1 Corporate Information

Zee Learn Limited (“the Company”) was incorporated in State of Maharashtra on 4 January, 2010. The Company is one of the most diversified premium education companies which delivers learning solutions and training through its multiple products viz. Kidzee, Mount Litera Zee Schools, Mount Litera World Preschool, Zee Institute of Media Arts (ZIMA), Zee Institute of Creative Arts (ZICA) and E - Learning Online Education and Testing.

(All the above securities are fully paid up)

1 Non disposal undertaking for 51% shares held by the Company for loan taken by subsidiary Company viz Digital Ventures Private Limited

2 0.01 %, Compulsorily Convertible Debentures (CCD) of Rs. 100 each fully paid up are compulsorily convertible into equity shares at a conversion rate to be decided based on fair value of equity shares any time from the date of allotment but not later than 10 years from the date of allotment.

3 During the year, 0.01% Compulsory Convertible Debentures (CCDs) with face value of Rs. 100/- each was converted into 0.01% Optionally Convertible Debentures (OCDs) aggregating to Rs. 30,00,00,000/- which was passed in the Extra ordinary general meeting of the wholly owned subsidiary held on 26 March 2018. The said OCD can be converted at any time after the allotment at the option of the company or can either be redeemed based on the request of the company. All the OCD’s have been redeemed during the year.

*As per regulation 22(2A) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the Subscription Shares i.e. 3,19,64,200 equity shares having face value of Rs. 10 each at a price of Rs. 62.57 (including a premium of Rs. 52.57/-) each of MT Educare Limited subscribed by the company on a preferential allotment basis has kept in an escrow account.

The company shall not be able to exercise its voting rights in relation to the Subscription Shares until the completion of the proposed open offer

b) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 1 each. Each holder of equity shares is entitled to one vote per share , except the holders of global depository receipts (GDR’s) do not have voting rights in respect of the equity shares represented by the GDRs till the shares are held by custodian. However holder of global depository receipts (GDR’s) was unvested into underlying equity shares of the company w.e.f. 15 January 2018. The Company declares and pays dividend in Indian Rupees. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per the records of the Company, including its register of shareholders / members and other declaration received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

e) Employees Stock Option Scheme (ESOP)

The Company has amended its Employee Stock Option scheme (ZLL ESOP 2010) to ZLL ESOP 2010- AMENDED 2015 to align the scheme with provisions of Companies Act 2013 and the SEBI (Shared Bases Employee Benefits) Regulations 2014 for issuance of upto 16,007,451 stock options (increased from 6,136,390) convertible into equivalent number of equity shares of Rs. 1 each not exceeding the aggregate of 5% of the issued and paid up capital of the Company to the employees of the Company and its susbsidiary viz Digital Ventures Private Limited as amended in board resolution dated 30 September 2016 at the market price determined as per the SEBI (Shared Bases Employee Benefits) Regulations 2014. The said Scheme is administered by the Nomination and Remuneration Committee of the Board.

Notes:

(i) The weighted average share price at the date of exercise of options exercised during the year ended 31 March 2018 was Rs. 32.23 (31 March 2017: Rs. 30.10).

(ii) Forfeited on account of non-market performance vesting condition not achieved.

(iii) Forfeited on account of employee resigned without exercising.

1) Debenture redemption reserve is created out of the profits which is available for payment of dividend for the purpose of redemption of debentures.

2) Securities premium is used to record premium on issue of shares. The reserve is utilised in accordance with the provisions of Companies Act, 2013.

3) Share Based Payment Reserve is related to share options granted by the Company to its employee under its employee share option plan.

4) General reserve is used from time to time transfer profits from retained earnings for appropriation purposes. General reserve includes Rs./Lakhs 8,881.25 (2017-8,881.25) (2016-8,881.25) pursuant to the scheme of Amalgamation, sanctioned by the Hon’ble High Court of Bombay and shall not be used for the purpose of declaring dividend.

5) Retained earnings represent the accumulated earnings net of losses if any, made by the Company over the years.

(i) Debentures

650 (2017-650), (2016-650) 10.40% Rated, Unlisted, Secured, Redeemable Non- Convertible Debentures of Rs. 10.00 Lakhs each fully paid up aggregating to Rs./lakhs 6,500.00, are issued for a period of 5 years and 3 months from the date of allotment. Debentures will be redeemed on July 8, 2020 in single tranche. The debentures are secured by first pari passu charge on all the fixed and current assets, all the rights, titles and interests to provide security cover of 1.1 times on outstanding amount and DSRA Undertaking by a related party.

(ii) Intercorporate deposits - Unsecured

The loan carries Interest @12.5% p.a and is repayable on demand.

