
be constructed within a period of 90 days. The construction work was not completed within the stipulated
time and a notice from the BBMP was served to pay Rs.48 lakhs as penalty. The license was also
withdrawn. The allegations have been refuted and a request has been made to revoke the notice and waive
off the penalty amount. The matter is under consideration.
• Five summary suits under order XXXVII rule 2 of the Code of Civil Procedure, 1908 have been filed
against us by Mr. Amin Pawar, proprietor of M/s Leading Edge before the Bombay High Court for recovery of
Rs. 63.2 lakhs.
• Five winding up petitions under sections 433, 434 and 439 of the Companies Act, 1956 have been filed
against the Company by M/s Leading Edge (CP/817/2009, CP/808/2009, CP/805/2009, CP/807/2009 and
CP/806/2009) alleging that the Company is indebted to the said party to the tune of Rs. 63.2 lakhs for which
Leading Edge had also filed Summary suits under Order XXXVII rule 2 of the Code of Civil Procedure, 1908
as stated above.
• A Writ Petition was filed in the High Court of Karnataka at Bangalore by an ex-employee questioning the
jurisdiction of the Civil Court in connection with the case filed by the Company against the said ex-employee
wherein the Company was seeking injunction from the Civil Court restraining him to join the competitor,
when there was an Arbitration Clause in the Agreement. In view of this Writ Petition the proceedings in the
suit filed by the Company in the Civil Court have been stayed. The Writ Petition is still pending to be
disposed off.
• Summons have been served on the Company with respect to a suit filed by M/s Aces Events and
Promos in the City Civil Court at Secunderabad claiming monies for services rendered. The amount involved
is about Rs. 3 lakhs.
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Cases filed by the Company
• A petition has been filed against a former radio jockey before a sole arbitrator in New Delhi for claiming
compensation to the tune of Rs. 43.7 lakhs for breach of the employment contract and bond executed by the
said radio jockey. The proceedings are currently pending.
• A petition has been filed before a sole arbitrator in Mumbai for an amount of Rs. 34.3 lakhs in respect of
the services rendered by the Company. We have filed our Statement of Claim before the Arbitrator. The
proceedings are currently pending.
• A special civil application has been filed by us in the High Court of Gujarat against Ahmedabad
Municipal Corporation (Respondent) under article 226 of the Constitution of India for setting aside an order
of the Respondent asking us to remit an amount of Rs. 250.2 lakhs, Rs. 30.9 lakhs and Rs. 3.9 lakhs
(totaling to Rs. 285.0 lakhs) towards the license fees, service tax and penalty respectively and directing the
Respondent to refund us an amount of Rs. 105.7 lakhs towards the full and final settlement from the security
deposit amount. The arguments are over and the court has opined that the issue should be the subject
matter of recovery proceedings and does not warrant invocation of Article 226 of the Constitution of India.
The Company is evaluating the option of filing an appeal in the Supreme Court against the order of the High
Court of Gujarat.
• There are 23 cases filed by us in various criminal courts for dishonour of cheques which were provided
to us in consideration of the services rendered. The cases involve an amount of Rs.101.05 lakhs and are at
various stages of adjudication.
• A notice dated April 30, 2007 was issued to us by the Court of Additional Commissioner (Stamps),
Aligarh under section 33 of the Indian Stamp Act, alleging evasion of stamp duty on the ground that the
stamp duty is required to be paid even on the renewal period, because of a clause contained in the lease
deed providing for the ‘option for renewal’. We had filed our reply and written submissions against the stand
taken by the Commissioner, after which an order was passed against us. Appeal was filed by us against the
said order. However the appeal has been dismissed. The Company is in the process of filing an Appeal
against the said order in the High Court at Allahabad. Amount involved Rs. 6.70 Lakhs.
• Goods belonging to us being transferred from our Chandigarh office to Amritsar office were detained by
a Taxation Inspector and on the basis of his report, and a notice was issued under section - 51(6)(a) of the
Punjab VAT Act, 2005 by the Excise & Taxation Officer (ETO). We had given a detailed reply to the charges
made. However, the arguments raised by us were rejected; an order dated July 28, 2007 detaining the
goods was passed. However, the goods were released upon furnishing a bank guarantee & making requisite
payments. An appeal has now been filed before the Deputy Excise and Taxation Commissioner cum Joint
Director of Enforcement, Patiala division (Taxation Commissioner), against the impugned order. This appeal
was disposed off and the case was remanded back to the ETO, who passed a fresh order, once again
implicating us for alleged default. A new appeal has therefore been filed before the Taxation Commissioner.
The amount involved is Rs. 2.57 lakhs.
• A suit has been filed by us in the city civil court at Bangalore against a former radio jockey seeking
injunction from the court for restraining him to join a competitor in breach of the terms and conditions of the
employment contract and also to prevent him from copying a popular show on our Big 92.7 FM Radio
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Channel. An interim order was passed by the court restraining him to carry on a program similar to the one
aired by Big FM on the competitor’s radio station. The proceedings in this suit have been stayed in view of
the Writ Petition filed by the said employee in the High Court of Karnataka, Bangalore. We are evaluating
the option to invoke the Arbitration Clause of the employment contract to seek relief.
• We have filed a complaint under section 2(o) read with section 10(a)(i) of the Monopolies and Restrictive
Trade Practices Act, 1969 in the MRTP Commission, Delhi against a newspaper publication company
refusing to publish RMWL advertisements in their newspaper. Interim relief was denied by MRTP and also
by the Supreme Court on appeal. The matter is currently being argued on merits before the “Competition
Appellate Tribunal” since all matters of MRTP have been shifted to the said tribunal.
• A Winding-up petition has been filed by the Company against Subhiksha Trading Services Limited in the
High Court of Chennai for non-payment of outstanding amount of Rs.43,49,211.52/-.
• We and several other FM radio channels have received a notice from the Karyalaya Nagar Palika
Nigam, Bhopal, wherein a tax at the rate of Re. 1 per second has been levied on all advertisements
broadcasted by FM radio channels. We have sent a detailed reply challenging this notice on the ground that
the notice is arbitrary and issued without any authority, as the power to impose tax on advertisements
broadcasted by radio or television lies with the Union parliament and not a state legislature.
II. Cases involving Directors
Shri Anil Sekhri - Shri Anil Sekhri had filed criminal complaint u/s 138 of the NI Act, 1881, for cheque
bouncing of Rs. 6,00,000 issued by JB Singh to Anil Sekhri. Bombay High Court has fined JB Singh Rs.
12.00.000 and sentenced him to 3 months imprisonment vide order dated 15.06.2009. Also Shri Anil Sekhri
has got decree against JB Singh for Rs. 35 lakhs. JB Singh filed a counter complaint (case no 28277 S
2005) against Shri Anil Sekhri in 1996 u/s 420, 406, 384 and 477 of Indian Penal Code, 1860 alleging that
he paid Rs. 50,000 to Shri Anil Sekhri as CA for which he did not receive any services.
III. Pending Material litigation in which Promoters are associated
A. Reliance Capital Limited (RCap)
Cases filed against RCap
• One Harinarayan Bajaj & Ors have filed a suit against RCap in the Bombay High Court which pertains to
loans of Rs.1000 lakhs granted by RCap to the plaintiff secured by a pledge of shares. The loan amount was
recovered by enforcement of security. The plaintiff has alleged that sale of part of the shares was not correct
and has claimed refund of shares and benefits accrued on the said shares or payment of Rs.164.5 lakhs
together with interest @ 24%. The case involves 322,172 shares of Sesa Goa Limited and also Rs.149
lakhs towards accrued dividend and interest. Surplus proceeds out of sale of pledged shares have been
deposited by RCap in the court. The matter is pending for further proceedings.
• Ms. Bharatiben & Ors. have filed a suit against RCap in the Bombay High Court which pertains to some
equity shares delivered by Manubhai Maneklal and his business associates to RCap (as a custodian) in
connection with the transactions carried out by Reliance Enterprises Limited. The Plaintiffs are the heirs and
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legal representatives of the late Manubhai Maneklal who have filed the suit for recovery against RCap. The
case involves an amount of Rs.757 lakhs. Plaintiffs have completed their evidence. The case is now posted
for evidence by RCap.
• There are some investor related disputes with respect to shares of RCap which involve 33 cases where
RCap has to purchase shares from the open market and deliver the same to the complainants. There are 23
cases where shares have to be recovered/compensated for settlement as the same have been transferred
out. There are 10 cases in relation to monetary claims against RCap.
• There are certain investor related disputes in which RCap has been made a party, but there would be no
financial impact on RCap. Out of these, 32 cases are in relation to settlement involving a broker or third
parties, 55 cases which involve the complainant making a payment to RCap or providing suitable
indemnities. There are 29 cases where settlement is pending completion of procedural formalities. In
addition, there are 26 cases where copies of relevant court documents/complaints are not available with
RCap.
• There are 36 investor related disputes filed after the demerger of Reliance Industries Limited, where
parties claim to have lost shares pursuant to the demerger. These cases relate to 1084 shares in total.
RCap has not been made a party in all these cases. These cases relate to ownership of shares and shares
to be allotted subsequent to the demerger and merger.
• There are 92 consumer cases filed against RCap in various courts in respect of disbursement of loan
amount. These cases involve an amount of Rs.250.4 lakhs and are at various stages of adjudication.
Cases filed by RCap
• There are 13 cases filed by RCap in the Bombay High Court for recovery of dues in respect of the
financial assistance or bill discount facility granted by it to the defendants. The cases involve an aggregate
of Rs. 6677 lakhs and are at various stages of adjudication.
• There are 14,111 cases filed by RCap in various criminal courts with respect to dishonour of cheques
which were given for purchase of mobiles. The cases involve an amount of Rs.277.3 lakhs and are at
various stages of adjudication. B. Reliance Land Private Limited (RLPL) RLPL does not have any outstanding litigation as on October 30, 2009. Outstanding Material Litigation of top five Group Companies 1. Reliance MediaWorks Limited (formerly Adlabs Films Limited) (“RML”) Cases filed against RML
• One Mr. Sunil Kumar Boobna has filed a criminal complaint (No. 1168 (c) of 2005) against various
persons including RML and its erstwhile directors before the court of the Chief Judicial Magistrate, Patna.
RML had through its erstwhile directors agreed to provide security for the amount advanced by the
Complainant to accused No. 2 for a film he was producing. It was agreed that the movie would not be
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released without a ‘No Objection Certificate’ from the Complainant. The name of the film was subsequently
changed and the film was released but an amount of Rs. 36,85,900/- allegedly due was not paid to the
Complainant. Instead a cheque of Rs. 4,45,889/- was issued in favour of the Complainant. The Complainant
filed a case for breach of trust and cheating against the accused. The matter is pending before the trial
court. RML has filed a quashing application (No. 3424 of 2006) before the Patna High Court, which is
presently pending.
• There are 16 civil cases filed against RML (in some of the cases the directors and erstwhile directors
have been made parties) in the different civil courts relating to possession of negative of films, processing
the prints of films, overseas distribution rights for the film, infringement of copy right and other civil disputes.
The cases are currently pending before the court and are at various stages of adjudication. The aggregate
amount involved in these cases is approximately Rs 3.55 Crores.
• A Recovery suit has been filed by M/s Kulwant Singh Harbhajan Singh Pictures Pvt. Ltd and Others
against RML in the court of Civil Judge, Junior Section at Moradabad by Chaddha Palace, Moradabad (UP)
for an amount of Rs 35,11,587/- being unpaid Conducting fee for the property situated at Chaddha Palace,
Moradabad.
• There are four labour cases filed against RML in labour courts and various related authorities with
respect to various labour issues pending at various stages of adjudication. The aggregate amount involved
in these cases is approximately Rs 9.35 Lacs.
• There are two consumer complaints filed against RML in various District Consumer Forums related to
selling of food and beverages at a price in excess of Maximum Retail Price and charging parking fee. There
is no financial implication in any of these cases.
• 6 cases have been filed against RML in various courts with respect to tax assessment and payment.
These cases are at various stages of adjudication and involve approximately an amount of Rs. 1415.18
Lacs.
