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    Auditor Certificate Non Applicability of para 9

    Uploaded by

    Deepak Gupta

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    © All Rights Reserved
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    of 39
    S.R. BaTLBOI & Co. LLP a ANNEXURE- J ‘The Board of Directors HT Media Limited Hindustan Times House 18-20, Kasturba Gandhi Marg New Delhi~ 110 001 Certificate of Non ~ applicability of requirements prescribed in Para 9 of Annexure I to SEBI Circular No. (CFD/DIL3/CIR201721 (“SEBI Circular”) dated March 10, 2017 in respect of Proposed Scheme of Arrangement. 1. This Certificate is issued in accordance with the terms of the Master Engagement Agreement (the “MEA”) dated October 22, 2016 and the Service scope letter (the | “SSL”) dated ‘August 23, 2017 which serves as an addendum to the MEA. Nothing contained in this Certificate, nor anything said or done in the course of, or in connection with the services that are subject this Certificate, will extend any duty of care that we may have in our capacity of the statutory auditors of any financial statements of the Company. 2. In connection with the proposed Scheme of Arrangement between HT Media Limited (Demerged Company) and HIT Digital Ventures Limited (Resulting Company) and thei respective shareholders and creditors. (hereinafter referred to as “Scheme”) in terms of the provisions of Sections 230 to 232 read ‘Section 66 and other applicable provisions ofthe Companies Act, 2013, the Demerged Company is, required to submit an undertaking which is prepared by the Board of Directors ofthe demerged Company as per SEBI’s Circular dated March 10, 2017 (the Undertaking’), duly certified by the statutory auditors of the Demerged Company, with BSE Limited, National Stock Exchange of India Limited (together referred to as ‘Stock Exchanges”) & Securities and Exchange Board of India (‘SEBI") towards non- applicability of conditions mentioned in paragraph 9(a) and 9(b) read with para 9(c) of heading / Paragraph 1 A of Annexure Ito the SEBI Circular stating reasons thereof 3. In connection with the requirement as stated in Paragraph 2 above, we have been provided by the Demerged Company, a certified copy of the Scheme which is pending for sanction by the Hon'ble "National Company Law Tribunal (as atached herewith) and certified copy of the Undertaking as per the ‘SEBI Circular (as attached herewith), We have initialed the Undertaking for identification purposes only. ‘We have relied on the Undertaking and have performed no further procedures in this regard, syee 126 S.R. BaTiBoi & Co. LLP ‘Charters Accountants ‘Management's Responsibility for the Undertaking 4. The preparation of the Undertaking is the responsibility of the management of the Company including the creation and! maintenance of all accounting and other records supporting the contents of the Scheme, This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation ofthe Undertaking. 5. ‘The management is also responsible for ensuring that the Demerged Company complies with the requirements of the aforesaid SEBI Circular and the Companies Aet 2013, in relation to the Scheme and for providing all the information to SEBI and the Stock Exchanges, Auditor's Responsibility (6. Pursuant to the requirements of the SEBI Circular, our responsibility isto provide reasonable assurance as to whether the requirements set out in paragraph 9a) and 9(b) read with para 9(¢) of heading / paragraph of 1 A of Annexure | ofthe SEBI Circular, as stated in the Undertaking, are applicable to the Scheme or not. 7. We conducted our examination in accordance with the Guidance Note on Reports or Certificates for Special Purposes (Revised) issued by the Institute of Chartered Accountants of India, The Guidance Note requires that we comply with the ethical requirements of the Code of Ethics issued by the In Chartered Aecountants of India 8. We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements, 9. reasonable assurance engagement includes performing procedures to obtain sufficient appropriate audit evidence on the reporting criteria, Accordingly, we have performed the following procedures in elation tw the Certificate: i. Obtained a certified copy of the Scheme, ii, Obtained a certified copy of the Undertaking as per the SEBI Circular, ili, Relied on the copy of the Scheme and the Undertaking so obtained, No further procedures inthis regard was performed, 10, Our scope of work did not involve us performing any