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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 20-F

OR

For the fiscal year ended March 31, 2017

OR

Date of event requiring this shell company report

Commission file number 1-36901

Videocon d2h Limited

(Exact name of Registrant as specified in its charter)

Republic of India

(Jurisdiction of incorporation or organization)

1st Floor, Techweb Centre

New Link Road

Oshiwara Jogeshwari (West)

Mumbai 400 102 Maharashtra, India

(Address of principal executive offices)

Law Debenture Corporate Services Inc.

400 Madison Avenue, 4th Floor

New York, NY 10017

Tel: (212) 7506474

Fax: (212) 7501361

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     Yes  ☐    No  ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ☐    No  ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on our corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    N/A

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.    N/A

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by checkmark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question, indicate by checkmark which financial statement item the registrant has elected to follow.    N/A

If this is an Annual Report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Table of Contents

TABLE OF CONTENTS

Table of Contents

DEFINITIONS

ADS

means an American Depositary Share.

add-on

means individual channels or a set of channels that subscribers may add to their current subscription package.

Additional KuBand Lease Agreement

means the additional KuBand lease agreement, dated December 4, 2015 as amended on June 24, 2016, entered into between our Company and Antrix Corporation, for the leasing of two 36 MHz transponders on a 24-hour, seven-day-per-week basis for a period of three years up to December 3, 2018.

Adjusted DTH Gross Revenue

refers to the basis of the payment of license fees to the MIB, calculated on the basis of revenue earned from licensed activities net of certain deductions as permitted by TDSAT Ruling.

a la carte

means a subscription package whereby subscribers can create a custom subscription package, by selecting individual channels or a set of different channels.

Antrix Corporation

means the commercial division of the Department of Space, Government of India.

ARPU

means Average Revenue Per User.

BSE

refers to BSE Limited, located in Mumbai, Maharashtra, India.

Contribution Agreement

refers to the Contribution Agreement dated December 31, 2014, as amended from time to time, between our Company and Silver Eagle Acquisition Corp.

DAS

means Digital Addressable Cable TV System.

Daily Burn Rate

means daily charge for the package used by subscribers.

Department of Space

refers to the Department of Space, Government of India.

Deposit Agreement

refers to the deposit agreement dated March 31, 2015, as amended from time to time, between our Company, Deutsche Bank Trust Company Americas as depositary and the holders and beneficial owners of the ADS evidenced by American Depositary receipts. The laws of the State of New York govern the Deposit Agreement and the ADSs.

Dish TV Videocon

refers to Dish TV Videocon Limited, as transferee company and successor to Dish TV India Limited upon the completion of our proposed merger with Dish TV India Limited pursuant to the Scheme of Arrangement.

DTH

means Direct-to-Home satellite, a means of receiving signals transmitted from direct broadcast satellites.

DTH License Agreement

means License Agreement, dated December 28, 2007, executed between Videocon d2h and the President of India acting through the Director, Broadcasting, Policy and Legislation, Ministry of Information and Broadcasting, Government of India.

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Earnout

refers to the allotment of bonus issue of shares (or such other form of share issue as determined by the independent members of our board of directors) to our existing shareholders as of the date of the Contribution Agreement and the Sponsor, Global Eagle Acquisition LLC, upon satisfaction of certain share price performance hurdles of the ADSs on Nasdaq being satisfied within three years of the initial listing of the ADSs, namely an “Initial Performance Hurdle” and a “Subsequent Performance Hurdle”.

equity shares

means the equity shares of Videocon d2h with face value of Rs. 10 each.

ESOP 2014

means the Videocon d2h Employees Stock Option Scheme 2014, adopted by Videocon d2h on August 1, 2014

GNIDA

refers to the Greater Noida Industrial Development Authority.

GoI

refers to the Government of India.

Gross subscribers

means total registered subscribers.

HD

means High Definition.

IFRS

refers to International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB).

Indian Companies Act

means together, the notified provisions of the Companies Act, 2013 (along with applicable rules framed thereunder) and the Companies Act, 1956, as amended (to the extent in force).

Initial Performance Hurdle

means the allotment of shares to existing shareholders as of the date of the Contribution Agreement and the sponsor, Global Eagle Acquisition LLC, if the last sales price of our Company’s ADSs on Nasdaq (converted into Indian Rupees on each such day at the Indian Rupee/U.S. dollar exchange rate on such date) equals or exceeds 125.0% of the listing price of the ADSs for any 20 trading days within any 30 trading period within three years from the closing date (as adjusted for splits, dividends, reorganizations, recapitalizations and the like).

KuBand

means the 1218 GHz portion of the electromagnetic spectrum in the microwave range of frequencies primarily used for satellite communications.

KuBand Lease Agreements

means the combination of the Original KuBand Lease Agreement, the New KuBand Lease Agreement and Additional KuBand Lease Agreement.

MIB

refers to Ministry of Information and Broadcasting, Government of India.

Nasdaq

means the Nasdaq Stock Market LLC.

Net subscribers

means subscribers authorized to receive DTH broadcasting services on account of payment of subscription charges or any entry offer at the time of initial connection, as well as subscribers who are temporarily disconnected due to non-payment of subscription charges for a period not exceeding 120 days.

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New GDRs

mean new global depositary receipts representing equity shares in Dish TV Videocon to be issued after the consummation of our proposed merger with Dish TV India Limited.