• Mr. Manmohan Shetty, the former managing director, allegedly traded in RML’s shares during the
closure of the trading window thereby violating the internal code of conduct for SEBI (Prohibition of Insider
Trading Regulations), 1992. Taking note of this violation, SEBI initiated its investigations against RML and
Mr. Manmohan Shetty and the same was intimated vide its letter dated November 7, 2006. As per regulation
12(1) of the Insider Trading Regulations, Ms Kirti Desai being the compliance officer was required to inform
SEBI about the violation of the code of conduct. However, such information was not made available. Ms Kirti
Desai was, therefore, warned by SEBI vide its letter dated December 31, 2007.
• RML filed a consent petition with SEBI and based on further discussions offered a payment of Rs. 15
lakhs as settlement charges without admission or denial of guilt on RML’s part to the finding of fact or
conclusion of law. Accordingly, the required amount was paid and a consent order was passed by SEBI on
March 6, 2009, wherein the fact of such settlement was recorded. It was also noted therein that since
Manmohan Shetty was no longer RML’s chairman or managing director, SEBI would continue its
proceedings against him separately. Therefore, the proceedings against RML had been settled and there
are no other outstanding issues which affect RML.
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• Dilsa Distributors (Applicant) filed an execution application (No. 51 of 2007) against Vivek Arts
(Respondent) before the Bombay High Court. RML was served with a Garnishee Notice (No. 2082 of 2007)
in pursuance of an order passed by the Court in the above proceedings to attach various film material of the
film “Ek Hindustani” for the purposes of execution. RML replied to the above notice stating that they had a
first and primary lien over the film negatives since their dues to the tune of Rs.61,42,093/- have not been
paid by the Respondents. RML had objected to the above notice where they have been added as a
garnishee to the execution proceedings. A person by the name of Shanlal Goenka has obtained an
injunction from a Civil Court in Guwahati against the release of final prints of the film. They have prayed for
quashing of the garnishee notice served upon RML. No new orders have been passed in the matter
thereafter.
• UTV Software Communications Limited (UTV) has served RML with a legal notice for infringement of
copyrights of its film titled “What’s your Rashee”. UTV has claimed that the master print of the film, which
was processed at RML laboratories, was illegally copied and distributed to persons engaged in piracy of film
prints. Further, UTV has alleged that persons employed by RML were involved in this act of piracy and that
they have purportedly not ensured adequate safety measures to protect the films which were in their
possession. Consequently, UTV has, through this notice, demanded a payment of Rs.5,000 lakhs from RML
as damages for purported losses suffered by them as a result of the alleged infringement, and has
threatened to take appropriate legal action, if such payment is not made within a period of 7 days from the
date of the notice. RML has refuted all the allegations through their reply dated September 24, 2009.
• RML has received a show cause notice dated 24th September, 2009 from Indian Motion Picture
Producers’ Association (IMPPA) alleging rampant piracy of films being carried out from their premises. The
IMPPA has threatened to issue a general mandate to all producers to refrain from dealing with RML in any
manner and to remove all their deposited film prints from the laboratories unless a satisfactory reply is given
to the issues raised in their notice. RML has replied to the show cause by its letter dated 28th September,
2009.
• RML has received a notice dated September 25, 2009 from the Film and Television Producers Guild of
India Limited (FTPGIL). FTPGIL, acting on a letter received by them from UTV on September 23, 2009
alleging rampant piracy of films and lack of adequate security resulting in alleged copyright infringement of
its film titled “What’s your Rashee”, has asked RML to give their comments in reply to the these allegations.
The FTPGIL has also stated that in the event RML is unable to provide a satisfactory reply, appropriate
action would be initiated against RML. RML has refuted all allegations through its reply dated September 29,
2009.
• The Collector of Stamps, Mumbai has served a demand notice dated March 9, 2009 on RML demanding
payment of stamp duty aggregating Rs. 7,34,700/- in connection with various agreements executed by RML
during the period of December 2006 to October 2007. The agreements deal with distribution and co-
production of various films. Appropriate steps to resolve the issue are being taken.
Cases filed by RML
• RML has filed a criminal complaint (No. 2865 of 2007) against Gaurang Doshi (accused) before the
Court of the Metropolitan Magistrate at Andheri, Mumbai for misappropriation of funds. The accused had
represented that he was producing a movie titled “Happy Birthday – Those who don’t believe in magic, will
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never find it” and based on that representation, RML agreed to take all distribution rights, including the
existing and all future rights in respect to the same for the purpose of commercial exploitation and
distribution. Consequently, a sum of Rs. 3,25,00,000/- was paid to the accused. However, the accused could
neither provide proper updates on the progress of the film nor produce copies of the agreements entered
into with various actors and actresses. On realizing that the representations made by the accused were false
and fraudulent, RML has instituted the present complaint. An investigation has been initiated by the police
but no report has been submitted.
• Mr. Ravi Diwan, sole proprietor of Suryodaya Productions (Complainant No. 1), has filed a complaint
(No. 441 (S) of 2003) against M/s. Gola Brothers and it sole proprietor Mr. Hyder Gola (accused) before the
Court of Metropolitan Magistrate. The accused is a distributor of films in Mumbai and had issued two
cheques of Rs.10,00,000/- and Rs.3,00,000/- to the Complainant No. 1 as consideration for obtaining the
rights to distribute the film titled ‘Aanrth’. However, these cheques were dishonoured and consequently,
Complainant No. 1 filed the present complaint. RML has been added as a complainant to the above
complaint since the Complainant No. 1 maintains an account for the purpose of receiving such royalty
amounts from various distributors. However, RML is not directly involved in the recovery of the amounts
mentioned.
• M/s Runwal Mutiplex Limited (subsequently merged into RML along with its two directors, Mr. Subhash
Runwal and Mr. Sandeep Runwal (Applicants) have filed a revision application before the Sessions Court at
Mumbai, against the order of the Metropolitan Magistrate, Mumbai. The Metropolitan Magistrate issued a
process against the Applicants on a complaint filed by the Inspector, Security Guard Board for the Mumbai
and Thane District. The charges related to engaging non-exempted security guards in non compliance with
the Private Security Guards (Regulation of Employment & Welfare) Scheme, 2002 and Maharashtra Private
Security Guards (Regulation of Employment & Welfare) Act 1981. Hearings before the Metropolitan
Magistrate and the Sessions Court are pending.
• A complaint has been filed by RML before the Council of Architecture, New Delhi and a private
complaint before the Metropolitan Magistrate's court at Borivali (Mumbai) against an Interior Designer Firm
namely Era Architects for cheating us by misrepresenting. A complaint u/s 420 of the IPC at Metropolitan
Magistrate's Court, Borivali (Mumbai) has also been filed regarding the same.
• There are 4 civil cases filed by RML in the different civil courts relating to recovery of dues and the
aggregate amount involved in these cases is approximately of Rs. 482.85 Lacs. The cases are at various
stages of adjudication.
• RML has served a notice on Construction Catalysers Private Limited (CCPL) for termination of its
agreement dated February 11, 2008. Under the agreement, CCPL had agreed to construct and develop a
pre-fabricated modular movie theatre. RML paid an amount of Rs. 19,26,855/- as the first tranche payment
to CCPL for starting work. However, CCPL failed to start construction of the structure as agreed. Frustrated
with the delay, the constant shifting of timelines and the abysmal nature of work of CCPL, RML terminated
the agreement by serving a notice on CCPL and claimed a refund of Rs.96,61,085/- along with damages
amounting to Rs.1,00,00,000/-. The matter has now been placed for arbitration before Justice M.S. Jamdar
(sole arbitrator).
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• There are four pending disputes initiated by RML before different arbitrators and arbitral tribunals in
relation to various disputes related to conducting agreements. The aggregate amount involved in these
cases is approximately Rs 1834.21 Lacs.
• RML has served a notice on Mr. Sagarmal Kothari, proprietor of Nirmal Sagar Talkies, Ujjain for
termination of the conducting agreement entered into by the parties on December 21, 2006. In pursuance of
the agreement, RML took over the operations of the theatre. Soon thereafter it faced a lot of trouble and
resistance from certain influential people of the locality, namely, Mr. Raja Yadav and Mr. Shakti Singh, who
had operated certain ancillary services in the same premises prior to RML’s takeover. Upon the assurances
of Mr. Kothari that the issues would be resolved amicably, RML extended a loan of Rs.8,00,000/- to him for
the purpose of clearing all outstanding dues of Mr. Shakti Singh and Mr. Raja Yadav. However the issue
could not be resolved. RML has claimed a total sum of Rs.3,12,53,003/- along with interest at the rate of
12% as amount in dues from Mr. Kothari, which has not yet been deposited. In view of the ensuing dispute,
both parties have agreed to resort to arbitration for a resolution.
• RML has terminated our conducting agreement with Mr. Radheshyam Rathore dated June 27, 2007
through a notice served upon him on January 28, 2009. RML entered into the agreement with Mr. Rathore
for the purpose of taking over the operations of “Sri Ram Smarati Talkies” and “Jyoti Chhabigrah” and for
refurbishing/redecorating/remodeling the theatres. During the process of carrying out such refurbishments/
redecorations, our engineers and technicians discovered several structural deficiencies in the theatres
thereby making them unsafe for public use. Consequently, RML was compelled to terminate the conducting
agreement with Mr. Rathore. It has claimed a total amount of Rs.5,63,38,388/- from Mr. Rathore on
termination of the conducting agreement. Mr. Rathore has however failed and/or refused to pay the amount.
The matter has now been set up for resolution through arbitration.
• RML through its notice dated December 12, 2008 terminated its conducting agreement with
Chandragupta Cinema Private Ltd. (CCPL) under which it was supposed to operate its theatre in Indore,
Madhya Pradesh. Under the agreement CCPL was supposed to obtain permission for converting the single
screen theatres into twin screen theatres and the costs were to be borne by RML. In addition to the
conducting agreement, RML had also entered into a financial assistance agreement with CCPL wherein it
agreed to pay all outstanding municipal dues of CCPL including property tax. Based on this agreement,
CCPL entered into a compromise with the Indore Municipal Corporation, which had filed a suit against CCPL
for non-payment of dues and the matter was disposed off by the Madhya Pradesh High Court. Under the
terms of the financial assistance agreement, CCPL was supposed to obtain all permissions for
alterations/additions in the theatre within 30 days of the disbursement of the amount through cheque. CCPL
failed to perform its obligations under the financial assistance agreement. RML was therefore forced to
terminate its conducting agreement with CCPL through its notice dated December 12, 2008 and demanded
a payment of Rs.4,76,05,822/- as dues with interest. The matter was thereafter referred to arbitration.
• RML has filed a winding up petition (No. 654 of 2009) against M/s WEG Entertainment Private Limited
(Respondent) before the Bombay High Court. RML had entered into a joint distribution agreement dated
September 22, 2007 with the Respondent for acquisition and distribution of 95 English films. RML also paid
a sum of Rs. 1,00,00,000/- as its share of the acquisition costs. A total sum of Rs. 3,39,26,875/- is due from
the Respondent. The parties agreed to terminate the distribution agreement. The Respondent issued 7 post
dated cheques in favour of RML. The first three cheques, each amounting to Rs. 50,00,000/-, were returned
dishonoured. A notice was sent by RML to the Respondent to pay the sum due which was not adhered to
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and therefore RML had filed the present winding up petition against the Respondent. However, RML has
reached a settlement with the Respondent and the same was set out in their letter dated September 1,
2009. The consent terms under that settlement have been filed in the High Court. A final order has not yet
been passed in the matter.
• RML has filed a criminal complaint (No. 1231 of 2009) dated April 6, 2009 against WEG Entertainment
Private Limited (accused) and others before the Court of the Learned Metropolitan Magistrate, Mumbai. RML
entered into a joint distribution agreement dated September 22, 2007 with the accused for acquisition and
distribution of 95 English films. RML paid a sum of Rs. 1,00,00,000/- as its share of the acquisition costs.
The accused owes a total sum of Rs. 3,39,26,875/- to RML. The parties agreed to terminate the distribution
agreement on payment of the abovementioned sum to RML. The accused issued 7 post dated cheques in
its favour. The first two cheques, each amounting to Rs. 50,00,000/-, were returned dishonoured which led
to filing the present complaint under section 138 of the Negotiable Instruments Act, 1881. However, RML
has reached a settlement with the accused and the same was set out in their letter dated September 1,
2009. RML is in the process of filing an application for withdrawal of the compliant pursuant to this
settlement.