audit tests in the context of our examination. We have not performed an audit, the objective of which would be to express an opinion on the specified ‘elements, accounts or items thereof, for the purpose of this certificate, Accordingly, we do not express such opinion, Further our examination did not extend to any aspects of a legal or propriety nature in the ‘Scheme. ee 197 S.R. BaTLiBot & Co. LLP ‘Chartered Accountants Conelusion 11, Based on the procedures performed as above and on the basis of verification of the Undertaking given by the Demerged Company and according to the information and explanations given to us and specifie representations received by us from the Management in respect of the conditions prescribed in paragraph 9(a) and 9(6) read with para 9(c) of heading / paragraph 1 A of Annexure I of the SEBI Circular (in relation tothe voting by public shareholders) and its applicability to the Scheme, we state that; ‘4. The Scheme does not envisage any issue of shares to Promoter / Promoter Group, Related Parties of yl() of Promoter / Promoter Group of the Company, other than the shares of the Resulting Company to all the shareholders of the Demerged Company on a proportionate basis pursuant 10 the Scheme, ‘Simultaneous withthe issuance of equity shares by the Resulting Company tothe shareholders of the Demerged Company, the equity shares of the Resulting Company held by the Demerged Company ‘and its nominees will be cancelled and which will ensure that the beneficial interest of the shareholders ofthe Resulting Company is identical to that of their respective intrest inthe Demerged Company; . Promoter / Promoter Group, Associates of Promoter / Promoter Group, Subsidi ', Read with 10(a) above, the scheme relates to the demerger and vesting of an undertaking of the Demerged Company to its wholly owned subsidiary ic. HT Digital Ventures Limited. The Scheme does not involve the Company and any other entity involving Promoter / Promoter Group, Related Panties of Promoter / Promoter Group, Associates of Promoter / Promoter Group, Subsidiary/(s) of Promoter / Promoter Group of the Company «The Scheme does not provide forthe acquisition, either diretly or indirectly, by the parent company, of the equity shares ofthe subsidiary, from any ofthe shareholders of the subsidiary who may be Promoter / Promoter Group, Related Parties of Promoter / Promoter Group, Associates of Promoter { Promoter Group, Subsidiary/s) of Promoter / Promoter Group of the parent listed entity ie the Demerged Company.. Further the Scheme is not forthe purpose of merger of subsidiary with the parent listed entity; 4. The Scheme does not envisage merger of an unlisted entity which results in reduction in the voting share of pre-scheme public shareholders of listed entity inthe transferee / resulting company by more than 5% of the total capital of the merged entity; and The Scheme does not envisage transfer of whole or substantially the whole of the undertaking of the Demerged Company and the consideration for such transfer is not in the form of the Demerged Company shares. +128 S.R. BaTLiBol & Co, LLP Charteed Accountants Restriction on Use 12. Our work was performed solely to assist you in meeting your responsibilities in relation to your compliance with the aforesaid SEBI Circular. Our obligations in respect of this certificate are entirely separate from and our responsiblity and liability is in no way changed by any other role we may have (or ‘may have had) as auditors ofthe Company or otherwise. Nothing in this certificate, nor anything said or «done in the course of or in connection with the services that are the subject ofthis certificate, will extend any duty of care we may have in our capacity as auditors ofthe Company, 13, The certificate is addressed to and provided to the Board of Directors of the Company solely for the Purpose to comply with requirement of SEBI Circular for onward submission to the Stock Exchanges, Accordingly, we do not accept or assume any liability or any duty of care for any other purpose or to any other person to whom this certificate is shown or into whose hands it may come without our prior consent in writing, For S.R. Batlibot & Co, LLP. Chartered Accountants ICAI Fitm Registration Number: 301003E/E300005 Afra Membership Number: 96766 Place of Signature: Gurgaon Date: 3¢ ]oe(a0 ‘> ‘Undertaking in relation to non-applicability of requirements prescribed in para (A)(9}(a) of Annexure I to SEBI Circular No. CFD/DILg/CU%/2017/21 dated 10% March, 2017 (‘SEBI