New KuBand Lease Agreement

means a KuBand Lease Agreement, dated August 1, 2015 as amended on June 24, 2016, entered into between our Company and the Department of Space, Government of India, for the leasing of ten 54 MHz transponders on a 24-hour, seven-day-per-week basis for a period of three years up to July 31, 2018.

Original KuBand Lease Agreement

means a KuBand lease agreement, dated April 19, 2012, as amended on June 19, 2013 (“Amendment 1”), on July 1, 2014 (“Amendment 2”), on February 27, 2015 (“Amendment 3”), on April 15, 2015 (“Amendment 4”) and on June 1, 2015 (“Amendment 5”) entered into between Videocon d2h and the Department of Space, Government of India.

PFIC

means passive foreign investment company.

Principal Shareholders

means Mr. Saurabh Pradipkumar Dhoot, Synergy Appliances Private Limited, Solitaire Appliances Private Limited, Greenfield Appliances Private Limited, Platinum Appliances Private Limited and Shree Dhoot Trading and Agencies Limited.

RBI

means the Reserve Bank of India.

Recharge

means the payments made by a subscriber from time to time in order to receive the services offered by Videocon d2h.

Scheme of Arrangement

means the scheme of arrangement among our Company, Dish TV India Limited and the shareholders and creditors of our Company and Dish TV India Limited under the provisions of Sections 230-232 and other applicable provisions of the Companies Act, 2013, to effect, among other things, the amalgamation of our Company, as transferor company, with and into Dish TV India Limited, as transferee company.

SEC

means the U.S. Securities and Exchange Commission.

SingTel

refers to Singapore Telecommunications Limited.

ST2

satellite refers to a telecommunications satellite made by Mitsubishi Electric, operated by the ST2 Satellite Ventures joint company of SingTel and Chunghwa Telecom.

Subsequent Performance Hurdle

means the allotment of shares to existing shareholders as of the date of the Contribution Agreement and the sponsor, Global Eagle Acquisition LLC, if the last sales price of our Company’s ADSs on Nasdaq (converted into Indian Rupees on each such day at the Indian Rupee/U.S. dollar exchange rate on such date) equals or exceeds 150.0% of the listing price of the ADSs for any 20 trading days within any 30 trading period within three years from the closing date (as adjusted for splits, dividends, reorganizations, recapitalizations and the like).

Sweat Equity Shares

refers to the allotment of equity shares to Mr. Saurabh Dhoot, our Executive Chairman upon satisfaction of certain share price performance hurdles of the ADSs on Nasdaq being satisfied within three years of the initial listing of the ADSs, namely an “Initial Performance Hurdle” and a “Subsequent Performance Hurdle”.

TDSAT

refers to Telecom Disputes Settlement and Appellate Tribunal of India.

TRAI

refers to Telecom Regulatory Authority of India.

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Videocon d2h

means Videocon d2h Limited, a public limited company organized under the laws of the Republic of India.

Videocon Group

means the group of entities controlled by Mr. Venugopal Nandlal Dhoot, Mr. Rajkumar Nandlal Dhoot and/or Mr. Pradipkumar Nandlal Dhoot.

Videocon Industries

refers to Videocon Industries Limited, the Videocon Group’s flagship entity with its securities listed on the BSE Limited, the National Stock Exchange of India Limited, the Bourse de Luxemburg and the Singapore Exchange Securities Trading Limited.

CERTAIN DEFINITIONS, CONVENTIONS AND GENERAL INFORMATION

Unless the context otherwise requires, references in this Form 20-F to the “Company”, “ Videocon D2H”, “we”, “us”, and “our” are to Videocon d2h Limited. References to “India” are to the Republic of India. References to “rupee,” “INR”, or “Rs.” are to the lawful currency of India. All references to the “GoI” herein are references to the Government of India. References to “United States” or “U.S.” are to the United States of America. References to “U.S. dollar” or “US$” are to the lawful currency of the United States. Certain figures (including percentages) have been rounded for convenience, and therefore indicated and actual sums, quotients, percentages and ratios may differ. References to “fiscal” year is to the year ended March 31 of the year referenced.

Our financial statements as of March 31, 2016 and 2017 and for the years ended March 31, 2015, 2016 and 2017 included in this Form 20-F (the “Financial Statements”) have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Solely for the convenience of the reader, certain Indian Rupee amounts have been converted into U.S. dollars at specified rates. Unless otherwise indicated, U.S. dollars equivalent information for amounts in Indian Rupee are converted at the Reserve Bank of India (“RBI”). Reference Rate for March 31, 2017, which was Rs. 64.84 to US$ 1.00. The Federal Reserve Bank of New York does not certify for customs purposes a noon buying rate for cable transfers in Indian Rupee. No representation is made that the Indian Rupee or U.S. dollar amounts shown herein could have been or could be converted into U.S. dollar or Indian Rupee, as the case may be, at any particular rate or at all. See Item 3 “Key Information — Selected Financial Data — Exchange Rate Information” for further information regarding rates of exchange between the Indian Rupee and the U.S. dollar.