• Eight other cases have been filed by RML under section 138 of the Negotiable Instruments Act, 1881,
which are pending before various forums in the country, aggregating to Rs. 25918182/-.
• RML served a notice on Mr. Jagdish Vasudev Agarwal, proprietor of Rajmandir Cinema, Jalna for
termination of the conducting agreement entered into with him on July 31, 2007. It was agreed between the
parties that Mr. Agarwal would hand over the premises of Rajmandir Cinema to RML on or before
September 1, 2007 with all the necessary licenses, permissions, certifications and requirements for the
purposes of refurbishing and operating the same. However, Mr. Agarwal failed to carry out his obligations.
Further, the ownership of the property is not clear, as it appears that the Marathwada Wakf Board, and not
Mr. Agarwal, is the real owner of the land on which the theatre has been constructed. Mr. Agarwal has been
unable to procure a no-objection certificate from the board. RML terminated the conducting agreement. RML
has also claimed a sum aggregating Rs.42,50,000 from Mr. Agarwal. No suit has been filed in the matter as
on date.
• RML has filed two complaints against the Brihan Mumbai Corporation before the Joint Assessor &
Collector, Mumbai Municipal Corporation. In the complaints RML has asked for adoption of the profit basis
method for assessment of its property at Wadala (I Max) and R Adlabs, respectively, rather than the
currently followed gross method (box office collection method). The complaints are presently pending.
2. Reliance Life Insurance Company Limited (RLIC)
Cases filed against RLIC
• A writ petition (No. 34256 of 2007) has been filed by Bal Natrajan in the Kerala High Court in 2007
against RLIC, challenging the order passed by the Ombudsman in relation to cancellation of the policy. The
amount involved in the matter is Rs. 0.5 lakhs. The matter is currently pending for hearing.
• 100 consumer complaints have been filed before various district consumer forums against RLIC by
various individuals in relation to various issues including, claims repudiation, non receipt of policy documents
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and for deficiency of service. The aggregate amount involved in the cases is approximately Rs. 255.44
lakhs. The matters are pending at various stages of adjudication.
• Appeals have been filed by Jagdish Chand (first appeal no. A/08/1013 of 2009) and Jayshree
Chandrakant Kapure (first appeal no. 9 of 2009) in the respective state commissions against RLIC
challenging the orders of district consumer forums. The aggregate amount involved in the cases is
approximately Rs. 10 lakhs. The cases are pending at various stages of adjudication.
• 12 civil cases have been filed by former employees in different civil courts against RLIC, in relation to
issues pertaining to claims repudiation, recovery of commission, commercial disputes and an injunction for
termination of services. The aggregate amount involved in the cases is approximately Rs. 2.9 lakhs. The
cases are pending at various stages of adjudication.
• Pedalu Purushottam has filed a criminal complaint numbered 61 of 2009 before the Sub-Divisional
Judicial Magistrate at Berhampur against RLIC and its the Head–legal, compliance and company secretary,
manager claims under different sections of the Indian Penal Code, 1860. The complaint pertains to claim
repudiation. The case is currently pending.
• Three cases have been filed against RLIC in the Lok Adalat at Vishakhapatnam by Polamarasett Yeruku
Naidu (No. 1290 of 2008) and K. V. Samba Murthy (No. 567 of 2009) in relation to claims repudiation and
deficiency in services. The aggregate amount involved in the cases Rs. 13.4 lakhs. The matter is currently
pending.
• 40 legal notices have been issued against RLIC in relation to issues pertaining to non-processing of their
claims, wrongful cancellation of policy, non cancellation of policies upon request, non refund of the premium
amount, deficiency of service and non issuance of premium receipt. The aggregate amount involved in these
cases is approximately Rs. 118 lakhs. RLIC is in the process of replying to these notices.
• 220 legal notices were issued against RLIC in relation to issues pertaining to non-processing the claim,
wrongful cancellation of policy, non cancellation of policies, non refund of the premium amount, deficiency of
service and non issuance of premium receipt. The aggregate amount involved in these cases is
approximately Rs.1459.92 lakhs. RLIC has replied to all these notices.
• 48 legal notices were issued against RLIC in relation to various issues pertaining to non payment of the
lease rentals, commercial disputes, unilaterally termination/breach of lease/leave and license agreements.
The aggregate amount involved in these cases is approximately Rs. 88.67 lakhs. RLIC has replied to all the
45 legal notices.
• 9 complaints have been filed against RLIC before various Ombudsmen in relation to issues pertaining to
non processing of claims, non receipt of the policy document, non cancellation of policies upon request,
recovery of money, fraud committed by RLIC’s employees, for re-issue of the policy and deficiency in
service. The amount involved in these cases is not ascertainable. RLIC is in the process of replying to these
complaints.
• 141 complaints were filed by various individuals before various Ombudsmen against RLIC in relation to
various issues including, non processing the claim, repudiation of claim, rejection of the claim, refusal to
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refund the premium, non issuance of premium receipt, unilaterally changing the terms of the policy, recovery
of money, fraud done by an employee of RLIC, deficiency in service, etc. The amount involved in these
cases is not ascertainable. RLIC has replied to all the grievances set out in these complaints.
• 30 complaints have been filed against RLIC before various Ombudsmen in relation to various issues
such as non processing of claims, repudiation of claims, rejection of claims, refusal to refund premiums, non
issuance of premium receipt, unilaterally changing the terms of the policy, non receipt of the policy
documents, non cancellation of policies upon request, recovery of money, fraud done by an employee of
RLIC, deficiency in service, etc. The amount involved in these cases is not ascertainable. The Ombudsman
has passed orders in favour of RLIC. One of the complainants has filed an appeal against the order of an
Ombudsman before the High Court of Kerala.
• 19 complaints were filed by various individuals before the various Ombudsman against RLIC in relation
to various issues including, refusal to refund the premium, cancellation of policy, unilaterally changing the
terms of the policy, etc. In these complaints the Ombudsman had passed orders against RLIC. RLIC has
filed an appeal in one matter before the High Court of Allahabad. In other cases RLIC had duly complied
with the orders.
• 151 inspection notices were issued by various labour enforcement officers against various branches of
RLIC in relation to various compliances under labour law provisions. RLIC has replied to all these notices.
• 11 complaints have been filed against RLIC before various labour conciliation officers by some of its
former employees. The cases pertain to various issues including, illegal termination and non-payment of
wages. The aggregate amount involved in these cases is approximately Rs. 1.70 lakhs. RLIC has filed its
replies before the respective labour authorities.
• 8 cases have been filed against RLIC including some of its directors and branch heads, in the various
courts of judicial magistrates. Most of these cases pertain to non compliance of the provisions of certain
Shops & Establishment laws in Mumbai, Uttar Pradesh, West Bengal, and the Equal Remuneration Act,
1976. One case at Phusro (No. 32 of 2009) is pending for adjudication. RLIC has paid fines aggregating to
Rs. 0.37 lakhs in seven cases.
• 79 complaints have been filed before the Insurance Regulatory and Development Authority (IRDA)
against RLIC in relation to various matters including non processing the claims, repudiation of claims,
rejection of the claims, refusal to refund the premiums, non issue of premium receipts, unilaterally changing
the terms of the policies, non receipt of the policy document, recovery of money, fraud committed by
employees of RLIC and deficiency in services. The amount involved in these complaints is not ascertainable.
RLIC is in process of replying to these complaints.
• 315 complaints have been lodged before the IRDA against RLIC in relation to issues such as non
processing claims, repudiation of claims, rejection of claims, refusal to refund premium amounts, non issue
of premium receipts, unilaterally changing the terms of the policy, non receipt of the policy documents,
recovery of money, fraud committed by employees of RLIC and deficiency in services. The amount involved
in these cases is not ascertainable. RLIC has replied to all the grievances set out in these complaints.
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Cases filed by RLIC
• 4 civil suits have been filed by RLIC in the Bombay High Court against M/s. Dawnay Day (No. 554 of
2009), Sanjay Jadhav (No. 225 of 2009), Rajiv Lohia (No. 97 of 2009) and Naizi Mohammad (No.226 of
2009) for recovery of amount due from them. These cases relate to issues such as unsatisfactory services
rendered by service provider, breach of contract and excess payment of remuneration. The aggregate
amount involved in the cases is Rs. 765.52 lakhs. The cases are currently at various stages of adjudication.
• 5 civil suits have been filed by RLIC in the City Civil Court at Mumbai against Abhinav Chahad (No. 2411
of 2008), Rajeev Singh (No. 2675 of 2008), Jasmine Kapadia (2677 of 2008), Santosh Singh (2677 of 2008)
and Rajendra Bartiya (2678 of 2008), all former employees of RLIC, for recovery of amount due to breach of
employment contract. The aggregate amount involved in these cases is Rs. 2.28 lakhs. The cases are
pending at various stages of adjudication.
• A writ petition (No.21126 of 2008) has been filed by RLIC in the Allahabad High Court for quashing the
first information report filed by Mrs. Sadhana Gupta against certain employees of RLIC, under provisions of
the Indian Penal Code, 1860. Mrs. Gupta has alleged that these employees of the Ghaziabad branch of
RLIC have malafidely procured the documents without her knowledge and subsequently forged the
signatures on those documents on a proposal form of a life insurance policy and submitted the same. She
has also alleged that a forged cheque of Rs. 0.25 lakhs was deposited for payment of premium for the
policy. Aggrieved by these alleged facts, Ms. Sadhana Gupta has filed a FIR no. 1367 of 2008 in the
Kavinagar police station in Ghaziabad. The matter is currently pending.
• A writ petition (No. 2825 of 2009) has been filed by RLIC in the Allahabad High Court challenging an
award of the Insurance Ombudsman, Lucknow, pertaining to computation of the premium amount. A
complaint was lodged by Mr. Vijay Kumar Gupta, who had availed a policy issued by RLIC for an assured
sum of Rs. 60 lakhs with an annual premium of Rs. 1 lakh.However, the premium was not enough to sustain
the mortality charges and hence Mr. Gupta was requested either to increase the premium amount or to
decrease the assured amount. He was also given an option to cancel the policy. However, Mr. Gupta filed a
complaint with Ombudsman, pursuant to which the Ombudsman directed RLIC to reinstate the policy on
original terms & conditions. The instant writ petition filed pertains to quashing of this order. The matter is
currently pending.
• A writ petition (No.23642 of 2009) has been filed by RLIC in the Patna High Court for cancellation for
anticipatory bail granted to a former employee, Mr. Adarsh Pandey (accused), for his involvement in
fraudulent activities. The accused was working in Raxaul branch of RLIC. Several complaints were received
against him from customers regarding his involvement in wrong sale of policies, non deposition of premium
amounts collected and other fraudulent activities. Relying on these facts, a FIR bearing no. 286 of 2008 was
filed. Consequently, the accused had applied for an anticipatory bail application bearing no. 56 of 2009 in
the Sessions Court at Patna, wherein he suppressed the fact that he was involved in cash misappropriation
amounting to Rs. 9 lakh, but only admitted to the commission of fraud to the tune of Rs. 2 lakhs. The court
vide order dated February 2, 2009 allowed the application subject to condition that the accused deposits a
monthly instalment of Rs. 0.10 lakhs. Being aggrieved by this decision, RLIC has filed the instant writ petition
on June 26, 2009 for cancellation of the anticipatory bail. The matter is currently pending.
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• A writ petition (No. 19389 of 2009) has been filed by RLIC in the Kerala High Court seeking a stay on
the recovery proceedings initiated by deputy tehsildar, Thodupuzha under Kerala Value Added Tax Act
(KVAT Act). The proceedings were initiated based on a recovery notice sent by the Intelligence Officer,
Idukki for the payment of a penalty amount of Rs. 5.06 lakhs for alleged failure of RLIC to deduct tax under
KVAT Act while the awarding of a contract to a certain contractor. The High Court vide its order dated July
10, 2009 has granted stay to the recovery proceedings.