Circular’) to the draft Scheme of Arrangement between HT Media Limited and HT Digital Ventures Limited and their respective shareholders and creditors Cthe Scheme’) ‘This {is in connection with the Draft Scheme of Arrangement between HT Media Limited CDemerged Company’ or ‘HTML and HT Digital Ventures Limited (Resulting Company’ or “ATDVL!) and their respective shareholders and creditors under Sections 230-232 of the Companies Act, 2013, reed with Section 66 of the Companies Act, 2019, and other applicable provisions of the Companies Act, 2033 and/ for Companies Act, 1956, as the case may be, and’ pursuant to para (1)(AY(9)(a) of the SEBI Circule, ‘wherein it is mandated for listed companies to ensuce that the Scheme submitted with the Hon'ble National Company Law Tubunal, for sanetion, provides for voting by public sharcholders through e-voting, after disclosure ofall material facts in the explanatory statement seat to the shareholders in rulation to such resolution. HIT Media Limited hereby undertakes thet the requirement stated at para (1)(A)(0)(a) of the SEBI Circular i.e. approval by publie shareholders through e-voting, is not applicable to the Scheme, for the following 1) Para DCANG)HIA) “The Scheme does not envisege any allotment of additional shares to Promoter/ Promoter Group, Related Parties of Promoter/ Promoter Group, Associates of Promoter/ Promoter Group, Subsidiary/(s) of Promoter/ Promoter Group, ofthe listed entity i. HTML, other than the shares to bbe issued by HTTDVL to all tbe Members of HTML as per the Share Entitlement Retio enshrined in Clause 12.1 ofthe Scheme, in discharge of the consideration for transfer of Entertainment & Digital Innovation Businese' af HTML to HTDVL. Fact pattern upon demerger coming into effect: > Issue of shares by the Resulting Company tothe existing Members ofthe Demorged Company. Resulting Company shall sve and allot equity shares on a proportionate basis to each Member of the Demerged Company [including The Hindestan Times Linsited (holding company of the Deuerged Company) and other shareholders), whose name iy recorded in the Register of Members ofthe Demerged Company as holding equity shares on Record Date, as per the Sharo Entitlement Ratio enshrined in Clause s2.1 ofthe Scheme .e. one filly paid tip exity share of ‘Re-t Rupoos two ony) of Resulting Company shal be issued and alloted for every 4 (fou) flly id up equity shares of Rs.2 (Rupees TWwo only) each of the Demerged Company held by the ‘Member. > Cancellation ofthe equity shares eld by the Demerged Company in Resulting Company ‘Simultaneous with the issuance of equity shares by tho Resulting Company to the members of the emerged Company, the existing equity shares ofthe Resulting Company held by the Demerged (Company and it neminees wil be cancelled, ‘This will ensure that shareholding pattern of Resulting Company is identical and mirror image YE the Demerged Company. 130 2) » a Accordingly, it is evident from the above that all the Members of the Demerged Company would get equity shares in Resulting Company in proportion to their entitlement as per Share Entitlement Ratio enshrined in the Schewe and there would be no allotment of additional shares ‘to Promoter / Promoter Group, Related Parties of Promoter/ Promoter Group, Associates of Promoter / Promoter Group, Subsidiary) of Prometer/ Promoter Group of the listed entity. Para (IYAM9)(b)Gi) ‘The Scheme envisages demerger of ‘Entertainment & Digital Innovation Business (as defined in the Scheme) of HTML and transfer and vesting thereof into HTTDVL (wholly-owned subsidiary company), tnd thus, the Scheme does not involve any other entity involving Promoter/ Promoter Group, Related Parties of Promoter/ Promoter Group, Associates of Promoter/ Promoter Group, Subsidiary/(s) of Promoter/ Promoter Group of HTML. Fact pattern upon demerger coming into effect: > HTDVL (Resulting Company) is a wholly-owned subsidiary of HTML (Demerged Company) and ‘therefore, the Resulting Company is not part of the Promoter/Promoter Group of Demerged ‘Company as the relationship is only through the Demerged Company. > As mentioned in para (1) above, the Resulting Company shall issue and allot fullypaid up equity shares as par the Shard Entitlement Ratio enshrined in Clause 12.1 of the Scheme to each ‘Member of the Demerged Company. Subsequent to issuance of such equity shares by the ‘Resulting, Company to the Members of the Demerged Company, the equity shares of the Resulting ‘Company held by the Demerged Company and its nominees