Certain Non-IFRS Measures

This annual report on Form 20-F contains references to EBITDA and Adjusted EBITDA which are non-IFRS measures. EBITDA and Adjusted EBITDA presented in this Annual Report are supplemental measures of performance and liquidity that are not required by or represented in accordance with the IFRS. Furthermore, EBITDA and Adjusted EBITDA are not measures of financial performance or liquidity under IFRS and should not be considered as an alternative to profit after tax, operating income or other income or any other performance measures derived in accordance with the IFRS or as an alternative to cash flow from operating activities or as a measure of liquidity. In addition, EBITDA and Adjusted EBITDA are not standardized terms, hence direct comparison between companies using the same terms may not be possible. Other companies may calculate EBITDA and Adjusted EBITDA differently from our Company, limiting their usefulness as comparative measures. We believe that EBITDA and Adjusted EBITDA help identify underlying trends in our business that could otherwise be distorted by the effect of the expenses that are excluded when calculating EBITDA and Adjusted EBITDA. We believe that EBITDA and Adjusted EBITDA enhance the overall understanding of our past performance and future prospects and allows for greater visibility with respect to key metrics used by our management in our financial and operational decision-making.

FORWARD-LOOKING STATEMENTS

This Form 20-F contains “forward-looking statements” as defined in Section 27A of the U.S. Securities Act of 1933, as amended (“Securities Act”) and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (“Exchange Act”), within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our expectations and projections for our future operating performance and business prospects. The words “believe”, “expect”, “anticipate”, “estimate”, “project” and similar words identify forward-looking statements. In addition, all statements other than statements of historical facts included in this Form 20-F are forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements herein are reasonable, we can give no assurance that such expectations will prove to be correct. These forward-looking statements are subject to a number of risks and uncertainties, including changes in the economic, social and political environments in India. This Form 20-F discloses, under Item 3 “Key Information — Risk Factors” and elsewhere, important factors that could cause actual results to differ materially from our expectations. You should thoroughly read this Annual Report and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

The following tables present our selected financial information and operating statistics as of the dates and for each of the periods indicated. The selected financial information as of and for the years ended March 31, 2013, 2014, 2015, 2016 and 2017 presented below is based upon our audited Financial Statements prepared in conformity with IFRS as issued by the IASB. The selected financial information as of March 31, 2016 and 2017 and for the years ended March 31, 2015, 2016 and 2017 should be read in conjunction with, and is qualified in its entirety by reference to, our audited Financial Statements, including the notes thereto, and the other information included elsewhere in this Form 20-F. The selected financial information as of March 31, 2013, 2014 and 2015 and for the years ended March 31, 2013 and 2014 is derived from our audited IFRS financial statements not included in this Annual Report on Form 20-F. Our historical results do not necessarily indicate results expected for any future period.

The Public Accountant Firm Khandelwal Jain & Co. audited our Financial Statements as of and for the years ended March 31, 2013, 2014, 2015, 2016 and 2017.

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Exchange Rate Information

The following table shows the exchange rate of Indian Rupee to U.S. dollar based on the noon buying rate in The City of New York for cable transfers of Indian Rupees as certified for customs purposes by the Federal Reserve Bank of New York.

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Source: Federal Reserve Bank of New York

Not applicable.

Not applicable.

Risks Relating to the Merger with Dish TV India Limited

The aggregate number of equity shares that Dish TV Videocon will issue to our shareholders as a result of our proposed merger with Dish TV India Limited has been fixed at 857,785,766 Dish TV Videocon equity shares and will not be adjusted to reflect any changes in the market value of our or Dish TV India Limited’s equity shares. In addition, the value of each Dish TV Videocon equity share that it will issue to our shareholders as a result of the merger could be different than at the time our shareholders vote to approve the transaction.

The aggregate number of equity shares that Dish TV Videocon will issue to our shareholders as a result of our proposed merger with Dish TV India Limited has been fixed at 857,785,766 Dish TV Videocon equity shares and will not be adjusted to reflect any changes in the market value of our or Dish TV India Limited’s equity shares. In addition, the market value of each equity share that Dish TV Videocon will issue to our shareholders as a result of the merger could vary significantly from the market value of Dish TV India Limited’s equity shares on the date that our shareholders vote to approve the transaction. Because the aggregate number of equity shares that Dish TV Videocon will issue to our shareholders as a result of the merger will not be adjusted to reflect any changes in the market value of our or Dish TV India Limited’s equity shares, such market price fluctuations may affect the value that our shareholders will receive upon completion of the transaction. Share price changes may result from a variety of factors, including changes in the business, operations or prospects of Dish TV India Limited or our Company, market assessments of the likelihood that the transaction will be completed, the timing of the transaction, regulatory considerations, general market and economic conditions and other factors. Shareholders are urged to obtain current market quotations for our or Dish TV India Limited’s equity shares. For more information, see Item 7 “Major Shareholders and Related Party Transactions — Major Shareholders — Change in Control”.

Dish TV India Limited and our Company must obtain an approval from the Ministry of Information and Broadcasting and make a filing with the Registrar of Companies to consummate the transaction, which, if not granted or delayed may jeopardize or delay the consummation of the transaction.

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Our proposed merger with Dish TV India Limited is subject to the receipt of required approvals from the Ministry of Information and Broadcasting and our submission to the Registrar of Companies of the National Company Law Tribunal’s approval of the Scheme of Arrangement. No assurance can be given that all required consents and approvals will be obtained and that all closing conditions related to our proposed merger will be satisfied. If we or Dish TV India Limited are unable to obtain all of the consents and approvals or make all filings required to consummate the transaction, these could jeopardize or delay the consummation of the transaction.

Failure to consummate the merger with Dish TV India Limited could negatively impact our business, financial results and share price.

If our proposed merger with Dish TV India Limited is not consummated, our ongoing businesses may be adversely affected and, without realizing any of the potential benefits of having consummated the transaction, we will be subject to a number of risks, including the following:

If the transaction is not consummated, these risks may materialize and may adversely affect our business, financial results and price for our ADSs.

