1 Rights, preferences and restrictions in respect of each class of shares
The Company has two classes of shares referred to as Equity Shares and Preference Shares having par value of Rs.10/- per share. Each holder of Equity Share is entitled to one vote per share. Preference Shareholder is eligible to vote only on the resolutions directly affecting the rights attached to his Preference shares.
In the event of liquidation, the Equity Shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their paid up value of Capital.
2. Security Description:
Term Loans of Rs.2599.77 lakh (March 31, 2015: Rs.1261.79 lakh) from banks are secured by way of hypothecation of Fixed assets. The following have been provided as collateral:
Already hypothecated fixed assets purchased out of term loans availed from Industrial Promotion and Investment Corporation of Odisha Limited (IPICOL) and SREI Equipment Finance Limited (SREI) charged on pari passu basis, equitable mortgage of leasehold property at Bhubaneswar, equitable mortgage of immovable property and flat at Cuttack and Bhubaneswar, pledge of term deposits of Rs.129.24 lakh (March 31, 2015: Rs.109.01 lakh) and personal guarantee of one of the Directors.
Term Loans of Rs.2198.60 lakh (March 31,2015: Rs.1098.60 lakh) from banks are secured by way of pari passu charge on assets/equipments acquired out of the said Term Loan and ranking pari passu with other Banks. Second charge on fixed assets already hypothecated to other banks and institutions. The following have been provided as collateral:
Equitable mortgage of leasehold property at Bhubaneswar, equitable mortgage of Immovable property and flat at Cuttack and Bhubaneswar, pledge of term deposits of Rs.209.26 lakh (March 31, 2015: Rs.177.78 lakh) and personal guarantee of one of the Directors.
Term Loans of Rs.845.95 lakh (March 31, 2015: Rs. Nil) from banks are secured by way of pari passu charge on assets/ equipments acquired out of the said Term Loan. The following have been provided as collateral:
Equitable mortgage of leasehold property at Rourkela.
Term Loans of Rs.7800.88 lakh (March 31, 2015: Rs.9706.76 lakh) from Others are secured by way of First/exclusive charge created by way of hypothecation of assets including various networking equipment and personal guarantee of one of the Directors. The following have been provided as collateral :
Against Term Loan of Rs.6697.30 lakh (March 31, 2015: Rs.8292.82 lakh), equitable mortage of immovable property at Raipur together with all buildings and structures thereon and all plant and machinery attached to the earth or permanently fastened to anything attached to the earth, both present and future.
Finance Lease Obligations of Rs.852.59 lakh (March 31, 2015: Rs.729.57 lakh) from Others are secured on equipment together with all parts, accessories and substitutions taken on lease.
[Secured by way of hypothecation of stocks of Networking items and book debts of the Company. The following assets are kept as collateral: Already hypothecated fixed assets purchased out of term loan availed from IPICOL and SREI charged on pari passu basis, equitable mortgage of leasehold property at Bhubaneswar, equitable mortgage of immovable property and flat at Cuttack and Bhubaneswar, pledge of term deposits amounting to Rs. 78.05 Lakh (31 March 2015: Rs. 65.90 Lakh) and personal guarantee of one of the Directors.]
* The Company had been providing services in Paradeep Port Trust (PPT) area as per contracts. In an earlier year, the Company had committed to cover programmes/news of PPT in its news channel as “PARADIP PARIKRAMA”. As per the terms of the contract, the contents of the programmes were to be provided by PPT for coverage and transmission of the programmes by the Company. Subsequently, PPT had claimed that it incurred Rs. 52.69 Lakh for shooting and covering the same. However, the said claim has not been accepted by the Company. By the time PPT raised this claim, the contract had expired and a new contract pursuant to fresh negotiation was executed. PPT then claimed that they would adjust the said amount with subscription money payable by PPT to the Company. Accordingly, the Company had filed a writ petition dated 10 July 2006 against the demand of PPT before the Hon’ble High Court, Orissa. The demand has been stayed by the Hon’ble High Court vide its interim Order dated 20 July 2006. The matter is still pending for final hearing. As on date, all earlier contracts with PPT have expired.