• RLIC have filed an application (No.218 of 2009) in the Bangalore High Court for appointment of
arbitrator for resolution of a dispute pertaining to the services agreement entered into with Azilon Software
Solutions (Azilon). The agreement entered was for providing software solutions to RLIC, for which RLIC
released 30% of the agreed service fees to Azilon, amounting to Rs. 9.36 lakhs. Azilon realized the amount,
but failed to provide the services as agreed between the parties. Hence, the present petition was filed. The
matter is currently pending.
• RLIC have filed a writ petition (No.22713 of 2009) in the Allahabad High Court for quashing of a private
complaint filed by a former employee against the territory manager, Kerakat in the Sessions Court at
Jaunpur, bearing case no.12 of 2009 . The complaint was filed under section 393, 504, 506 and 323 of
Indain Penal Code, 1860. The High Court has disposed off the petition and has directed the lower court to
consider the bail application on merits.
• An appeal (No. 624 of 2008) has been filed by RLIC before Small Causes Court at Bombay against an
order passed by the Municipal Corporation of Greater Mumbai (MCGM) directing RLIC to pay the property
tax in accordance with the enhanced value of the property. The amount involved in this case is Rs. 21.3
lakhs. The matter is currently pending as MCGM has to file the details of computation of the property tax
before the court.
• RLIC has filed Civil Suit bearing no.792/2009 before the Civil Judge Senior Division, Delhi seeking
permanent injunction against Bhartiya Labour Union, Delhi restraining them from holding any agitation
against RLIC. The court vide order dated October 10, 2009 had restrained the labour union from holding any
agitation before the branch office of RLIC at Delhi.
• RLIC has filed a revision petition (No.217 of 2009) in the National Commission, New Delhi (NC)
challenging the order of the State Commission, Bangalore wherein RLIC was ordered to pay a monetary
relief of Rs.1.1 lakhs to one Mr. Madhavacharya for the alleged hardship and agony caused to him for the
repudiation of his medical claim. The NC has stayed the order of the state commission and has directed
RLIC to deposit Rs. 1.08 lakhs with the district commission. The matter is currently pending.
• RLIC has filed original complaint bearing no.183/2009 before the State Consumer Dispute redressal
commission, Mumbai against ICICI Bank for deficiency of Service for excess debit of amount form its current
account maintained with ICICI Bank for banking transaction. The amount involved in the matter is 22 lakhs.
• 12 appeals have been filed by RLIC in various state commissions against various persons against
orders of district forums. The total amount involved in the matter is Rs. 42.81 lakhs. The cases are at various
stages of adjudication.
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• 16 first information reports have been filed by RLIC in various police stations, against various
individuals. These cases relate to misappropriation of premium amount, dishonest misappropriation of
cheques, issuance of fake receipt, theft at office premise, etc. The aggregate amount involved in the cases
is Rs. 59.74 lakhs. The investigations are ongoing and the matters are currently pending.
• 2 criminal cases have been filed by RLIC against its former employees, viz. Siddharth Patel (No.996 of
2007) and Parin Mistry (No. 632 of 2008), for misappropriation of premium amount, cheating and forgery.
The total amount involved in these cases is Rs. 8.5 lakhs. Both matters are currently pending.
• A case (No. 11737 of 2008) has been filed by RLIC in the Chief Metropolitan Court, Bangalore against
Azilon Software Solutions under various sections of the Indian Penal Code, alleging an intention to defraud
and misappropriation of funds. The matter has been referred to the police for investigation. The amount
involved in the matter is Rs. 10 lakhs. The matter is currently pending.
• An appeal (No. KVAT 865 of 2009) has been filed by RLIC before the Deputy Commissioner (Appeals),
Commercial Taxes Department, Ernakulam against an order passed by the Intelligence Officer, Commercial
Taxes, Idukki for alleged failure of RLIC to deduct tax under Kerala Value Added Tax Act from the payments
made by the contractors. The amount involved in the case is Rs. 5.06 lakhs. The appeal is currently
pending.
• An appeal (No. 37 of 2007) has been filed by RLIC before the Commissioner (Appeals) in CESTAT,
South Zonal Bench, Chennai against an order passed by the Commissioner, Appeal, in relation to
disallowance of ineligible credit of service tax. The amount involved in the case is Rs. 33.8 lakhs. The
CESTAT has ordered RLIC to deposit the amount with the CESTAT. RLIC has deposited the amount with
the CESTAT. The appeal is pending.
• An appeal (No. 35 of 2005) has been filed by RLIC before the (CIT) (Appeals), against an order passed
by the Assistant Director of Income Tax, International Taxation, Chennai, in relation to classification of
payment made to the AMP Group, Australia, as royalty. The aggregate amount involved in the case is Rs.
5.23 lakhs. The CIT has ordered RLIC to deposit the amount with the CIT. RLIC has deposited the amount
with the CIT. The appeal is currently pending.
• 10 legal notices have been issued by RLIC against various individuals and entities for issues pertaining
to appointment of an arbitrator, tampering of cheques issued by RLIC and recovery of money. The amount
involved in these cases aggregates to approximately Rs. 796.89 lakhs. RLIC has initiated appropriate legal
action against the individuals and entities after expiry of the notice period.
3. Reliance Capital Asset Management Limited (RCAM) Cases filed against RCAM
• Ms. Vinny Trehan (through Mrs. Radha Rani) (Plaintiff) has filed a civil suit in the Court of the Civil
Judge, Junior Division, Amritsar against RCAM for making a transmission of mutual fund units on the basis
of the nomination made by the deceased investor, against the terms of the will produced by the Plaintiff. The
matter is currently pending. The total amount involved is Rs.3.67 lakhs.
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• PAN Securities Limited filed a suit (No.2126 of 2008) against Gopal M Mahubani and others in the Court
of the Junior Civil Judge, City Civil Court, Hyderabad. RCAM has been made a party to a dispute for
redemption of units provided by RCAM against which a lien request was received subsequent to such
redemption. The total amount involved is Rs.2.43 lakhs.
• RCAM has been added as a party to a suit (No.1937 and 1938 of 2000) filed between Siddharth Deepak
Chury and Prabhakar Deepak Chury in the Bombay High Court. The suit pertains to possession of a flat
belonging to one of the parties, which was taken on leave and license basis by RCAM. The term of the
license is over and RCAM is ready to vacate the flat. However, RCAM has retained possession since the
security deposit was not refunded upon expiry of the license. Pending the resolution of the matter, the Court
has appointed RCAM as the agent of the receiver appointed by the court. The amount involved is Rs. 10
lakhs.
• RCAM has been made a party to a civil suit (No.1936 of 2008) between Mrs. Pramila Lodha (Plaintiff)
and Edelweiss Securities Limited (Defendant) in the Bombay High Court. The Plaintiff had provided a power
of attorney to the Defendant and requested RCAM to mark a lien on her folio in favour of the Defendant. In
the present dispute, Mrs. Lodha has moved the High Court for issuing directions to RCAM not to act on
instructions of the Defendant. The amount involved is Rs.12.73 lakhs.
• Mr. Bhumanagoudar (Plaintiff) has filed an original suit (No. 1118 of 2008) against RCAM in the Court of
the Additional Civil Judge, Junior Division, Dharwad for failing to making allotment of units against the
investments allegedly made by him. RCAM has contended that it has not made the allotment of units as no
money was received from the Plaintiff. The Plaintiff has in fact been defrauded by the employees of a
distributor in whose favour he had given the cheques meant for investment in certain scheme(s) of Reliance
Mutual Fund. The amount involved is Rs. 1.25 lakhs.
• There are 16 consumer related cases filed against RCAM in various district and state consumer
disputes redressal fora. Further, in certain cases, the branch manager, regional managers and chief
executive officer/ managing director of RCAM have been added as parties. Deficiency in services provided
by RCAM, fraud committed on the investors by third parties, rejection of application for allotment of units,
rejection of redemption etc. are some common allegations raised in these cases. The approximate amount
involve is Rs. 318.3 lakhs.
• SEBI has issued an ad-interim ex-parte order cum show cause notice dated June 3, 2009 pertaining to
an advertisement issued in respect of a scheme of Reliance Mutual Fund. The instruction contained in the
said notice has been complied with and a reply has been filed with SEBI.
Cases filed by RCAM
• RCAM had moved an application in the Bombay High Court for permission to act as an agent of the
receiver appointed by the High Court in the suit (No. 1937 and 1938 of 2000) between Siddharth Deepak
Chury and Deepak Prabhakar Chury and Others for a flat which has been taken by the company on a leave
and license basis and in relation to which the security deposit is still to be refunded by the licensors. The
matter is currently pending. The total outstanding amount involved is Rs. 10 lakhs.
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• RCAM has filed an appeal against an order passed by the Additional Collector (Department of
Revenues), Moradabad for alleged insufficient payment of stamp duty by RCAM and the penalty thereon, in
respect of a lease deed pertaining for its branch office in Moradabad (U.P.). The matter is currently pending
and involves an amount of Rs. 2.5 lakhs.
• RCAM has filed 2 appeals in the State Consumer Disputes Redressal Commission at Hyderabad
against an order passed by the District Consumer Disputes Redressal Forum. The amount involved in these
matters is approximately Rs. 0.7 lakhs. 4. Reliance General Insurance Company Limited (RGICL) Cases filed by RGICL
• RGICL has filed 6 appeals in the Income Tax Appellate Tribunal (ITAT) against orders of various income
tax authorities between the assessment year 2000-01 to 2006-07. These appeals, (Nos. 6262/Mum/2008,
3126/Mum/2008, 1520/Mum/2008, 781/Mum/2007, 2951/Mum/2008 and 2950/Mum/2008) are all currently
pending.
• There are 15,600 claims in the Motor Accidents’ Claims Tribunal (MACT) involving a total amount Rs.
12,867.70 lakhs outstanding as on September 30, 2009. These MACT claims are routine to normal business
operations of RGICL, for which the premium for covering the insurance risks have been received.
• RGICL has filed 2 Arbitration Applications bearing Nos 386/09 and 387/09 in the Delhi High Court for
appointment of Arbitrators, as the Premises, furniture and fixtures belonging to M/s Mac Overseas and M/s
Allied Enterprises have been taken on Lease by the Company. The Company has terminated the Lease as
per the terms of the Agreement, but the Lessors have not refunded the security deposit amounts. The matter
is currently pending and the total outstanding amount is Rs. 18.60 Lakhs. 5. Reliance Securities Limited (“RSL”) Cases filed against RSL
• There are 08 arbitration matters filed before NSE & BSE. The total claim involved is approximately
Rs1959.77lakhs. There are 09 investor grievances’ complaints filed against RSL pending before various
stock exchanges. The total claim involved is approximately Rs.1.17 lakhs.
• There are 3 complaints filed against RSL in different consumer disputes redressal forum for a total claim
of Rs. 22.9 lakhs.
• A former employee has filed a petition against RSL in the labour court at Jammu claiming payment of
salaries totaling to Rs. 1.1 lakhs approximately.
• A former employee has filed a petition against RSL in the Court of the Civil Judge, Panipat seeking
salaries amounting to Rs.1 lakh approximately.
• Two petitions filed against RSL U/s 9 of the Arbitration and Conciliation Act, regarding disputes relating
to reimbursement of service tax and claim towards balance Lease Rent totaling to Rs.15 lakhs under Lease
Agreements relating two office premises in Delhi.
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Cases filed by RSL
• RSL has filed 12 arbitration matters against its clients before the Stock Exchanges at various locations
for the recovery of outstanding ledger balance in client’s account totaling to Rs.32.62 lakhs.
• RSL has filed an appeal before Delhi High Court (FAO-330/09 & CM No15325/09) against the
Arbitration Award passed by NSE Delhi in the matter of Mr.Vivek Sharma Vs Reliance Securities Limited.
The Claim amount is approximately Rs. 3,96,741/-. IV. Pending material litigations of other listed companies belonging to Reliance Anil Dhirubhai
Ambani Group
Apart from the above companies, pending litigations of other listed companies belonging to Anil Dhirubhai
Ambani Group are given as under, as additional information:
Reliance Communications Limited (RCOM)
Cases filed against RCOM
Investor Related Disputes
• There are 11 cases filed against RCOM where the Legal heirs of shareholders have filed these cases
claiming succession certificates 4994 shares of RCOM are involved.