While the merger with Dish TV India Limited is pending, we will be subject to uncertainties that could adversely affect our business.

Uncertainty about the effect of our proposed merger with Dish TV India Limited on our employees, customers, suppliers and other stakeholders may have an adverse effect on our business. These uncertainties may impair our ability to attract, retain and motivate key personnel until the transaction is consummated and for a period of time thereafter, and could cause customers, suppliers and others who deal with us to seek to change or terminate existing business relationships with us. Employee retention may be challenging during the pendency of the transaction because employees may experience uncertainty about their future roles with Dish TV Videocon. If, despite our retention efforts, key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with Dish TV Videocon, our business could be harmed.

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Risks Related to our Company and the Industry in which we operate.

We have accumulated losses resulting in substantial erosion of our net worth, which may affect our ability to continue as a “going concern”.

We incurred losses for the years ended March 31, 2015 and 2016 of Rs. 2,726.64 million and Rs. 922.05 million, respectively. We have accumulated losses amounting to Rs. 17,918.32 million as of March 31, 2017. Our auditors have stated in their audit opinion that our ability to continue as a going concern is dependent on our ability to fund our operations and capital expenditure requirements. In addition, our accumulated losses exceed our paid-up share capital. See Item 5 “Operating and Financial Review and Prospects.” We cannot assure you that we will not continue to incur losses, or that the our auditors will continue to prepare our financial statements on a going concern basis.

Our indebtedness could adversely affect our financial health and make it more difficult for us to service our debt or obtain additional financing, if necessary.

As of March 31, 2016 and March 31, 2017, we had outstanding secured indebtedness of Rs. 23,171.70 million and Rs. 20,320.45 million, respectively, from banks and financial institutions. We may incur additional indebtedness in the future. Our indebtedness could have several important consequences, including but not limited to the following:

As of March 31, 2017, substantially all of our indebtedness consisted of floating rate indebtedness. An increase in the prevailing interest rates would increase borrowing costs with respect to existing floating rate obligations or new loans, which may adversely affect our business, financial condition and results of operations.

We were not in compliance with certain terms and conditions of our loan agreements in prior years, which could lead to termination of facilities, acceleration of loans, or cross-defaults, which could have an adverse effect on our business, financial condition and results of operations.

Although we believe we are in compliance with our financial covenant requirements of our loan agreements as of March 31, 2017, we had, on occasion, been unable to meet our financial covenant requirements in the past, and we have not received waivers for such non-compliance. In addition, although we made all of our payments under our loan agreements on time during the fiscal years 2016 and 2017, we had occasionally faced delay when making payments under certain of our loan agreements in prior years. However, our lenders have neither enforced any security nor have accelerated repayment of the loans for any such non-compliance. In the event of our failure to make timely payments to our lenders, such lenders may issue a notice declaring an event of default under each of these loan agreements. Further, a default under the terms of any of our loan agreements also constitutes a cross-default under our other financing agreements. Such default could result in acceleration of amounts due under those facilities, which may individually or in the aggregate have an adverse effect on our business, financial condition and results of operations. In addition, we may have to dedicate a substantial portion of our future cash flow from operations to repay our debts under the financing agreements, thereby reducing the availability of cash flow to meet working capital requirements and use for other general corporate purposes. Such continued defaults and any action initiated by a lender may also impact our ability to obtain financing in the future and may result in a decline in the value of our equity shares and the trading price of the ADSs.

While we believe that our relationships with our lenders are good, compliance with various terms and conditions of our loan agreements is subject to interpretation and, as a result, it is possible that a lender could assert that we have not complied with certain terms under our financing agreements. Any failure to make timely payments to our lenders, perform any condition or covenant or obtain a required consent for any of the foregoing could lead to a termination of one or more of our credit facilities, acceleration of amounts due under such facilities and cross-defaults under certain of our other financing agreements, any of which may adversely affect our ability to conduct our business and have an adverse effect on our financial condition and results of operations.

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Our failure to adhere to the terms and conditions contained in the DTH License Agreement could have an adverse effect on our business, financial condition and results of operations. In addition, we may owe additional amounts under our DTH License Agreement for prior years of operations.

We entered into the DTH License Agreement, dated December 28, 2007, with the President of India acting through the Director, Broadcasting, Policy and Legislation, Ministry of Information and Broadcasting, GoI, or the MIB. Pursuant to the terms of the DTH License Agreement, we are required to pay an annual fee of 10.0% of our gross revenue as defined in the DTH License Agreement (“DTH Gross Revenue”) to the MIB for the relevant fiscal year. Separately, we are also required to pay license fees and royalty for the spectrum we use, as determined by the Wireless Planning & Coordination Wing of the Ministry of Communications and Information Technology, Department of Telecommunications, GoI.