will be cancelled, which will ensure that the shareholding patter of Resulting Company is identical and mirror image of the emerged Company. In such a case, benefit, if any, of the Scheme shall be to the advantage of all ‘the shareholders of the Demerged Company. > Since all the Members of the Demerged Company are being issued equity shares ofthe Resulting Company, the benefit of the Scheme would accrue to the advantage of all Members of the ‘emerged Company. Thus the objective of safeguarding the interest of the minority shareholders is metin this case. Para GD(AMO)(b)CD HTML (Demerged Company and parent listed company) has not acquired, ether directly or indirectly, any equity shares of HTDVL (Resulting Company and wholly-owned subsidiary company of Dpmerged Company) from any shareholders of HTDVL, who may be Promoter/ Promoter Group, Related Pasties of Promoter/ Promoter Group, Associates of Promoter/ Promoter Group, Subsidiary/(s) of Promoter/ Promoter Group of HTML. ‘The Scheme does not envisage the merger of HTDVL with HTMI., Para (AYO)(b) Civ) ‘The Scheme does not envisage merger of unlisted entity i.e. HTDVL (Resulting Company) with the listed entity Sc. HITMI. (Demerged Company) and therefore, the question of any red tee 131 voting share of pre-scheme public shareholders of ITTML in HTDVL, by more than 5% of the total capital ofthe merged entity, doesnot arise at all. 5) Para CAN )(b)(W) ‘The Schome envisages demerger of Entertainment & Digital Innovation Business’ (as defined in the ‘Scheme) of HTML and transfer and vesting thereof into HTDVL, ‘As per the SEDI Cireular, for the purposes of para (1(AY(G}(O%0), the expression “substantially the ‘whole ofthe undertaking” in any financial year shall ean 20% or more of value ofthe company in terms of consolidated net worth or consolidated total income during previous financial yoar as specified in seation 180(3)a}() ofthe Companies Act, 2013. ‘As per the audited financials of HTMT. for the Ginancial year ended g3¢' March, 207, the ‘Bntertainment & Digital Innovation Business’, does not satisfy the criteria of consolidated net wort and consolidated total iucome outlined in para (D(A)(9)(OX.) of the SEBI Circular. ‘The shares to be issued/ alloted by HTDVL to the Members of HTML as per Share Entitlement Ratio ccashrined in Clause 12.1 of the Scheme, shall be listed on both, BSE and NSE as enshrined in the (Clause 12:7 of the Scheme. inesh. ‘Whole-t &Comy Date: August 25, 2017 Place: New Delhi see 132 SCHEME OF ARRANGEMENT BETWEEN HT MEDIA LIMITED (DEMERGED COMPANY) AND HT DIGITAL VENTURES LIMITED (RESULTING COMPANY) AND ‘THEIR RESPECTIVE SHAREHOLDERS AND CREDITORS UNDER SECTIONS 230 TO 232 OF THE COMPANIES ACT, 2013 READ WITH SECTION 66 OF THE COMPANIES ACT, 2013, See 133 PREAMBLE ‘This Scheme (hereinafter defined) is presented under Sections 230 to 232 read with Section 6 and other applicable provisions of the Act (hereinafter defined), for transfer and vesting of Entertainment & Digital Innovation Business (hereinafter defined) of HTML (hereinafter defined) to the Resulting Company. (hereinafter defined) with effect from the Appointed Date (hereinafter defined), and upon effectiveness of the Scheme on the Effective Date(hereinafter defined). In addition, the Scheme also provides for various ‘other matters consequential andor otherwise integrally connected herewith, A. Background 1. HIT Media Limited “HTML” or the “Demerged Company") is a public limited company incorporated under the provisions of the Companies Aet, 1956 on December 03, 2002 bearing Corporate Identification Number L22121DL2002PLC117874. The registered office of HTML is situated at 18-20, Kasturba Gandhi Marg, New Dethi ~ 110001, The correspondence email address of HTML is investor@hindustantimes.com. The equity shares of HITML are listed on BSE Limited (“BSE”) & National Stock Exchange of India Limited (“NSE”). HTML is engaged in the following key businesses: 4) Printing and publication of newspapers and periodicals b)_FM Radio Broadcasting ©) Entertainment & Digital Iniovation Business 4) Operating Online job portal “shine.com” 2, HT Digital Ventures Limited (*HTDVL” or the “Resulting Company”) is a public limited ‘company incorporated under the provisions of Companies Act, 2013 on August 14, 2017 bearing Corporate Identification Number U74999DL2017PLC322147. The registered office of the Resulting Company is situated at Hindustan Times House, 2nd Floor, 18-20, Kasturba Gandhi Marg, New Delhi-110001. The correspondence email address of the