(iii) Term loans from banks

a) Term loan from bank Nil (2017-’/lakhs 3,640.00) (2016- Rs./lakhs 4,680.00) is secured by first pari passu charge on all the movable assets (including current assets, loans and advances) of the Company and lien over debt service reserve account .The loan is further secured by way of securities and corporate guarantee provided by related parties. The loan carries interest over lenders base rate plus 1.1% and is repayable in 12 half yearly installments beginning from 30 June, 2014. The same has been repaid during the year

b) Term loan from bank 3,500.00 Rs./lakhs (2017-’/lakhs Nil) (2016- Rs./lakhs Nil) is secured by way of first ranking charge over movable assets including current assets, loans and advances with minimum coverage of 1.25x for entire tenure of the facility which includes charge on the accounts that receive cash from franchisee/revenue of the Company Plus DSRA equivalent to 1 months interest to be maintained upfront and one immediate installment to maintained one month prior to its schedule payment. The loan carries interest of 9.4% and its repayable 12 quarterly installments beginning from financial year 2018-19.

b) The Company had entered into and executed third party warehousing arrangement for materials/ study materials with a service provider. There was a dispute with the service provider for the service and Company has issued termination letter giving 3 months notice as per terms of the contract. However, the service provider stopped rendering the services during the notice period and has taken custody of the study materials. The Company has filed a case in Honorable High Court against the service provider in order to take the materials/ study materials through court process. Company was successful in getting a favorable order from Honorable High Court and obtained the custody of materials/study materials through court process, during March 2015. Further, the Company has filed a claim for damage and the matter is under arbitration.

c) The Company has withdrawn the merger with Tree House Education and Accessories Limited (THEAL) and has reserved its rights for suitable actions against adverse allegations by THEAL.

2 Capital and other commitments

a) Estimated amount of contracts remaining to be executed on capital account not provided for (net of advances) is Rs./lakhs 31.05 (Rs./lakhs 2017- 0.87) (Rs./lakhs 2016 - 10.43)

b) Non disposal undertaking for 51% shares held by the Company in Digital Ventures Private Limited for loan taken by subsidiary Company.

3 Managerial remuneration

Remuneration paid or provided in accordance with Section 197 of the Companies Act, 2013 to Executive Director and Manager, included in Note 25 “Employee benefits expense” is as under :

Notes :

a) Executive Director remuneration constitutes only the value of perquisite calculated upon exercise of ESOPs during the year.

b) Mr. Umesh Pradhan, Chief Financial Officer, has been reappointed with effect from 1 April 2016, as Manager of the company without any remuneration. He draws salary from the company as the CFO and not as the Manager.

4 Micro, small and medium enterprises

The Company has due to one party related to Micro, Small and Medium enterprises as at 31 March 2018 i.e. Rs./lakhs 152.81 (2017-Nil) (2016-Nil), on the basis of information provided by the parties and available on record. Further, there is no interest paid / payable to Micro, Small and Medium enterprises during the year.

iv) Securities given

The Company has given securities of Rs./lakhs 5406.51, (2017- 5406.51), (2016- 5406.51) for loan taken by wholly owned subsidiary.

5 On 28 June 2015, a fire occurred in one of the warehouses of the Company at Bhiwandi, Mumbai and the inventory of educational material lying at the said warehouse, amounting to Rs./lakhs 1,416.61 got completely destroyed. As per the initial settlement of the claim by the insurance company, the difference in loss claimed and the actual claim determined amounting to Rs./lakhs 941.63 is shown in Statement of Profit and Loss during the previous year 31 March 2017. The claim recoverable of Rs./lakhs 474.98 has been recovered during the year.

6 Dividend

Dividend on equity shares is approved by the Board of Directors in their meeting held on 07 May 2018, and is subject to approval of shareholders at the annual general meeting and hence not recognised as a liability (including DDT thereon). Appropriation of dividend is done in the financial statements post approval by the shareholders. Final dividend on equity shares for the year ended on 2018: Rs. 0.1 per equity share (2017 : 0.1*) which aggregates to Rs./lakhs 392.25 (2017 - 388.18).

* Interim and final dividend

7 Acquisition

The company has kept Rs. 136 lakhs in MT Educare Escrow Account towards Open Offer shown under Note 14 “Cash and Bank Balance” under other balances with bank. The company transferred Rs. 20,000 lakhs on 27 March 2018 which is shown in the Note 7 “Other Financial Assets” for preferential allotment of 31,964,200 equity shares having face value of Rs. 10/- each at the price of Rs. 62.57/- each (including a premium of Rs. 52.57/-) for MT Educare Limited and these shares kept in escrow account. Pending proposed open offer, the company will not be able to exercise its voting rights in relation to the subscription shares. In view of this, as per Ind AS 28, the group has not done accounting of investment in MT Educare Limited as an associate.