The DTH license is valid until December 12, 2018, and it may be terminated by the MIB without compensation to us in the event of breach of any of the terms and conditions of the license (after giving us an opportunity to address the breach). If the DTH License Agreement is terminated or is not renewed, we would lose the ability to provide DTH services in India and our business, financial condition and results of operations would be adversely affected. Since the commencement of our DTH operations, we have paid license fees to the MIB, calculated on the basis of revenue earned from licensed activities net of certain deductions as permitted by TDSAT Ruling (“Adjusted DTH Gross Revenue”). Pay DTH operators, including Videocon d2h, are currently in a dispute with the MIB regarding whether license fees should be calculated based on DTH Gross Revenue or Adjusted DTH Gross Revenue and a final decision by the TDSAT is pending. If the TDSAT rules in favor of the GoI and we are required to pay additional DTH license fees based on DTH Gross Revenue instead of Adjusted DTH Gross Revenue, we may incur additional liability and our business and financial condition of our operations may be adversely affected. We make an estimation of and disclose such potential liability in our financial statements as a contingent liability. For the period since incorporation until March 31, 2017, such potential liability is estimated to be Rs. 6,413.67 million (inclusive of interest as of March 19, 2014 on liability accruing until March 31, 2013), as per our financial statements as of March 31, 2017, whereas the MIB raised a demand against us for an aggregate amount of Rs. 1,582.89 million towards outstanding license fees (together with interest at the rate of 1% per month) for periods until March 31, 2013. See Item 5 “Operating and Financial Review and Prospects”.

Our leased satellite ST2 is subject to operational, lease and environmental risks that could limit our ability to utilize the satellite.

The ST2 satellite was launched in May 2011 and it has an estimated useful life of 12 to 15 years. It is subject to significant operational risks while in orbit, resulting from the satellite manufacturer’s errors or operational failures. The satellite is also subject to a variety of atmospheric risks while in orbit that may adversely affect operations, including meteoroid strikes, electrostatic storms, increased solar activity and collisions with space debris. In the event the ST2 satellite experiences a technical failure, is damaged or lost, our ability to provide programming to our subscribers could be seriously disrupted or suspended, even for prolonged periods, as we do not have any additional backup satellite.

A significant portion of our operations are currently located in a single digital broadcast center in Noida, India.

Although we have taken steps to set up an additional broadcast site, which is currently in its final stages of construction, at Bharuch in Gujarat as a backup to our existing broadcast center, a significant portion of our operations are still currently located in a single digital broadcast center in Noida, India. As a result, we are vulnerable to the effects of natural disasters, such as an earthquake, flood or fire, or other calamity or event, such as technological failures, that would cause significant damage to this facility and/or disrupt our ability to conduct the business. In the event of a significant disruptive event affecting this facility, we may face disruptions in the delivery of channels or degradation in the audio and visual quality of such channels.

Further, pursuant to the terms of the facility’s lease agreement, or the Noida Lease Agreement, executed between our Company and the Greater Noida Industrial Development Authority, or the GNIDA, we are required to comply with certain terms and conditions, including providing prior written notice to the GNIDA in respect of any change in our capital structure, among other things. If we are in default of the terms of the Noida Lease Agreement, the GNIDA may terminate the lease, in which case we would be required to vacate the facility. If our operations at the digital broadcast center in Noida are disrupted for any reason, our business, financial condition and results of operations would be adversely affected.

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A significant portion of our shares held by the Principal Shareholders are pledged as security to banks and financial institutions.

As of the date of this Form 20-F, certain of our Principal Shareholders have pledged an aggregate of 50.9% of our outstanding shares to banks and financial institutions. In the event of enforcement of pledges on such encumbered equity shares for any reason (including any default under the terms and conditions of the relevant agreements pursuant to which such pledges have been created), such pledged equity shares may be required to be transferred to third parties in whose favor the pledges were created. This could result in a change in our shareholding pattern, which may adversely affect our ability to carry out our business operations and thereby adversely affect our business, financial condition, results of operations and the trading price of our ADSs.

We rely on third parties to provide us with programming and any increase in programming costs or new regulations may adversely affect our business, financial condition and results of operations.

We rely on third party content providers to provide us with programming and our ability to compete successfully in the DTH pay-TV industry depends on our ability to continue to obtain programming for delivery to our subscribers at competitive prices. Content procurement by broadcasting service providers in India, including our Company, takes place through channel distributors or owners. Under Indian interconnection regulations, all channel owners and distributors are required to offer their content to all broadcasting platforms and operators, including pay DTH service providers such as our Company, subject to payment of content costs, which are regulated by the GoI. Any change in Indian interconnection regulations that would permit content owners and distributors to refuse to provide programming to DTH operators or impose discriminatory terms or conditions, may adversely affect our ability to acquire programming in a cost-effective manner, or at all, which would adversely affect our business, financial condition and results of operations.

Further, we typically enter into agreements with channel distributors and owners, in order to be able to acquire multiple channels offered by such distributors or owners as a bundle, at negotiated prices (typically below the ceiling prices prescribed by the Indian regulator). Significant content agreements that we have entered into at negotiated rates include those entered into with Zee Entertainment Enterprises Ltd (formerly Taj Television (India) Private Limited), Star India Private Limited, Sony Pictures Networks India Private Limited (formerly Multi Screen Media Private Limited) and TV 18 Broadcast Limited. Our programming agreements generally have terms ranging from one to five years and contain various renewal and termination provisions.

Although we have historically been able to readily renew our contracts with our major content providers, we may not be able to renew them on favorable terms in the future, in a timely manner, or at all, if the market environment changes due to new regulations or increase in content costs for channel distributors. If we are unable to renew our material content agreements, our programming costs may increase. If we are unable to pass on such increased programming costs to our subscribers, or if such increase in subscriber fees leads to increased subscriber churn or inability to add to our subscriber base, our business, financial condition and results of operations may be adversely affected. In addition, we have paid our content fees after the due date under our major content agreements from time to time, and the content providers are entitled to terminate the agreement within 21 to 45 days after serving a written demand for payment if payment has not been received by the due date. We have in the past received such written demands due to late payments and we cannot assure you that our major content providers will not exercise their right to terminate the agreements in the future due to delays in payments for content, which could adversely affect our business, financial condition and results of operations.