• There are 30 cases filed against RCOM where the plaintiffs have claimed ownership of 11893 shares of
RCOM along with subsequent demerged company shares. RCOM has received plaint copies in all these
cases.
Civil Cases
• There are 73 civil cases filed against RCOM (in some of the cases, the Manager, Managing Director,
Chief Managing Director and Chairman of RCOM have been made parties) in the different civil courts
relating to money recovery and civil disputes. The cases are currently pending before the court and are at
various stages of adjudication. The aggregate amount involved in these cases is Rs. 50.35 million.
Consumer Cases
• There are 437 cases filed against RCOM (in some of the cases, the Manager, Managing Director, Chief
Managing Director and Chairman of RCOM have been made parties) in various district consumer dispute
resolution fora. The cases relate to deficiency of service by RCOM. The aggregate amount involved in these
cases is Rs. 46.78 million. (In some of these cases, Mr. Anil Dhirubhai Ambani has also been made a party
to the dispute).
• There are 27 appeal cases filed against RCOM in various state consumer dispute resolution fora. The
aggregate amount involved in these cases is Rs. 1.15 million and are at various stages of adjudication.
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High Court Cases
• Mr. S. Anantharaman and Webdunia.com (India) Private Limited (“Webdunia”) have filed separate
appeals before the High Court of Bombay challenging the order dated July 18, 2009 passed by the High
Court of Bombay sanctioning the scheme of arrangement between RCOM and the Company for the transfer
and vesting of the Optic Fibre Undertaking of RCOM into the Company (“OFC Demerger Scheme”).
Webdunia is a creditor of RCOM and has alleged that the High Court of Bombay erred in dispensing with the
requirement of holding the meeting of creditors to approve the Scheme. Mr. Anantharaman, a shareholder of
RCOM, has claimed that the valuation report was inadequate and the High Court ought to have directed the
furnishing of the complete valuation report and also that the independent findings on various aspects of
valuation in the impugned order are incorrect in law and in fact. The said appeals are yet to be admitted by
the High Court. The High Court has, by its order dated September 23, 2009 disposed the appeals. A copy of
the order has not yet been received.
• There are 20 civil cases filed against RCOM in various High Courts (in some of the cases, the Manager,
Managing Director, Chief Managing Director and Chairman of RCOM have been made parties) for money
recovery and civil disputes. The cases are currently pending before the court and are at various stages of
adjudication. The aggregate amount involved in these cases is Rs. 284.27 million.
Tax cases
• There are three cases filed against RCOM in various High Courts with respect to tax assessment and
payment. These cases are at various stages of adjudication and the aggregate amount involved in these
cases is approximately Rs. 42.64 million.
Company Cases
• Mrs. Anjali Aney, sole proprietress of Maheash Aney Productions (“Petitioner”) has filed a company
petition before the High Court of Bombay against RCOM. Petitioner has claimed an amount of Rs. 2.91
million as due and payable by RCOM. The Petitioner has also sought winding up of RCOM in accordance
with the provision of the Companies Act. The petition is posted on October 9, 2009. Since the claimed is
disputed RCOM has already filed recovery suit against the Petitioner before the High Court of Bombay for
the amount claimed by Petitioner in the Company Petition. The matter is currently pending.
Labour cases
• There are 9 cases filed against RCOM in various labour tribunals with respect to various labour issues
pending at various stages of adjudication. The aggregate amount involved in these cases is approximately
Rs. 1.56 million.
Regulatory Cases before TDSAT
• BSNL (Bharat Sanchar Nigam Limited) has filed an appeal against the Telecom Regulatory Authority of
India (“TRAI”), Association of Unified Telecom Service Providers of India (AUSPI) and Cellular Operators
Association of India (COAI) challenging regulation dated February 2, 2007 notified by TRAI being the
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Telecommunication Inter Connection (Port Charges) Amendment Regulation, 2007, on the ground that it is
without jurisdiction and without any basis.
• An appeal has been filed by BSNL against TRAI in TDSAT inter-alia challenging Explanatory
Memorandum 84 to the IUC Regulation dated October 29, 2003, issued by TRAI imposing a uniform
carriage charge of 20 paise on calls terminating from mobile network on Level II TAX and doing away with
the distance based carriage charge. AUSPI is a respondent in the case. The amount involved in this case is
Rs. 15 million per month.
• COAI has filed a case against RCOM, BSNL, DoT (Department of Telecommunications) and TRAI
before TDSAT on the issue of access deficit charge on fixed wireless services of RCOM under the brand
name ‘Unlimited Cordless’. COAI is seeking a refund of the access deficit charge till January 30, 2005. The
amount involved in this case is Rs. 20 million.
• BSNL has filed an appeal against TRAI before TDSAT inter alia challenging that part of the IUC
Regulations, whereby the quantum of ADC receivable by BSNL has been reduced. AUSPI has been
impleaded as a respondent.
Cases before the Supreme Court of India
• BSNL filed an appeal before TDSAT challenging TRAI’s directive, by which it held that terminating
network operator is entitled only to termination charges and not to additional revenue sharing for roaming
call charges. TDSAT dismissed the appeal, against which an appeal was filed by BSNL.
• MTNL has filed an appeal before the Supreme Court of India against a TDSAT judgment. RCOM had
filed a petition against MTNL, inter alia, challenging the unilateral and exorbitant determination and revision
of charges towards infrastructure sharing and also unilateral deduction of RCOM’s IUC payments. The
appeal was allowed by TDSAT, against which MTNL approached the Supreme Court. The order of TDSAT
has been stayed. The impugned order has been stayed till such time as both parties file their respective
replies. The amount involved in this case is approximately Rs. 20 million to Rs. 30 million during the validity
of the licence.
• DoT filed an appeal against the TDSAT judgment on the validity of the definition of Adjusted Gross
Revenue (AGR) in licenses issued by DoT. A petition was filed by AUSPI against the Union of India and
TRAI before TDSAT, challenging the same. TDSAT had referred the matter back to TRAI for its
recommendations. Against this order, DoT filed an appeal before the Supreme Court, which dismissed the
appeal and granted liberty to DoT to raise their contentions before TDSAT, which decided the petition
against them. An appeal is filed against this order.
• BSNL has filed a transfer petition before the Supreme Court seeking transfer of a petition filed by RCOM
against BSNL pending before the TDSAT to the Supreme Court. This petition is filed on the issue of HCD
limitation.
• MTNL has filed a transfer petition before the Supreme Court seeking transfer of a petition filed by RCOM
against MTNL pending before the TDSAT to the Supreme Court. This petition is filed on the issue of HCD
limitation.
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• BSNL filed an appeal before the Supreme Court challenging TDSAT Judgment dated 11.05.09 passed
in Petition No. 209 of 2006 wherein the TDSAT allowed Petition filed by RCOM inter- alia seeking
implementation of the Judgment and Order dated 3.3.06 on the issue of charge for passive links. The
amount involved in this case is Rs. 20 million.
• BSNL has filed an appeal before the Supreme Court against the Judgment and Order dated 31.03.09
passed by TDSAT in Petition No. 286 of 2007. Against the same Order COAI has filed an appeal against
the Union of India and TRAI has also filed a separate appeal. RCOM is party to all the appeals.
• BSNL has filed an appeal before the Supreme Court challenging TDSAT Judgment dated 05.05.09 and
27.05.09 passed in Petition No. 224 of 2006 wherein the TDSAT allowed the Petition filed by RCOM
challenging BSNL circular dated 12.06.06 which was issued by BSNL inter- alia amending/ modifying clause
7.6.0 to 7.6.3 of the interconnect agreements.
Criminal Cases
• There are 26 criminal cases filed against RCOM in various criminal courts against various other parties
on grounds of fraud and cheating. There is no financial implication in any of these cases.
MRTP Cases
• There are Six MRTP cases filed against RCOM before MRTP Commission alleging that the company
has indulged in certain unfair trade practices. The financial implications in these cases are Rs. 6.50 million.
Cases filed by RCOM
Cases filed under Section 138, Negotiable Instruments Act, 1881
• There are 6,761 cases filed by RCOM under Section 138, Negotiable Instruments Act, 1881 against
various defendants which relate to the dishonouring of cheques received by RCOM towards payment of bill
amounts. The aggregate amount involved in these cases is approximately Rs. 39.64 million. These cases
are at various stages of adjudication.
Consumer Cases
• There are 42 cases where appeals have been filed by RCOM in various state consumer dispute
resolution commissions against the orders of the various consumer dispute resolution fora. The aggregate
amount involved in these cases is approximately Rs. 1.03 million. All these cases are currently pending.
Civil Cases
• There are 131 civil cases filed by RCOM in various civil courts relating to recovery of dues and the
aggregate amount involved in these cases is approximately of Rs. 8.86 million. The cases are at various
stages of adjudication.
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Criminal Cases
• There are 32 criminal cases filed by RCOM in various criminal courts against various other parties on
grounds of fraud and cheating. The aggregate amount involved in these cases is approximately Rs.
12.45million and are at various stages of adjudication.
Lok Adalat Cases
• There are 169 cases filed by RCOM before the District Legal Services Authority for recovery of dues. In
all these cases, a notice has been sent to the respondent. The cases involve claims worth Rs. 0.29 million.
High Court Cases
• There are 55 civil cases filed by RCOM in various High Courts against various parties relating to money
recovery and civil disputes. The cases are currently pending before the courts and are at various stages of
adjudication. The aggregate amount involved in these cases is approximately Rs. 378.06 million.
Tax cases
• There are eight cases filed by RCOM in various High Courts with respect to tax assessment and
payment. These cases are at various stages of adjudication and the aggregate amount involved in these
cases is approximately Rs. 73.64 million.
Cases before the Supreme Court of India
• RCOM has filed an appeal before the Supreme Court of India against the Department of
Telecommunications which had imposed a penalty of Rs. 1,500 million on RCOM for alleged violation of
license conditions in relation to Home Country Direct services. TDSAT upheld the imposition of penalty by
DoT. The aforesaid amount has been paid by way of deposit to DoT. The case is listed for hearing and the
amount involved in this case is Rs. 1,500 million.
• RCOM has filed an appeal before the Supreme Court of India against TRAI against a TDSAT judgement
and order. RCOM had filed a petition before the TDSAT challenging the levy of transit charge of Rs. 0.19 by
BSNL on RCOM for accessing CellOne subscribers. The Cellular Operators have already obtained a relief
with respect to transit charges from TDSAT by an order earlier. The matter is pending in the Supreme Court
of India. The only issue pending relates to refund for the period from the order to the date of implementation
of agreement for direct connectivity.
Cases before TDSAT
• RCOM has filed a reconciliation petition against BSNL in TDSAT for compliance with the provisions of
the Interconnect Agreement regarding reconciliation of bills. The matter is pending.
• There are two limitation petitions filed by RCOM against BSNL and MTNL in TDSAT in relation to cases
pending before TDSAT on Home Country Direct services. The cases have been adjourned to a later date
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and the amounts involved in these cases are Rs. 3,190 million and Rs. 3,400 million respectively. Both
BSNL and MTNL have filed transfer petitions before the Supreme Court.
• RCOM has filed a petition against BSNL seeking interim relief against disconnection notices issued by
BSNL's Kerala Unit. The amount involved in this case is Rs. 9.65 million.
• RCOM has filed a petition against allocation of spectrum in excess of the license mandated quantum to
the existing private GSM Operators and seeking to reclaim the excess already allocated and further to stop
issuing any additional spectrum to the existing private GSM Operator.
• RCOM has filed a petition against the Government of India seeking a direction inter alia to direct the
respondent i.e., DOT to amend the UAS licenses in pursuance of in-principle approval dated October 18,
2007, issued to RCOM in respect of six service areas.
• A petition has been filed against BSNL on the issue of quantification of payable amount by each party in
accordance with Supreme Court Judgment in FWP case.
• RCOM has filed a petition against the Government of India and the DOT in relation to license fee and
spectrum charges charged by DOT. RCOM has sought to set aside the letter dated November 5, 2008
issued by the DOT and a direction requiring DOT to recalculate the license fee and spectrum charges in
consonance with the definition of AGR determined by TDSAT in its order dated August 30, 2007.