8 Corporate social responsibility - (CSR)

As per Section 135 of the Companies Act, 2013, a CSR Committee has been formed by the Company. The Company is required to spend Rs./lakhs 16.50 (2017 - 16.00) for the year against which Rs./lakhs 16.50 (2017 - 16.00) has been spent on activities specified in Schedule VII of the Companies Act, 2013.

9 Segment information

The Company has presented segment information on the basis of the consolidated financial statements as permitted by Ind AS 108 - Operating Segments.

10 Employee Benefits

The Disclosures as per Ind AS 19 - Employee Benefits is as follows:

A Defined Contribution Plans

Contribution to provident and other funds is recognised as an expense in Note 25 “Employee benefit expenses” of the Statement of Profit and Loss B Defined Benefit Plans

The present value of gratuity obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave benefits (non funded) is also recognised using the projected unit credit method.

VII. Sensitivity Analysis

The key actuarial assumptions to which the benefit obligation results are particularly sensitive to are discount rate and future salary escalation rate. The following table summarises the impact in percentage terms on the reported defined benefit obligation at the end of the reporting period arising on account of an increase or decrease in the reported assumption by 100 basis points

Notes:

(a) The current service cost recognised as an expense is included in Note 25 ‘Employee benefits expense’ as gratuity. The remeasurement of the net defined benefit liability is included in other comprehensive income.

(b) The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the Actuary.

Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and mortality. The sensitivity analysis above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

C Other long term benefits

The obligation for leave benefits (non funded) is also recognised using the projected unit credit method and accordingly the long term paid absences have been valued. The leave encashment expense is included in Note 25 ‘Employee benefits expense’.

11 Related party transactions

(i) List of parties where control exists Subsidiary company-wholly owned

Digital Ventures Private Limited

Academia Edificio Private Limited (Incorporated on 14 January 2016)

Liberium Global Resources Private Limited (Incorporated on 27 March 2017)

(ii) Other related parties with whom transactions have taken place during the year and balance outstanding as on the last day of the year.

Asian Satellite Broadcast Private Limited, Direct Media Distribution Ventures Private Limited, Diligent Media Corporation Limited, Digital Satellite Holdings Private Limited, Essel Business Excellence Services Private Limited, Pan India Network Infravest Private Limited, Taleem Research Foundation, Pri-Media Services Private Limited, Zee Entertainment Enterprises Limited, Dr Subhash Chandra Foundation, Essel Infra Projects Private Limited, Essel Corporate Resources Private Limited.

12 Financial instruments

(i) Financial risk management objective and policies

The Company’s principal financial liabilities, comprise loans and borrowings, trade advances, deposits and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include investments, loans, trade receivables, other receivables, and cash and cash equivalents that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s management oversees the management of these risks.

a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, and other financial instruments.

1) Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair value of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that future cash flows of floating interest bearing investments will vary because of fluctuations in interest rates.

The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term loan from banks. compulsorily convertible Debentures and Intercorporate deposits carries fixed coupon rate and hence is not considered for calculation of interest rate sensitivity of the company.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company’s profit before tax is affected through the impact of change in interest rate of borrowings, as follows:

2) Foreign currency risk

The Company enters into transactions in currency other than its functional currency and is therefore exposed to foreign currency risk. The Company analyses currency risk as to which balances outstanding in currency other than the functional currency of that Company. The management has taken a position not to hedge this currency risk.

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are not hedged considering the insignificant impact and period involved on such exposure.

Foreign Currency sensitivity analysis

The following table demonstrates the sensitivity to a 10% increase / decrease in foreign currencies with all other variable held constant. The below impact on the Company’s profit before tax is based on changes in the fair value of unhedged foreign currency monetary assets and liabilities at balance sheet date.

3) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers, deposits and loans given, investments and balances at bank. The Company measures the expected credit loss of trade receivables based on historical trend, industry practices and the business environment in which the entity operates. Expected Credit Loss is based on actual credit loss experienced and past trends based on the historical data.

Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies. Investments primarily include investment in liquid mutual fund units and non convertible debentures.

b) Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The Company’s principal source of liquidity are cash and cash equivalents and the cash flow i.e. generated from operations. The Company consistently generated strong cash flows from operations which together with the available cash and cash equivalents and current investment provides adequate liquidity in short terms as well in the long term.

(ii) Capital management

For the purpose of the Company’ s capital management, capital includes issued capital and all other equity reserves. The Company manages its capital structure to ensure that it will be able to continue as a going concern while maximising the return to the stakeholders.