3 Leases Finance Leases
The Company has acquired certain Cable Network, Broadband NOC equipment and Computers on finance lease for a period maximum up to forty eight months, The assets will be transferred to the Company at a nominal value at the end of the lease period. The lease Agreements are non-cancellable as envisaged in the Accounting Standard 19 on Leases.
4. Disclosure pursuant to Accounting Standard (AS) 15 - Employee Benefits
The Company maintains a provident fund with Regional Provident Fund Commissioner. Contributions are made by the Company to the funds, based on the current salaries. In the provident fund schemes, contributions are also made by the employees. An amount of Rs. 123.23 Lakh (March 31, 2015 : Rs.76.54 Lakh) has been charged to the Statement of Profit and Loss on account of the above defined contribution schemes.
The Company operates a superannuation scheme for its eligible employees with Life Insurance Corporation of India (LICI) towards which the Company contributes upto a maximum of 15% of the employees’ current salary amounting to Rs. 1.24 Lakh (March 31, 2015 : Rs.1.26 Lakh) which is charged to the Statement of Profit and Loss.
The Company has taken a policy with Life Insurance Corporation of India (LICI) for future payment of gratuity liability to its employees, which is a defined benefit scheme. Actuarial valuations are carried out by an independent actuary based on the methods prescribed in the Accounting Standard 15 - “Employee Benefits” of the Companies (Accounting Standard) Rules, 2006. Contributions are also made by the Company. Employees are not required to make any contribution.
The Company also provides for leave encashment benefit to the employees. Actuarial valuations for the year are carried out by an independent actuary based on the methods prescribed in the Accounting Standard 15 - “Employee Benefits” of the Companies (Accounting Standard) Rules, 2006.
The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors. The expected return on plan assets is based on actuarial expectation of the average long term rate of return expected on investments of the funds during the estimated terms of the obligations.
Gratuity expenses and Leave Encashment expenses charged to the Statement of Profit and Loss for the year ended March 31, 2016 are Rs.37.68 lakh and Rs.30.40 lakh respectively.
5. Employee Stock Option Scheme
Brief description about the scheme :
Employee Stock Option Scheme, 2010 (ESOS 2010): The Board, vide its resolution dated 19 December 2010, approved (i) ESOS 2010 for granting Employee Stock Options in the form of Equity Shares linked to the completion of a minimum period of continued employment and (ii) Employee Performance Linked Stock Option to be issued at par in lieu of loyalty bonus linked to specified performance target to the eligible employees of the Company monitored and supervised by the Compensation Committee of the Board of Directors in compliance with the provisions of Securities and Exchange Board of India(Employee Stock Option Scheme And Employee Stock Purchase Scheme) Guidelines, 1999 and amendments thereof from time to time [since repealed on October 28,2014 pursuant to the coming into force of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations,2014 with effect from the said date.] An employee who is a promoter or belongs to the promoter group shall not be eligible to participate in the scheme. The eligible employees for the purpose of ESOS 2010 will be determined by the Compensation Committee from time to time. The Employee Performance Linked Stock Option shall be subject to 18 months lock in after the date of allotment whereas the Employee Stock Option is free from lock in. The vesting period of Employee Performance Linked Stock Option and Employee Stock Option are 18 and 36 months respectively with 3 months exercise period for exercising the option to subscriber.
The Company had granted (net of options lapsed) 35500 stock options in 2010-11 under the ESOS 2010 Scheme (Option XI),which had vested in earlier years and were allotted in FY 2014-15. All the exercised options were allotted in the form of Equity Shares.
All the above valid options would be allotted in the form of Equity Shares on the basis of 1:1.
The Company has adopted the intrinsic value method as permitted by the aforesaid SEBI guidelines/regulations and the Guidance Note on Accounting for Employee Share Based Payment issued by the Institute of Chartered Accountants of India in respect of stock options granted. The value of the underlying Shares has been determined by an independent valuer. The Company’s net profit / (loss) and earnings per share would have been as under, had the compensation cost for employees’ stock options been recognized based on the fair value at the date of grant in accordance with Black Scholes model.