Damage to our relationship with the Videocon Group or the “Videocon” brand could have a material adverse effect on our business, financial condition and results of operations.

Our growth and future success are influenced, in part, by our continued relationship with the Videocon Group because of the goodwill and market reputation that Videocon Group has established in India, and we rely on such benefits to position ourselves in the market to attract subscribers. We cannot assure you that we will be able to continue to take advantage of our relationship with Videocon Group in the future. If we cease to benefit from this relationship for any reason, our business, financial condition and results of operations may be adversely affected.

We believe that our subscribers, vendors and members of the financial community perceive the “Videocon” brand to be that of a trusted provider of quality products and services. We cannot assure you that the established “Videocon” brand name will not be adversely affected in the future by events that are beyond our control, including subscriber complaints or negative publicity relating to our Company or the Videocon Group. Any damage to the “Videocon” brand name, if not immediately and sufficiently remedied, could have an adverse effect on our reputation, business, financial condition and results of operations.

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If we are unable to recover consumer premises equipment from churned subscribers, there could be a significant erosion of the realizable value of our consumer premises equipment.

Consumer premises equipment comprised 83.7% of our net tangible assets as of March 31, 2017. When subscribers discontinue or terminate our services, we are not always able to recover our consumer premises equipment that we have provided on a rental basis to such subscribers. We recognize a subscriber as a churned subscriber if the subscriber has not made a payment for at least 120 days. As of March 31, 2017, we have encountered a cumulative churn of 5.07 million subscribers since we commenced operations in 2009, out of which we have already provided for impairment for 1.98 million churned subscribers. If we are unable to recover the consumer premises equipment from such churned subscribers, there could be a significant erosion of the realizable value of our consumer premises equipment. See Item 5 “Operating and Financial Review and Prospects — Critical Accounting Policies — Impairment reviews.”

We face intense and increasing competition.

Our business is primarily focused on providing DTH pay-TV services and we have traditionally competed against other DTH pay-TV providers and cable companies, some of whom have greater financial, marketing and other resources than us. Moreover, mergers and acquisitions, joint ventures and alliances among cable television providers, telecommunications companies and others may result in, among other things, greater financial leverage and increase in service offerings from our competitors capable of bundling television, broadband and telephone services. We and our competitors would need to attract a greater proportion of new subscribers from each other’s existing subscriber bases as well as first-time purchasers of DTH pay-TV services, including cable to DTH switch over subscribers. In addition, because other DTH pay-TV providers may be seeking to attract a greater proportion of their new subscribers from our existing subscriber base, we may be required to increase retention spending which is capital-intensive. Competition in the DTH pay-TV industry has intensified in recent years as the industry has matured and seen the growth of digital cable-based pay-TV services offered by digital cable operators. These cable-based pay-TV services have significantly greater capacity, enabling them to offer substantial HD programming content as well as bundled services. This increasingly competitive environment may require us to increase subscriber acquisition and retention spending or accept lower subscriber activation and higher subscriber churn. Further, as a result of this increased competitive environment and the maturation of the DTH pay-TV industry, our future growth opportunities may be limited. In addition, our margins may be reduced if we are unable to finance our capital needs, duly service our debt obligations or secure other financing when needed, on acceptable terms, which could have a material adverse effect on our business, results of operations, financial condition and cash flow.

Any failure or inadequacy of our information technology and network systems may have an adverse effect on our business operations.

Our success depends, in part, on the continued and uninterrupted performance of our information technology and network systems. The capacity, reliability and security of our information technology hardware and software infrastructure (including our billing systems) are important to our business operations, which would suffer in the event of system failures or cyber attacks. Similarly, our ability to expand and update our information technology infrastructure in response to our growth and changing needs is important to implement our new service offering initiatives. Our inability to expand or upgrade our technology infrastructure could have adverse consequences, which could include delayed implementation of new service offerings, service or billing interruptions, among others.

Our systems are vulnerable to damage from a variety of sources, including telecommunications failures, power loss, malicious human acts and natural disasters. Moreover, despite our security measures, our servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Despite the precautions we have taken, unanticipated problems affecting our systems could cause failures in our information technology and network systems or disruptions in the transmission of signals. Sustained or repeated system failures that interrupt with our ability to provide services to our subscribers or otherwise meet our business obligations in a timely manner would adversely affect the satisfaction of our subscribers. If one or more of such events occur, this could potentially jeopardize our customer information and other information that have been processed and stored, as well as transmitted through, our information technology hardware and software infrastructure, or otherwise cause interruptions or malfunctions in our operations, which could result in significant losses or reputational damage to our Company.

If our information technology systems are subjected to floods, fire or other natural disasters, terrorism, computer viruses, power loss, other catastrophe or unauthorized access, our operations and customer relations could be adversely affected. Any failure in the operation of our information technology and network systems could result in business interruptions, which may adversely affect our reputation, weaken our competitive position and have an adverse effect on our business, financial condition and results of operations. We may also be required to expend significant additional resources to modify our security measures or investigate and remediate vulnerabilities or other exposures in our information technology systems, and we may be subject to litigation.

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Our inability to keep pace with technological developments could have a material adverse effect on our business, financial condition and results of operations.