Reliance Infrastructure Limited (RInfra)
Cases filed against RInfra
Tax related Cases
• SLP (C) – 14829 of 2007 – Sales Tax Officer (WC & LT) & others Vs. RInfra - The Sales Tax Officer,
Pallakad has filed a special leave petition before the Supreme Court of India against RInfra alleging that
RInfra is liable to pay entry tax and penalty of Rs.850 million plus interest as demanded by the Sales Tax
Officer vide their notice dated November 15, 2006. The Petitioner has challenged the Judgment of Kerala
High Court, where by RInfra’s petition had been allowed and the notices issued by the Petitioners had been
set aside. The case is still pending before the Court.
Civil Cases
• There are 181 cases filed against RInfra alleging in the various Civil Courts and High Courts. These
cases are having financial implications as they pertain to challenging the bills/ excess bill/ supplementary
bill/ final assessment order issued by RInfra on the grounds of tampering, stopped meter, unauthorised
extension of load, theft and involve an amount of Rs. 484 million.
• There are 91 cases filed against RInfra in various Consumer, Civil Courts and High Court in relation to
Consumer Disputes wherein the financial implication is either nil or negligible.
• There are five cases filed against RInfra in Small Causes Courts praying for removal of sub- station and/
or other reliefs.
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Investor Related Disputes
• There are some investor related disputes in which RInfra is involved out of which, 20 cases relate to loss
of share certificates transferred to third parties and which were dematerialised. 31 cases relate to loss of
share certificates transferred to third parties and which were not dematerialised. It has been claimed in this
dispute that the shares are required to be recovered/ or the claimant be compensated for settlement as the
shares have been transferred out. If the matters are decided against RInfra, it may have result into a
financial liability on RInfra to the extent of such compensation.
• There are some investor related disputes in which RInfra has been made a party, but these cases would
not result into a financial liability on REL. Out of these, 16 cases have already been resolved and are
awaiting withdrawal/dismissal orders. 15 cases relate to disputes between brokers, buyers, sellers and
requirement of succession certificates. There are also certain cases which do not have an immediate impact
on RInfra. Of these, 19 cases relate to loss/ non- receipt of share certificates sent for transfer and the shares
stand in the name of the plaintiff. The cases are pending at various levels of adjudications.
• 39 cases have been filed after the demerger of RInfra, where parties have claimed that they have lost
shares pursuant to the demerger. These cases relate to 1393 shares in total. RInfra has not been made a
party in all of these cases. These cases relate to ownership of shares and shares to be allotted subsequent
to the demerger and merger.
Criminal Contempt Cases
• Misc Criminal Complaint (ULP) No. 49/2007 - Sanjay Gujar v/s REL & Others - Mr. Sanjay Gujar has
filed a criminal contempt case in the Labour Court, Mumbai against RInfra alleging that RInfra has not paid
the back wages, as directed by the order of the Bombay High Court dated November 13, 2006 in Writ
Petition No. 4554/2006. RInfra’s contention is that they have already made the payment of back wages as
per the directions of the High Court. This case involves an amount of Rs. 0.25 million.
Labour Cases
• There are 35 cases against RInfra in the various labour/industrial courts in Mumbai and the Bombay
High Court. These cases involve different issues like implementing the clause regarding employment of kin
of deceased employees, discussing issues of the employees with other unions, restraining RInfra from
terminating services of the applicant or implementing the order of transfer, challenging an enquiry filed
against an employee, allegation of RInfra engaging in unfair labour practices, for reinstatement and back
wages and claiming contribution with respect to contract workers. These cases involve an aggregate amount
of Rs. 354.7 million.
Regulatory Matters
• C.A. No. 4161 of 2008 – Tata Power V/s RInfra - Tata Power Company Limited (TPCL) has filed a
petition before the Maharashtra Electricity Regulatory Commission (MERC) in March 2002 claiming Rs.
1,250 million from RInfra towards “Take or Pay and Additional Energy Charges” pursuant to an agreement
dated January 31, 1998. The appeals are currently pending in Supreme Court.
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• TPCL has filed a civil appeal before the Supreme Court of India against RInfra alleging that RInfra had
offered certain rebate with effect from 1998 to retain high value consumers and prevent their migration to
TPCL. MERC by its order dated February 20, 2004, disallowed such rebate and treated this rebate of Rs.
3,500 million as a notional income while computing the aggregate revenue requirement for the period 1998
to 2004. RInfra has challenged the said order by filing an appeal before the Appellate Tribunal for Electricity
(ATE). The said appeal was allowed by ATE and the order of MERC was set aside. TPCL has challenged
the judgment by filing a second appeal before the Supreme Court of India bearing C.A. 3101 of 2006 and
the said appeal is pending.
• TPCL has filed a civil appeal bearing C.A. 415/2007 before the Supreme Court of India against RInfra
claiming that RInfra should pay the standby charges to them at the same rate per KVA as TPCL pays to
MSEB. RInfra has contended that the part of standby charges payable by TPCL to MSEB is recovered
through tariff and hence they are not liable to pay at the same rate as TPCL pays to MSEB. RInfra has
received Rs. 2,270 million from TPCL pending disposal of the appeal, as directed by the Supreme Court of
India.
• ATE Appeal No. 163 of 2009– Trent Limited ATE Appeal No. 164 of 2009– Hard Castle Rest, ATE
Appeal No. 165 of 2009– Spencers Retail Limited, ATE Appeal No. 172 of 2009 - Consumers have
challenged the tariff orders passed by MERC In case No. 121/2008 classifying them in LT2 Commercial
Category.
• C.A. No. 4128 of 2007 - Bombay Small Scale Industries Association has challenged ATE Judgment
which allowed certain expenditure for FY 2006-2007 to RInfra.. The said appeal is pending.before Supreme
Court.
• C.A. 1985 of 2009 Padmakar Balkrishna Samant v. MERC & Ors. And (2) C.A. 2116 of 2009 Padmakar
Balkrishna Samant v. MERC & Ors - Mr. P B Samant and others have challenged before ATE that RInfra
accounting reports for FY-06-07 and FY 07-08 are not in line with the Regulations framed by MERC. ATE
dismissed both the Appeals. Mr. P B Samant and others have now filed two Appeals before the Hon’ble
Supreme Court and the same is pending..
• ATE Appeal No. 170 of 2009 & Appeal No. 110 of 2009 - Association of Hospitals Vs. MERC & others
has challenged the MERC Tariff Orders for FY 2009-10 & FY. 2008 -2009 before ATE. The appeal is
pending.
• ATE Appeal No. 144 of 2009 – MIAL Vs. MERC & IA No. 260 of 2009 - MIAL has filed an appeal for
classifying them under HT-Commercial. The appeal in pending before ATE.
Arbitration Proceedings
• ARBP No.7 (GCW) of 2005 - Mukund Engineering V/s Reliance Energy Limited (GCW) – The arbitration
relates to the contract for supply of construction material and construction and erction of civil works for 24
MW power plant for M/S GSML at Sameerwadi, Karnataka by BSES to Mukund Engg. The claimant has
demanded inter alia compensation and damages for Escalation and delay. REL has filed counter claim for
LD and on other heads. The case involves an approximate amount of Rs. 3.5 crores claim.
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• ARBP No.8 (RWR) of 2005 - Mukund Engineering V/s Reliance Energy Limited (RWR) - The arbitration
relates to the contract for construction of raw water reservoir for 24 MW power plants for M/S GSML at
Sameerwadi, Karnataka by BSES to Mukund Engg. The claimant has demanded inter alia compensation
and damages for Escalation and delay. REL has filed counter claim for LD and on other heads. The case
involves an approximate amount of Rs. 2.2 crores claim.
• Fenner India Limited V/s BSES Limited - M/s Godavari Sugar Mills Limited (GSML), the company
awarded a turnkey EPC contract for the execution of 24 MW Bagasse fired captive project to REL. REL
entered into three separate contract with Fenner (India) Limited, and one separate contract BMF Beltings
Limited. Dispute arose regarding default or negligence on the Part of the Claimants. The Dispute is now
before the Arbitrator. The case involves an approximate amount of Rs. 4.73 crores claim.
• M/s Rapti contractors V/s Reliance Energy Limited & Ors - The matter relates to the contract for
errection of sub station for BSES to the petitioner. The same was to be executed within 80 days. However
the contractor took approx. 2 years to complete.hence the dispute arose and Delhi High Court referred the
same for arbitration - The case involves an approximate amount of Rs. 1.42 crores claim.
• Maytas V/s Reliance Energy Limited & Ors.- Maytas, a construction contractor, appointed for
construction of Salem Ulunderapet Phase-II, was not able to make sufficient progress of work due to the
adverse effect of "Satyam-Maytas" Episode. As such, after giving, sufficient opportunities and notice we
firstly encashed the Mobilisation Advance Granted to them. Maytas approached the High court to restrain us
from encashing the Performance Bank Guarantee which was opposed by RInfra. The court, in view of
established principles regarding invocation of Irrevocable Performance Bank Guarantee, passed an order in
our favour. The matter is now before the arbitrators. The case involves an approximate amount of Rs. 133.
72 crores claim.
Cases filed by RInfra
Labour Cases
• There are seven cases filed by RInfra are pending before various Labour/Industrial/ High Court. The
cases have been filed on the following grounds:
• Breach of order of the Industrial Disputes Court restraining BEW Union, its office bearers/members and
employees of the company from carrying out any labour agitations or any other demonstration within 100
meters radius form the company’s premises. Restraint BEW Union to hold dharanas and agitation at all the
company’s offices in Mumbai and also at Bhaidas Auditorium where RInfra organizes its AGM. Complaint
(MRTU & PULP) No. 610 of 2001 before Industrial Court (Justice MULYE) – R Infra v/s BEW Union - Cross
examination of Company's witness.
• Appeal application (IC) No. 40 of 2007 - REL v. Ramesh Bhoir. The Complainant Mr. Ramesh Bhoir has
filed a case against the Company for reinstatement and back wages in (BIR) Appln No. 81 of 2004. The
Labour Court directed the Company to reinstate Mr. Bhoire. The Company therefore filed appeal against the
order dated 10.01.2007 and the appeal is now pending before the Industrial Court.
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• Suit No. 2111 of 2000 - REL v. BEW Union— The Company received a letter on 06.05.2000 from an
unknown body calling itself as The Bombay Electrical Workers Committee. On perusal of the letter it
appeared that this committee has been created for and at the behest of BEW Union. The Committee put
posters at all the establishments of the Company on 07.05.2000 demanding various demands such as
Retrospective wage revision of contract Labour, recruitment of workers children and permanency of contract
Labour etc. The defendants further threatened that unless these demands were immediately acceded to,
the contract workers would proceed on strike on and from 10.05.2000 and regular workers on and from
12.05.2000 which was illegal strike and therefore, the Company filed the said application against the Union
before Mumbai High Court on 09.05.2000.To declare the strike call given on 10.05.2000 and 12.05.2000 to
be ex-facie illegal and granted permanent injunction restraining the dependents together with their action
committee from proceeding on strike.
• Appeal No. 2225 of 1998 - REL V/s. Manuel D'Souza & Others - Air India Project based temporary
workers (11 Nos.): The workmen had initially approached Ind. Court for regularization in REL. The Ind. Court
upheld the case of the workmen & directed the Company to take the workmen as permanent workmen in
Contracts Division. The case is now pending before Hon’ble High Court for final hearing.
• Writ Petition No. – 4694 of 2006 - REL v/s Sanjay Gujar & Others - Voucher based temporary workers
(05 Nos.): The workmen had initially approached Ind. Court for regularization in REL. The Ind. Court upheld
the case of the workmen & directed the Company to take the workmen as permanent workmen w.e.f their
completion. The case is pending before Hon’ble High Court
• Revision Application No. 157 of 2007 - REL & Others v/s Sanjay Gujar - Revision Appln filed by the
Company against the criminal complaint filed by Mr. Sanjay Gujar in Hon'ble Labour Court Mumbai seeking
to go through the legality, validity and propriety thereof, quash and or set aside the impugned summon. The
case is now pending for records and proceedings before Industrial Court.