Since the Company was unlisted at the time of grant of Options ,the Expected Annual Volatility of the options was taken based on one year historical volatility index of Peer Listed Company as per clause 27 of Appendix 1 of the Guidance Note issued by ICAI.
Notes to Financial Statements for the year ended March 31, 2016 Ortel Employee Stock Option Scheme, 2015 (“ ESOS 2015"/ “Scheme”)
The Members of the Company at the Annual General Meeting dated July 27, 2015 approved ESOS 2015 for granting Employee Stock Options in form of Equity Shares, linked to the completion of a minimum period of continued employment, to the eligible employees of the Company, administered by the Nomination & Remuneration Committee (“Committee”) of the Board of Directors in compliance with the provisions of SEBI (Share Based Employee Benefits) Regulations 2014 and amendments thereof from time to time. The Scheme can be implemented either directly or through an irrevocable Trust. However, if the scheme invokes secondary acquisition of shares or gift or both, then it is mandatory to implement the scheme through a Trust. The Company may lend or give refundable advance with or without interest to the trust to acquire shares of the Company from secondary market. Such secondary acquisition by the trust shall not exceed 2% of the paid up equity capital of the Company as at the end of each financial year. An employee who is a promoter or belongs to the promoter group shall not be eligible to participate in the scheme. The eligible employees for the purpose of ESOS 2015 will be determined by the Committee from time to time. The vesting period of Employee Stock Option is not less than one year and not more than five years from the grant of offer with 3 months exercise period for exercising the option to subscribe. The shares issued against exercise of options may be subject to lock in for a period till repayment of the funds availed from the company/trust or for any other period as may be decided by the Committee. During the year ended March 31,2016, no option has been offered/granted pursuance to the scheme. Further, as per the Scheme, the Company has set up an irrevocable Trust,”Ortel Employee Welfare Trust” on 20th November, 2015 to implement the scheme. As on March 31, 2016, the turst has acquired 3095 nos of equity shares from secondary market at an average acquisition price of Rs.189.84 per shares which will be offered to the eligible employees in future, as decided by the Committee.
5. Disclosure pursuant to Accounting Standard 18- Related Party Disclosures (a) Names of the Related Parties
i) Key Managerial Personnel (KMP) : Ms. Jagi Mangat Panda - Managing Director
Mr. Bibhu Prasad Rath - Chief Executive Officer
ii) Relative of Key Managerial Personnel : Mr. Baijayant Panda - Husband of Ms.Jagi Mangat Panda
iii) Enterprises over which KMP and/or relative of such Indian Metals & Ferro Alloys Ltd.
KMP is able to exercise significant influence (with whom Odisha Television Ltd. transactions havetaken place during the year): Orissa Infratech Pvt. Ltd.
B.Panda & Company Pvt. Ltd.
Barabati Investment & Trading Co. Pvt. Ltd.
Panda Investment Pvt. Ltd.