In the DTH industry, changes occur as new technologies are developed, which could adversely affect our business and increase our cost of operations. Technological developments within the DTH industry include changes that may result in improved utilization of capacity, more robust content recording features and new interactive content. Consumers may also choose to view digital media through other platforms, such as computers, mobile phones, tablet computers and other devices. If we are unable to keep pace with such technological developments, our business, financial condition and results of operations may be adversely affected. If new technologies in which we invest fail to achieve acceptance in the marketplace or our technology does not work and requires significant cost to replace or fix, we could suffer a material adverse effect on our competitive position, which could reduce our revenues and earnings. For access to technologies and products that are necessary to remain competitive, we may make acquisitions and investments and may enter into strategic partnerships with other companies. Such investments may require commitment of significant capital and human and other resources. The value of such acquisitions, investments and partnerships and the technology required may be highly speculative. Such arrangements with third parties can lead to disputes and dependence on others for the development and delivery of necessary technology that we may not be able to control or influence. Such relationships may result in us committing to technologies that are rendered obsolete or precluding pursuit of other superior technologies.

In addition, our business is subject to risks relating to increased competition from other leisure and entertainment activities which occupy consumers’ time. Our business competes with many other media used for entertainment and information delivery, including broadcast television, films, live events, radio broadcasts, home video products, video and computer games, print media, social media and the Internet. Technological advancements, such as new video formats, and delivery of video content through streaming and downloading services on the Internet, have increased the number of entertainment and information delivery choices available to consumers and intensified the challenges posed by audience fragmentation. The increasing number of choices available to consumers could adversely affect demand for our products and services and changes in technology could adversely affect our ability to maintain, expand or upgrade our systems and respond to competitive pressures. We cannot assure you that we will be able to fund the capital expenditures necessary to keep pace with future technological developments. We also cannot assure you that we will successfully anticipate the demand for products and services requiring new technology. Any inability to keep pace with technological changes and offer advanced services in a timely manner, or to anticipate the demands of the market, could adversely affect our business and increase our costs of operations.

We may be unable to manage our growth effectively.

Since the commencement of our operations, our subscriber base and total revenue have grown rapidly. Our gross DTH subscriber base has increased from approximately 0.44 million as of March 31, 2010 to 17.98 million as of March 31, 2017. Our total revenue has increased from Rs. 142.07 million for the fiscal year 2010 to Rs. 30,717.34 million for the fiscal year 2017. In order to manage our continued growth effectively, we must continue to increase our subscriber base, acquire programming offerings, manage the selection of programming, including structuring of subscriber packages, introduce new models of set-top boxes and additional service features, develop and improve our operational, financial and other controls, keep pace with technological advancements, effectively withstand pricing and other competitive pressures, effectively manage a growing labor force and hire, train and retain skilled personnel for our management and technical teams. If we are unable to manage our growth effectively, our business, financial condition and results of operations may be adversely affected.

We experience seasonal fluctuations in our business.

We experience seasonal fluctuations in our business. India’s DTH market is affected by seasonal factors, such as Diwali and other regional festivals and sports events, especially cricket tournaments such as the ICC Cricket World Cup. Other seasonal sporting events that could affect the demand in the DTH industry are major football leagues and the Olympics. These seasonal events could encourage subscribers in the suspension or churn group to become active subscribers and additional new subscribers may sign up for our services during these festivals or sporting events. Further, existing subscribers may move from a base pack to a sports pack or sports HD pack which would result in additional revenue for us during the relevant period. However, we cannot assure you that the subscribers who sign up for our services or upgrade their subscription packages during such events will continue to pay for their subscriptions or not revert to base subscription packages, which could adversely affect our business, financial condition and results of operations.

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We do not intend to pay dividends in the foreseeable future.

We have not declared any dividend since our incorporation have not adopted a formal dividend policy and do not intend to pay dividends in the foreseeable future. The declaration and payment of dividends by our Company, if any, will be recommended by our board of directors and approved by our shareholders at their discretion, subject to the provisions of our Articles of Association and the Indian Companies Act, the notified provisions of the Companies Act, 2013 (along with the applicable rules framed thereunder) and the Companies Act, 1956, as amended (to the extent in force). As a result, capital appreciation in the price of our ADSs, if any, maybe your only source of gain from investment in our ADSs.

Subscription and activation revenue and operating expenses (and, as a result, revenue from operations and total expenses) and ARPU for the fiscal year 2017 are not comparable with prior periods.

We have adopted a change in the accounting treatment of entertainment tax effective April 1, 2016. This change has resulted in subscription and activation revenue being presented net of entertainment tax, effective from April 1, 2016 (the “New Method”). Prior to April 1, 2016, entertainment tax was accounted for under operating expenses, thus subscription and activation revenue was presented without deduction of entertainment tax (the “Old Method”), and both subscription and activation revenue and operating expenses were higher under the Old Method than under the New Method. We reported our earnings for the fiscal years 2015 and 2016 using the Old Method, resulting in higher subscription and activation revenue and higher operating expenses than would be applicable under the New Method. Under the New Method, subscription and activation revenue was Rs.28,075.20 million and operating expenses Rs. 16,191.51 million for the fiscal year 2017, both Rs. 2,263.52 million lower than as would be presented under the Old Method.