• Writ Petition No. 4554/2006 - REL v/s Yadayya Giri & Others, The appeal lies before Bombay High
Court against the voucher based temporary workers ( 14 Nos.) where in the workmen had initially
approached Ind. Court for regularization in REL. The Ind. Court upheld the case of the workmen & directed
the Company to take the workmen as permanent workmen w.e.f. their compilation.
• Writ petition No 12388 of 2009 – Reliance Infra V/S Manuel D’Souza & Others. In ULP No 30 /98, the
appeal lies before Bombay High Court against the order of Industrial Court for paying back wages. The
Industrial Court has ordered to pay that the recovery certificate for the amount shown in Annex B to the
application i.e. Rs 93,35,000/- be issued along with 9% interest after adjusting the amount already paid to
the applicant.
Consumer Cases
• Twelve appeals have been filed by RInfra against the decisions of the respective consumers forums
which are pending before the Maharashtra State Consumer Dispute Redressal Commission, Mumbai in the
State Commission. The issues involved in these cases include claiming of refunds, compensation for cost of
damages, deficiency of service, rectification of bills, mental anguish, restoration of connection and
electrocution. The amount involved in these cases is Rs. 0.3 million.
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Arbitration Proceedings
• A dispute is under arbitration between Cipla Limited and RInfra for its Goa Power Project. Cipla Limited
is claiming rebate of Rs. 172.15 million under the Power Supply Agreement. The matter is now pending
before the arbitrator.
Cases under Section 138, Negotiable Instruments Act, 1881
• There is one case filed by the RInfra involving Section 138 of the Negotiable Instruments Act regarding
cheque issued towards billing. The case involves an amount of Rs. 0.17 million.
Regulatory Proceedings
• RInfra’s appeals bearing ATE Appeal No. 147, ATE Appeal 148 of 2009, 149 of 2009 and 150 of 2009 -
RInfra. v. MERC against determination of tariff for Generation, Transmission and Distribution is pending
before ATE
• RInfra’s appeal bearing ATE Appeal No.116/08-- RInfra. Limited v. JSERC, against rejection of our
expression of interest for distribution of electricity at Ranchi is pending before ATE.
• RInfra vs. Spencer and Multiplex - C.A. No. 1602 of 2009 and C. A. 1603 of 2009. Hon’ble Supreme
Court has stayed the operation of ATE judgment till further order in two Appeals filed by RInfra
Writ Petitions
• RInfra has filed a writ petition bearing W .P. No. 7427 of 2007 in the Bombay High Court challenging the
order of the Tehsildar, Dahanu dated September 13, 2007 directing RInfra to pay Rs. 720 million to the
Government of Maharashtra towards unearned income for sale of the Dahanu Thermal Power Station land
by BSES Limited to RInfra. RInfra has contended that there has only been a change of name of the
company from BSES Limited to Reliance Energy Limited and the corporate entity remains the same. The
Hon’ble Bombay High Court has stayed the Tehsildar Order. The writ petition is pending.
• Reliance Infrastructure Limited & Ors. Vs. Maharashtra State Road Development Corporation & Ors -
Writ Petition - WP No. 1542 of 2009 filed by SMS consortium (RInfra) against MSRDC regarding the bidding
for securitization of five Mumbai Entry Points along with maintenance of flyovers. MSRDC disqualified SMS
consortium (RInfra) to participate in second stage of bidding for securitization of five Mumbai Entry Points.
The petition is kept for admission before division Bombay High Court Chief Justice & Justice A M Khanwilkar
Reliance Power Limited (RPower)
Cases filed against RPower Writ Petitions
• Petitioners have filed 44 writ petitions seeking to quash the notification issued for acquisition of land for
Dadri Power Project, Uttar Pradesh. All the petitions have been clubbed with W.P 537/2006 and have been
transferred to the Supreme Court.
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Cases relating to non receipt of refund and/or equity shares
a. Consumer forum
• There are 99 cases pending before various consumer redressal forums in the matter of claiming of
shares and refund order.
b Civil Court
• There are 3 cases pending before Civil Court in the matter of claim for shares and refund order.
c. Criminal Court
• There are 4 criminal cases pending against the Company and its directors in the matter of claim for
refund amount, interest and compensation for refund order.
Reliance Natural Resources Limited (RNRL)
Cases filed against RNRL
• There are 12 cases filed against RNRL where the legal heirs of shareholders have filed these cases
claiming succession certificates. 4724 shares of RNRL are involved.
• There are 25 cases filed against RNRL where the plaintiffs have claimed ownership of 10996 shares
and shares to be allotted subsequent to demerger of companies. RNRL is in the process of replying to the
same.
Cases filed by RNRL
• Pursuant to the scheme of demerger of RIL, the gas based energy undertaking was to be transferred to
RNRL from RIL. A Gas Supply Master Agreement was signedon January 12, 2006 (“GSMA”), purporting to
provide for a fixed amount of gas from the gas fields operated by RIL at US$ 2.34 per mmbtu, which is not
bankable and the effectiveness of which is subjected to certain extraneous conditions. RNRL filed a
company application against Reliance Industries Limited (“RIL”) in the Bombay High Court claiming that the
agreement was not a suitable arrangement under the scheme and rendered the demerger of the Gas Based
Energy Undertaking under the scheme unworkable. RIL claimed that the High Court did not have jurisdiction
and that the scheme was implemented. The court by way of its judgment delivered on October 15, 2007 held
that the GSMA is in breach of the scheme and that it would be appropriate for both parties to renegotiate,
reconsider and settle the terms of the existing GSMA afresh within four months. RIL subsequently filed an
appeal before the High Court, Bombay on December 14, 2007 against the said judgment of the Bombay
High Court. On December 17, 2007, RNRL also filed an appeal before the High Court, Bombay challenging
certain inconsistent observations that crept into the judgment. On January 30, 2009, the Division Bench of
the Bombay High Court disposed of the appeals on June 15, 2009 directing the parties to enter into a
suitable arrangement within one month so that RNRL gets an assured supply of 28 mmscmd gas from RIL’s
Krishna-Godavari (KG) basin at $2.34 per mmbtu for 17 years for its the power plants of the Reliance ADA
Group.
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Both RNRL and RIL have filed SLPs in the Supreme Court against the Bombay High Court Judgment dated
June 15, 2009 and the same are pending. RIL has filed SLP (Civil) Nos.15063 and 15064 of 2009
challenging the entire Bombay High Court Judgment and RNRL has filed SLP (Civil) No.14997 of 2009 for
directions to RIL to supply gas to RNRL as per the Bombay High Court Judgment. Union of India has also
challenged the Bombay High Court Judgment in SLP (Civil) No.18929 of 2009.
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GOVERNMENT APPROVALS
Incorporation Details
CIN No. U64 200 MH 2005 PLC 158355
Tax Related Details
PAN No. AADCR1885L
TAN No. MUMR19417G
Service Tax Registration No. AADCR1885LST001
Human Resource Related Details
Provident Fund Registration No. MH/210159
Business Related Approvals
The Company has received approval from MIB vide its letter dated May 29, 2009 giving its no-objection for
transfer and vesting of the Radio Business from RML, to the Company subject to the conditions imposed as
aforesaid. The Company had procured fresh Bank Guarantees and has duly executed GOPAs with the MIB
for all its 45 FM Radio Stations.
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REGULATORY AND STATUTORY DISCLOSURES
Authority for the Scheme
The Honorable High Court of Judicature at Bombay, by its Order dated April 4, 2009 has approved the
Scheme of Arrangement between RML and erstwhile RUL now RMWL and their respective shareholders
and creditors (the “Scheme”).
Prohibition by SEBI
The Company, its directors, its promoters, other companies promoted by the promoters and companies with
which the Company’s directors are associated as directors have not been prohibited from accessing the
capital markets under any order or direction passed by SEBI.
General Disclaimer from the Company
The Company accepts no responsibility for statements made otherwise than in the Information
Memorandum or in the advertisements to be published in terms of Clause 5 of Part A of the SEBI Circular
No. SEBI/CFD/SCRR/01/2009/03/09 dated Sept 3, 2009 or any other material issued by or at the instance
of the Company and anyone placing reliance on any other source of information would be doing so at his or
her own risk. All information shall be made available by the Company to the public and investors at large
and no selective or additional information would be available for a section of the investors in any manner.
Disclaimer Clause of the BSE
As required, a copy of this Information Memorandum has been submitted to BSE. The BSE has vide its letter
dated November 25, 2008 , approved the said Scheme under Clause 24(f) of the Listing Agreement and by
virtue of that approval the BSE’s name in this Information Memorandum has been incorporated as one of the
Stock Exchanges on which the Company’s securities are proposed to be listed.
The BSE does not in any manner:
• warrant, certify or endorse the correctness or completeness of any of the contents of this Information
Memorandum; or
• warrant that this Company’s securities will be listed or will continue to be listed on the BSE; or
• take any responsibility for the financial or other soundness of this Company, its promoters, its
management or any scheme or project of this Company;
and it should not for any reason be deemed or construed to mean that this Information Memorandum has
been cleared or approved by the BSE. Every person who desires to apply for or otherwise acquire any
securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall
not have any claim against the BSE whatsoever by reason of any loss which may be suffered by such
person consequent to or in connection with such subscription/ acquisition whether by reason of anything
stated or omitted to be stated herein or for any other reason whatsoever.
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Disclaimer Clause of the NSE
As required, a copy of this Information Memorandum has been submitted to NSE. The NSE has vide its
letter dated December 23, 2008, approved the said Scheme under Clause 24(f) of the Listing Agreement
and by virtue of that approval the NSE’s name in this Information Memorandum has been incorporated as
one of the Stock Exchanges on which the Company’s securities are proposed to be listed.
As required, a copy of the Information Memorandum has been submitted to NSE. It is to be distinctly
understood that it should not in any way be deemed or construed that this Information Memorandum has
been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or
completeness of any of the contents of the Information Memorandum; nor does it warrant that our securities
will be listed or will continue to be listed on the NSE; nor does it take any responsibility for the financial or
other soundness of this Company, its promoters, its management or any scheme or project of this Company.
Every Person who desires to acquires any of our securities may do so pursuant to independent inquiry,
investigation and analysis and shall not have any claim against NSE whatsoever by reason of any loss
which may be suffered by such Person consequent to or in connection with such subscription/acquisition
whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.
Filing
Copies of this Information Memorandum have been filed with BSE and NSE on August 11, 2009.
Listing
Pursuant to Clause 3.1.5 of the Scheme the Company shall make application to BSE and NSE for
permission to deal in and for an official quotation of the Equity Shares of the Company. The Company has
nominated BSE as the Designated Stock Exchange for the aforesaid listing of the shares.
The Company shall ensure that all steps for the completion of necessary formalities for listing and
commencement of trading at all the Stock Exchanges mentioned above.
Demat Credit
The Company has executed Agreements with NSDL and CDSL for admitting its securities in demat form and
has been allotted ISIN INE445K01018. On August 8, 2009 the Company made allotment of the equity
shares and such shares were allotted in demat form to those shareholders who have provided necessary
details to the Company and/or who were holding their shares in RML in demat form, as on the Record Date
i.e. August 7, 2009.
Dispatch of Share Certificates
Upon allotment of shares to eligible shareholders pursuant to the Scheme on August 8, 2009, the Company
dispatched share certificates to those shareholders who were holding shares in RML in physical form, as on
the Record Date i.e. August 7, 2009.
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Expert Opinions
Save as stated elsewhere in this Information Memorandum, we have not obtained any expert opinions.
Previous rights and public issues
The Company has not made any public or rights issue since incorporation.
Commission and brokerage on previous issues
Since the Company has not issued shares to the public in the past, no sum has been paid or has been
payable as commission or brokerage for subscribing to or procuring or agreeing to procure subscription for
any of the Equity Shares since its inception.
Promise vis-à-vis performance
This is for the first time the Company is getting listed on the Stock Exchange.
Outstanding debentures or bonds and redeemable preference shares and other instruments issued
by the Issuer Company
There are no outstanding debentures or bonds and redeemable preference shares and other instruments
issued by the Company.
Stock Market Data for Equity shares of the Company
Equity shares of the Company are not listed on any stock exchanges. The Company is seeking approval for
listing of its shares through this Information Memorandum.