(c) Details of the aforesaid Related Party Transactions during the year (excluding reimbursements):
1 Managerial Remuneration paid to Ms. Jagi Mangat Panda Rs.65.91 Lakh (Previous Year: Rs.42.11 Lakh) and Mr. Bibhu Prasad Rath Rs. 58.82 Lakh(Previous Year : Rs. 51.63 Lakh)
2 Sitting fees as nominee paid to Panda Investment Pvt. Ltd Rs.Nil (Previous Year: Rs.0.05 Lakh)
3 Sitting fees as nominee refunded back by Panda Investment Pvt. Ltd Rs.Nil (Previous Year: Rs. 0.05 Lakh )
4 Signal Uplinking Income received from Odisha Television Ltd. Rs.297.62 Lakh (Previous Year: Rs.288.38 Lakh)
5 Rent Received from Odisha Television Ltd. Rs.7.20 Lakh (Previous Year: Rs.7.20 Lakh)
6 Internet Subscription Fees received from Odisha Television Ltd. Rs.12.40 Lakh (Previous Year: Rs.10.13 Lakh) and Indian Metals & Ferro Alloys Ltd. Rs.6.24 Lakh (Previous Year: Rs.6.23 Lakh)
7 Subscription Fees received from Mr. Bibhu Prasad Rath Rs 0.16 Lakh (Previous Year Rs 0.19 Lakh) and Indian Metals & Ferro Alloys Ltd. Rs 0.30 Lakh (Previous Year: Rs.0.34 Lakh)
8 Material Issued to Odisha Television Ltd. Rs. Nil (Previous Year: Rs.0.44 Lakh)
9 Advertisement Expenses paid to Odisha Television Ltd. Rs.18.03 Lakh (Previous Year: Rs. 18.00 Lakh)
10 Channel Carriage Income received from Odisha Television Ltd. Rs.210.67 Lakh (Previous Year: Rs.174.39 Lakh)
11 Programming Cost paid to Odisha Television Ltd. Rs.219.03 Lakh (Previous Year: Rs.179.70 Lakh)
12 Share application money received from Mr.Baijayant Panda Rs. Nil (Previous Year: Rs.2.50 Lakh).
13 Amount Received towards Exercise of Employee Stock Option Scheme by Mr. Bibhu Prasad Rath Rs. Nil(Previous Year: Rs 10.30)
14 Unsecured Loan received from Orissa Infratech Pvt. Ltd. Rs. 170.00 Lakh(Previous Year: Rs.662.49 Lakh)
15 Unsecured Loan repaid to Orissa Infratech Pvt. Ltd. Rs.207.56 Lakh (Previous Year: Rs.164.73 Lakh)
16 Interest and Processing Fees on Unsecured Loan paid to Orissa Infratech Pvt. Ltd. Rs.142.76 Lakh (Previous Year: Rs.65.22 Lakh)
17 Advance given to Mr. Bibhu Prasad Rath Rs.Nil (Previous Year : Rs 9.27 Lakh).
18 Advance Recovery from Mr. Bibhu Prasad Rath Rs. 2.83 Lakh (Previous Year : Rs 1.80 Lakh)
6. Advance from customers includes Rs. 74.46 Lakh, being Electricity Inspection Duty collected from the customers (levied by the Department of Energy, Government of Orissa vide its notification dated March 29, 2002 under Indian Electricity Rules, 1956) but not deposited with the appropriate authorities on the ground that neither the rules nor the notification is applicable to the Company and the charging chapter of the Notification does not authorize the electrical Inspector to levy fees on any person other than the owner of the television connection. The Company has filed a writ petition before
Hon’ble High Court of Orissa against the said Notification and obtained an order to the effect that no coercive action can be taken against the Company until the disposal of the case. However, as per the direction of Hon’ble High Court of Orissa vide its order dated February 09, 2007, Rs. 29.00 Lakh was deposited with the said Court. Subsequently, Hon’ble High Court of Orissa vide its order dated November 05, 2007 directed the Government of Orissa to take a decision as to whether the inspection charges so far as consumer of television connections are concerned can be waived and/or imposed and also directed the Company not to collect any amount from any individual customer until a decision is taken by the Government of Orissa.
7. The Company acquires the "Cable Network Business" of various Local Cable Operators ('LCOs') which, inter alia, consists of equipments, infrastructure and cable television subscribers and enters into agreements with the LCOs in this regard, whereby the LCOs agree to sell their "Cable Network Business" . The LCOs also agree not to compete with the Company for a specified period in the areas where the LCOs have transferred their cable television subscribers to the Company. The amount payable for acquisition of equipments & infrastructure has been capitalized under relevant categories of tangible assets and the amount payable as non-compete fee has been treated as an Intangible asset.
8 Capital Work-in-Progress includes capital inventory of Rs.6008.44 Lakh (March 31, 2015: Rs.1115.97 Lakh).
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