The management assessed that cash and cash equivalents and bank balances, trade receivables, other financial assets, certain investments, trade payables and other current liabilities approximate their fair value largely due to the short-term maturities of these instruments. Difference between carrying amount and fair value of bank deposits, other financial assets, other financial liabilities and borrowings subsequently measured at amortised cost is not significant in each of the year presented.

(iv) Fair value hierarchy

The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities.

Investments measured at fair value are tabulated above. All other financial assets and liabilities at fair value are in Level 1 of fair value hierarchy.

The fair values of the financial assets and financial liabilities included in the level 1 categories above have been determined in accordance with quoted in active market

13 First Time Adoption of Ind AS

These financial statements, for the year ended 31 March 2018, are the first, the Company has prepared in accordance with Ind AS. For the period up to and including the year ended 31 March 2017, the Company prepared its financial statements in accordance with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP).

Accordingly, the Company has prepared its financial statements to comply with Ind AS for the year ended 31 March 2018, together with comparative data as at and for the year ended 31 March, 2017, as described in the summary of significant accounting policies. In preparing its financial statements, the Company’s opening balance sheet was prepared as at 1 April 2016, the Company’s date of transition. The notes explains the principal adjustments made by the Company in restating its Previous GAAP financial statements, including the balance sheet as at 1 April, 2016 and the financial statements as at and for the year ended 31 March 2017.

1 Exemptions

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

a) Deemed cost option

The Company has opted to continue with the carrying value for all of its Property, plant and equipment as recognised in its previous GAAP financial statements as deemed cost at the transition date.

b) Business Combination

The Company has elected to apply Ind AS 103 Business Combinations prospectively from 1 April, 2016.

c) Investments in equity instruments

An entity may make an irrevocable election at initial recognition of a financial asset to present subsequent changes in the fair value of an investment in an equity instrument in profit and loss or other comprehensive income. Ind AS 101 allows such designation of previously recognised financial assets, as ‘Fair value through profit and loss or other comprehensive income’.

The Company has accordingly designated certain equity instruments as at 1 April 2016 as fair value through profit and loss or other comprehensive income.

2 Exceptions

The following are the mandatory exceptions that have been applied in accordance with Ind AS 101 in preparing financial statements:

a) Estimates

The estimates at 1 April, 2016 and at 31 March, 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences, if any, in accounting policies) apart from the following items where application of Previous GAAP did not require estimation:

i. Impairment of financial assets based on expected credit loss model

The estimates used by the Company to present amounts in accordance with Ind AS reflects conditions as at the transition date and as on 31 March 2016.

b) Derecognition of financial assets and financial liabilities

The Company has elected to apply the derecognition requirements for financial assets and financial liabilities in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.

c) Classification and measurement of financial assets

The Company has classified financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS.

3 Reconciliations between Previous GAAP and Ind AS

The following reconciliations provides the effect of transition to Ind AS from IGAAP in accordance with Ind AS 101

a Balance Sheet and equity Reconciliation

b Profit and Loss and Other comprehensive income reconciliation

c Adjustment to Statement of Cash Flows

d Total equity reconciliation

e Total comprehensive income reconciliation

Explanations for reconciliation of Balance Sheet and Statement of Profit and loss and other Comprehensive income as previously reported under IGAAP to Ind AS

I Share Based Payments

Under Indian GAAR the company recognised only the intrinsic value for the long-term incentive plan as an expense. As per Ind AS requires the fair value of the share options to be determined using an appropriate pricing model recognised over the vesting period.

II Deposits

Under Indian GAAP the company accounted for deposits received / given at transaction value. As Per Ind AS, the company has discounted the lease deposit to consider wherever the fair value is different from the the market.

III Financial guarantee obligation

The Company has issued the financial guarantee on behalf of its subsidiaries for the borrowings taken by them. The company has recognised financial guarantee obligation at fair value with corresponding debit as investment in subsidiary. Subsequently guarantee obligation is amortised as other income.

IV Borrowings

Under Indian GAAP transaction costs incurred in connection with borrowings were charged to statement of profit and loss. Under Ind AS, borrowings are recorded initially at fair value less transaction cost and are subsequently measured at amortised cost as per Effective Interest Rate (EIR) method.

V Remeasurements of defined benefit plans

Under the Indian GAAP remeasurements i.e. actuarial gains and losses on the net defined benefit liability were recognised in the statement of profit and loss. Under Ind AS-19 Employee Benefits, actuarial gains and losses are recognised in other comprehensive income and not reclassified to statement of profit and loss.

VI Tax adjustments

Tax adjustments include deferred tax impact on account of differences between Indian GAAP and Ind AS.

14 Prior year comparatives

Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classifications / disclosures.