Resulting Company is tridib.barat@livehindustan.com . It is a wholly owned subsidiary of HTML and has been recently incorporated. The Entertainment & Digital Innovation Business is proposed to be demerged and vested into the Resulting Company. B. Rationale for the Scheme of Arrangement HTML has various businesses that are complementary in nature. However, they are distinet in terms of their nature, regulatory & competitive environment, risk profile, workforce capability, capital requirement and growth trajectory. With a view to support the Entertainment & Digital Innovation Business to capitalize on ft ‘growth opportunities, led by a dedicated management team, it is proposed to assign a separate identity to this business by way of its demerger into the Resulting Company. The proposed demerger is likely to offer benefits to HTML and the Resulting Company, as outlined hereunder: a. The Entertainment & Digital Innovation Business of HTML has significant potential for growth. The nature of risk, competition, challenges, opportunities and business operations of the Entertainment & Digital Innovation Business is separate and distinct from other businesses of HTML. Thus, the Scheme, which envisages demerger of Entertainment & Digital Innovation Business into a separate company, would enable this business to innovate, scale up and run independently to pursue growth opportunities in a more focused manner. b. As part of the Resulting Company, the Entertainment & Digital Innovation Business shall, bbe amenable to benchmarking, and be in a position to attract the right set of investors, strategic partners, employees and other relevant stakeholders, ©. There would be enhanced focus on the operations of the Entertainment & Digital Innovation Business under a dedicated management team of the Resulting Company, who can chart out and pursue an independent strategy to maximize value oreation for stakeholders. Likewise, there would be greater management focus on the Remaining Business (hereinafter defined) of HTML. 4. The listing of shares of the Resulting Company on stock exchanges, would enable independent bench-marking of Entertainment & Digital Innovation Business, and give a distinct identity to the Entertainment & Digital Innovation Business which is independent, and accountable to the interest of all stakeholders and thus, would provide enhanced liquidity to the investors of HTML. ‘There is no adverse effect of Scheme on the directors, key managerial personnel, promoters, non- promoter shareholders, creditors, vendors and employees of HTML and the Resulting Company. ‘The Scheme would be in the best interest ofall stakeholders. Pursuant to this Scheme, all shareholders of HTML shall be entitled to equity shares in the Resulting Company on a pro-rata basis on the terms specified in this Scheme. Accordingly, the Board of Directors of HTML and the Resulting Company have decided to make requisite applications and/or petitions before the ‘Tribunal (hereinafter defined), as applicable under Sections 230 to 232 of the Act (hereinafter defined) read with section 66 of the Act and ‘other applicable provisions for the sanction of this Scheme. C. ‘Treatment of Scheme for the purposes of Income-Tax Act, 1961 The provisions of this Scheme have been drawn up to comply with the conditions relating to “Demerger” as defined under Section 2(19AA) of the Income-tax Aet, 1961 (“IT Act”). If any {terms or provisions of the Scheme are found or interpreted to be inconsistent with the provisions. of the said Section at a later date, including resulting from an amendment of law or for any other reason whatsoever, the provisions of the said Section of the IT Act shall prevail, and the Scheme shall stand modified to the extent determined necessary to comply with Section 2(19AA) of the IT ‘Act. Such modification(s), will, however, not affect the other provi ‘The Scheme is divided into the following parts: PART A deals with Definition and Share Capital of the companies PART B deals with the transfer and vesting of the Entertainment & Digital Innovation Business (hereinafter defined) of HTML (0 and with the Resulting Company in accordance with Sections 230 to 232 of the Act (hereinafter defined) read with Section 66 of the Act, other applicable provisions of the Act and/ or the 1956 Act (hereinafter defined), and in accordance with Section 2(19AA) of the IT Act. PART C deals with general terms and conditions that would be applicable to the Scheme. PARTA DEFINITION AND SHARE CAPITAL, 1, DEFINITIONS Im this Scheme, unless inconsistent with the subject, following expressions shall have the ‘meanings respectively assigned against them: 11 “the Aet” means the Companies Act, 2013, as notified, and ordinances, rules and regulations made and notifications, circulars ete, issued thereunder, and shall include any statutory modifications, re-enactments or amendments thereof. 