Disposal of Investor Grievances
Karvy Computershare Private Limited (Karvy) are the Registrars and Transfer Agents of the Company.
Karvy has set up Investor Relation Centres (IRCs) across the country to accept the
documents/requests/complaints from the investors/shareholders of the Company.
The letters that are accepted at the IRCs are forwarded to the Central Processing Unit of Karvy’s Hyderabad
office. Documents/Letters are also received from the Investors directly at Hyderabad by courier/post.
All documents are received at the inward department, where the same are classified based on the nature of
the queries/actions to be taken and coded accordingly. The documents are then electronically captured
before forwarding to the respective processing units.
The documents are processed by professionally trained personnel. Subsequent to the completion of the
process the documents are scrutinized thoroughly by independent firm(s) of Chartered Accountants
appointed by the company.
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The company has set up service standards for each of the various processors involved such as affecting the
transfer/dematerialisation of securities/change of address ranging from 3-7 days. Karvy maintains an
agewise analysis of the process to ensure that the standards are duly adhered to.
The Company has appointed Shri Gururaja Rao, Company Secretary as the Compliance Officer and he may
be contacted in case of any problems. He can be contacted at the following address:
Subject to the provisions of the Act and of these Articles, the Board shall have power to appoint from
time to time Managing Director/s or Manager or Executive Director(s), of the Company for a fixed
term not exceeding five years at a time and upon such terms and conditions as the Board thinks fit,
and the Board may by resolution vest in such Managing Director/s or Manager or Executive
Director(s), such of the powers hereby vested in the Board generally as it thinks fit, and such powers
may be made exercisable for such period or periods and upon such conditions and subject to such
restrictions as it may determine. The terms of appointment of Managing Director/s or Manager or
Executive Director(s), shall be the terms on which such persons shall be appointed by the Board.
The Managing Director/s or Manager or Executive Director(s), as the case may be, so appointed,
shall be responsible for and in charge of the day to day management and affairs of the Company
and subject to the provisions of the Act and these Articles, the Board shall vest in such Managing
Director/s or Manager or Executive Director(s), as the case may be, all the powers vested in the
Board generally.
POWERS OF THE BOARD
Article 69 provides that
Subject to the provisions of the Act and these Articles: -
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(A) The Board of Directors shall be entitled to exercise all such power and to do all such acts
and things as the Company is authorized to exercise and do.
(B) The Board of Directors is vested with the entire management and control of the Company,
including as regards any and all decisions and resolutions to be passed, for and on behalf of
the Company.
DIVIDEND POLICY
Article 80 provides that
(A) The divisible profits of the Company, subject to any special rights relating thereto being
created or authorised to be created by the Memorandum or these Articles and subject to the
provisions of these Articles shall be divisible among the Members in proportion to the
amount of Capital Paid-up or credited as Paid-up and to the period during the year for which
the Capital is Paid-up on the Shares held by them respectively. Provided always that,
(subject as aforesaid), any Capital Paid-up on a Share during the period in respect of which
a Dividend is declared, shall unless the Directors otherwise determine, only entitle the holder
of such Share to an apportioned amount of such Dividend as from the date of payment.
(B) Subject to the provisions of Section 205 of the Companies Act, 1956 the Company in
General Meeting may declare Dividends, to be paid to Members according to their
respective rights and interests in the profits but no Dividends shall exceed the amount
recommended by the Board, but the Company in General Meeting may declare a smaller
Dividend, and may fix the time for payments not exceeding 30 days from the declaration
thereof.
(a) No Dividend shall be declared or paid otherwise than out of profits of the Financial
Year arrived at after providing for depreciation in accordance with the provisions of
Section 205 of the Act or out of the profits of the Company for any previous Financial
Year or years arrived at after providing for depreciation in accordance with those
provisions and remaining undistributed or out of both provided that:
(i) if the Company has not provided for depreciation for any previous Financial
Year or years it shall, before declaring or paying a Dividend for any
Financial Year provide for such depreciation out of the profits of that Financial
Year or out of the profits of any other previous Financial Year or years,
(ii) if the Company has incurred any loss in any previous Financial Year or years
the amount of the loss or an amount which is equal to the amount provided for
depreciation for that year or those years whichever is less, shall be set off
against the profits of the Company for the year for which the Dividend is
proposed to be declared or paid or against the profits of the Company for any
previous Financial Year or years arrived at in both cases after providing for
depreciation in accordance with the provisions of sub-section (2) of Section 205
of the Act or against both.
(iii) The decision of the Board as to the amount of the divisible profits shall be
conclusive.
(b) The Board may from time to time, pay to the Members such interim Dividend as in
their judgment the position of the Company justifies.
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(c) Where Capital is paid in advance of calls upon the footing that the same shall carry
interest, such Capital shall not whilst carrying interest, confer a right to participate in
profits or Dividend.
(f) (i) Subject to the rights of Persons, if any, entitled to Shares with special rights as
to Dividend, all Dividends shall be declared and paid according to the amounts
paid or credited as paid on the Shares in respect whereof Dividend is paid but if
and so long as nothing is Paid upon any Shares in the Company, Dividends
may be declared and paid according to the amount of the Shares.
(ii) No amount paid or credited as paid on Shares in advance of calls shall be
treated for the purpose of this regulation as paid on Shares.
(iii) All Dividends shall be apportioned and paid proportionately to the amounts paid
or credited as paid on the Shares during any portion or portions of the period in
respect of which the Dividend is paid, but if any Shares are issued on terms
providing that it shall rank for Dividend as from a particular date such Shares
shall rank for Dividend accordingly.
(g) Subject to the provisions of the Act and these Articles, the Board may retain the
Dividends payable upon Shares in respect of any Person, until such Person shall
have become a Member, in respect of such Shares or until such Shares shall have
been duly transferred to him.
(h) Any one of several Persons who are registered as the joint-holders of any Share may
give effectual receipts for all Dividends or bonus and payments on account of
Dividends or bonus or sale proceeds of fractional certificates or other moneys payable
in respect of such Shares.
(i) Subject to the provisions of the Act, no Member shall be entitled to receive payment
of any interest or Dividends in respect of his Share(s), whilst any money may be due
or owing from him to the Company in respect of such Share(s); either alone or jointly
with any other Person or Persons; and the Board may deduct from the interest or
Dividend payable to any such Member all sums of money so due from him to the
Company.
(j) A transfer of Shares shall not pass the right to any Dividend declared thereon before
the registration of the transfer.
(k) Unless otherwise directed any Dividend may be paid by cheque or warrant or by a
pay slip or receipt (having the force of a cheque or warrant) and sent by post or
courier or by any other legally permissible means to the registered address of the
Member or Person entitled or in case of joint-holders to that one of them first named
in the Register of Members in respect of the joint-holding. Every such cheque or
warrant shall be made payable to the order of the Person to whom it is sent and in
case of joint-holders to that one of them first named in the Register of Members in
respect of the joint-holding. The Company shall not be liable or responsible for any
cheque or warrant or pay slip or receipt lost in transmission, or for any Dividend lost to
a Member or Person entitled thereto, by a forged endorsement of any cheque or
warrant or a forged signature on any pay slip or receipt of a fraudulent recovery of
Dividend. If two or more Persons are registered as joint-holders of any Share(s) any
one of them can give effectual receipts for any moneys payable in respect thereof.
Several Executors or Administrators of a deceased Member in whose sole name any
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Share stands shall for the purposes of this Article be deemed to be joint-holders
thereof.
(l) No unpaid Dividend shall bear interest as against the Company.
(m) Any General Meeting declaring a Dividend may on the recommendation of the Board,
make a call on the Members of such amount as the Meeting fixes, but so that the call
on each Member shall not exceed the Dividend payable to him, and so that the call
will be made payable at the same time as the Dividend; and the Dividend may, if so
arranged as between the Company and the Members, be set-off against such calls. DIRECTORS’ AND OTHERS’ RIGHTS TO INDEMNITY Article 83(D) provides that
Subject to the provisions of Section 201 of the Act, every Director, Manager and other officer or
employee of the Company shall be indemnified by the Company against any liability incurred by him
and it shall be the duty of the Directors to pay out of the funds of the Company all costs, losses and
expenses which any Director, Manager, officer or employee may incur or become liable to by reason
of any contract entered into by him on behalf of the Company or in any way in the discharge of his
duties and in particular, and so as not to limit the generality of the foregoing provision, against all
liabilities incurred by him as such Director, Manager, officer or employee in defending any
proceedings, whether civil or criminal, in which judgment is given in his favour or he is acquitted or in
connection with any application under Section 633 of the Act in which relief is granted by the Court
and the amount for which such indemnity is provided shall immediately attach as a lien on the
property of the Company and have priority as between the Members over all claims.
DIRECTORS ETC. NOT LIABLE FOR CERTAIN ACTS
Article 84 provides that
Subject to the provisions of Section 201 of the Act, no Director, Manager, officer or employee of the
Company shall be liable for the acts, defaults, receipts and neglects of any other Director, Manager,
officer or employee or for joining in any receipts or other act for the sake of conformity or for any loss
or expenses happening to the Company through the insufficiency, or deficiency of any security in or
upon which any of the monies of the Company shall be invested or for any loss or damage arising
from the bankruptcy, insolvency or tortuous act of any Person with whom any moneys, Securities or
effects shall be deposited or for any loss occasioned by an error of judgment or oversight on his
part, or for any other loss, damage or misfortune whatsoever which shall happen in the execution
thereof unless the same shall happen through his own negligence, default, misfeasance, breach of
duty or breach of trust.
AMENDMENT TO MEMORANDUM AND ARTICLES OF ASSOCIATION
Article 85 provides that
(A) The Members shall vote all the Shares owned or held of record by such Members at any
Annual or Extraordinary General Meeting of the Company in accordance with these Articles.
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(B) The Members shall not pass any resolution or take any decision which is contrary to any of
the terms of these Articles.
Notwithstanding anything stated in these Articles, if the ADA Group ceases to be the largest
shareholder of the Company, then neither ADA nor the ADA Group will be entitled to the rights as
stipulated in Articles 40, 44, and 46.
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MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The following contracts (not being contracts entered into in the ordinary course of business carried on by our
Company or entered into more than two years before the date of this Information Memorandum) which are
or may be deemed material have been entered or to be entered into by our Company.
Copies of the following documents will be available for inspection at the Registered office of the Company
on any working day (i.e. Monday to Friday and not being a bank holiday in Mumbai) between 11.00 am to
1:00 pm upto seven days from the date of filing of this Information Memorandum.
Documents for Inspection:
1. Memorandum and Articles of Association, as amended till date.
2. Certification of incorporation.
3. Fresh Certificate of Incorporation consequent to the Change of Name of the Company from Reliance Unicom Limited to Reliance Media World Limited.
4. Reports of the Statutory Auditors of the Company dated September 16, 2009 and October 30, 2009 prepared as per Indian GAAP and mentioned in this Information Memorandum.
5. Scheme of Arrangement sanctioned by the Hon’ble High Court of Judicature of Bombay vide its order dated April 4, 2009 between RML and erstwhile RUL now RMWL and their respective shareholders and creditors.
6. Copy of the Order dated April 4, 2009 of the Hon’ble High Court of Judicature at Bombay approving the Scheme of Arrangement.
7. Form 21 filed with the ROC on June 30, 2009 for making the Scheme effective.
8. Letters of approval from BSE and NSE dated November 25, 2008 and December 23, 2008 respectively, conveying their ‘No Objection’ to the Scheme under Clause 24(f) of the Listing Agreement.
9. Tripartite Agreement with NSDL dated July 27, 2009 and CDSL dated July 28, 2009.
10. Letters of approval from BSE and NSE granting In – Principle approval for listing of Equity Shares pursuant to Scheme received on August 24, 2009 and September 25, 2009 respectively.
11. SEBI letter no. CFD/DIL/PB/VT/177960/2009 dated September 24, 2009 granting relaxation from the strict enforcement of the requirement of Rule 19(2)(b) of the Securities Contract Regulation (Rules), 1957 (SCRR) for the purpose of listing of shares of the Company.
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DECLARATION All statements made in this Information Memorandum are true and correct.