1.21986 Act” means the Companies Act, 1956 (as applicable) and ordinances, rules regulations made thereunder, and shall include any statutory modifications, re-enactmen}s “Appointed Date” shall mean March 31, 2018(at close of business hours). “Board of Directors” or “Board” means and includes the respective Boards of Directors of the Demerged Company and the Resulting Company or any committee constituted by such Board of Direetors for the purposes of the Scheme. “Clause” and “Sub Clause” means the relevant clause /sub clause set out in the Scheme, ess of HTML” or “Entertainment & Digital Innovation Business” means all, the businesses, undertakings, activities, assets, properties and liabilities, of whatsoever nature and kind and where so ever situated, of HIML pertaining to the Entertainment & Digital Innovation Business, including specifically the following: “Entertainment & Digital Innovation Busi 1.6.1 Fever Audio Tools for aggregation and creation of audio, audio feed which plays music and promotional talks across various stores, malls, buildings, restaurants, eateries, ete., distribution of in-house creative and niche celeb based content to mobile and digital users, innovative tools to build, promote and amplify brand communication and deliver it with a greater impact and credibility; strategic investments in multimedia content management business, movie review and rating entertainment platform and the digital repository of images; 1.6.2 All immovable properties ie. land together with the buildings and structures standing thereon (whether freehold, leaschold, leave and licensed, right of way, tenancies or otherwise), benefits of any rental agreement for use of premises, marketing offices, share of any joint assets, ete., which immovable properties are being used for the purpose of and in relation to the Entertainment & Digital Innovation Business and all documents (including panchnamas, declarations, receipts) of ttle rights and easements in relation thereto and all rights, covenants, continuing rights, title and interest in connection with the said immovable properties; 1.6.3 All asseis, as are movable in nature pertaining to and in relation to the Entertainment & Digital Innovation Business, whether present or future or contingent, tangible or intangible, in possession or reversion, corporeal or incorporeal (including plant and machinery, capital work in progress, stores under progress, electrical fittings, furniture, fixtures, appliances, accessories, power lines, office equipments, computers, communication facilities, installations, vehicles, inventory, hardware & software and tools and plants, stock-in-trade, stock-in-transit, raw materials, finished good packaging items), actionable cla ‘current assets, earnest monies and sundry debtors, investments, financial as. 1.6.4 165 1.6.6 outstanding loans and advances, recoverable in eash or in kind ot for value to be received, provisions, receivables, funds, cash and bank balances and deposits including accrued interest thereto with Government, semi-Government, local and other authorities and bodies, banks, customers and other persons, insurances, the benefits of any bank guarantees, performance guarantees and letters of credit, and tax related assets, including but not limited 10 Goods and Services tax credits, CENVAT credits, value added/Sales tax/entry tax eredits or set-offs, advance tax, ities, tax deducted at source minimum alternate tax credit, deferred t and tax refunds; All permits, licenses, permissions including municipal permissions, right of way, approvals, clearances, consents, benefits, registrations, rights, entitlements, credits, certificates, awards, sanctions, allotments, quotas, no objection certificates, exemptions, concessions, subsidies, liberties and advantages (Gncluding consenvauthorisation granted by relevant authorities and other Ticenses/permits granted/issued’ piven by any govermental, statutory or regulatory or local or administrative bodies for the purpose of carrying on the fertainment & Di including those relating (0 privileges, powers, facilites of every kind and

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