In addition, we have adopted a change in our calculation of ARPU. ARPU represents the revenue we receive per average number of subscribers per period. For the fiscal years 2015 and 2016, we calculated ARPU by dividing our subscription and activation charges by the average of our net subscribers for the period. In this calculation, subscription and activation charges includes margins provided to distributors for distribution of subscriptions and consumer premises equipment for the fiscal years 2015 and 2016 in the amounts of Rs. 1,204.43 million, and Rs. 1,286.55 million respectively. Subscription and activation charges collected from subscribers is a non-IFRS measure. In the fiscal year 2017, we calculated ARPU by dividing our revenue from operations by the average of our net subscribers for the period. For more information, see Item 5 “Operating and Financial Review and Prospects — Operating Results — Certain Key Measures of Financial Performance — Average Revenue Per User”. As a result of the foregoing, subscription and activation revenue and operating expenses (and, as a result, revenue from operations and total expenses) and ARPU for the fiscal year 2017 are not be comparable with prior periods.

Any further grant of the proposed Sweat Equity Shares will result in a charge to our profit and loss account, which may adversely affect our results of operations.

Our board has adopted a resolution with respect to granting of up to 2,800,000 shares of face value Rs. 10 each in the form of sweat equity to Mr. Saurabh Dhoot equivalent to 700,000 Videocon d2h ADSs, exercisable at a value determined by a registered valuer in accordance with applicable law, in two tranches of 50.0% each, which shall be allotted if the last sales price of our ADSs on Nasdaq (converted into Indian Rupees on each such day at the Indian Rupee/U.S. dollar exchange rate on such date) equals or exceeds 125.0% of the listing price of the ADSs (the “Initial Performance Hurdle”), and 150.0% of the listing price of the ADSs (the “Subsequent Performance Hurdle”), respectively, for any 20 trading days within any 30 trading period within three years from the closing date (as adjusted for splits, dividends, reorganizations, recapitalizations and the like). As the Initial Performance Hurdle was met in the fiscal year 2016, Mr. Saurabh Dhoot was allotted 1,400,000 equity shares. Any further grant under this plan is subject to compliance of the applicable laws and regulations. Under IFRS, the grant of Sweat Equity Shares will result in a charge to our profit and loss account and dilute the earnings per share which may adversely affect our results of operations.

Risks Related to Our Operations in India

A slowdown in economic growth in India may adversely affect our business, financial condition, results of operations, the value of our equity shares and the trading price of our ADSs.

All of our operations are in India. Thus, our results of operations and financial condition are dependent on, and have been adversely affected by, conditions in financial markets in the global economy, and, particularly in India. The Indian economy also remains largely driven by the performance of the agriculture sector which depends on the quality of the monsoon which is difficult to predict. The Indian economy has grown significantly in recent years, although it has experienced an economic slowdowns in the past. The Indian economy could be adversely affected by various factors such as political or regulatory action, including adverse changes in liberalization policies, business corruption, social disturbances, terrorist attacks and other acts of violence or war, natural calamities, interest rates, inflation, commodity and energy prices and various other factors. Any slowdown in the Indian economy may adversely affect our business, financial condition, results of operations, value of our equity shares and the trading price of our ADSs.

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Regional hostilities, terrorist attacks, communal disturbances, civil unrest and other acts of violence or war involving India and other countries may result in a loss of investor confidence and a decline in the value of our equity shares and trading price of the ADSs.

Terrorist attacks, civil unrest and other acts of violence or war may negatively affect the Indian markets in which we operate our business and also adversely affect the worldwide financial markets. In addition, Asia has from time to time experienced instances of civil unrest and hostilities among the neighboring countries. Hostilities and tensions may occur in the future and on a wider scale. Military activity or terrorist attacks in India, such as the attacks in Mumbai in November 2008 and in July 2011, may result in investor concerns about stability in the region, which may adversely affect the value of our equity shares and the trading price of the ADSs. Events of this nature in the future, as well as social and civil unrest within other countries in Asia, could influence the Indian economy and could have an adverse effect on our business, including the value of our equity shares and the trading price of our ADSs.

Changing laws, rules and regulations and legal uncertainties in India may adversely affect our business and operations.

Our business and operations are governed by various laws and regulations of the Indian Government and relevant state governments in India.

Our business and financial performance could be adversely affected by any change in laws or interpretations of existing, or the promulgation of new laws, rules and regulations applicable our Company. There can be no assurance that the Indian Government or any state government in India will not implement new regulations and policies which will require us to obtain additional approvals and licenses from the government and other regulatory bodies or impose onerous requirements and conditions on their operations.

Any such changes and the related uncertainties with respect to the implementation of the new regulations may have a material adverse effect on our business, financial condition and results of operations.

A significant change in the Indian Government’s economic liberalization and deregulation policies could impact economic conditions in India generally and our business and financial results and prospects in particular.

Since 1991, successive Indian Governments have pursued policies of economic liberalization and financial sector reforms, including significant relaxations of restrictions on the private sector. Nevertheless, the Indian Government continues to exercise a dominant influence over many aspects of the economy, and its economic policies have had and continue to have a significant effect on private-sector entities, including us.

India has a mixed economy with a large public sector and an extensively regulated private sector. The role of the Indian Government and the state governments in the Indian economy and the effect on producers, consumers, service providers and regulators have remained significant over the years. The Indian Government has in the past, among other things, imposed controls on the prices of a broad range of goods and services, restricted the ability of businesses to expand existing capacity and reduce the number of their employees, determined the allocation to businesses of raw materials and foreign exchange and reversed their policies of economic liberalization. We may not be able to react to such changes promptly or in a cost-effective manner. Increased regulation or changes in existing regulations may require us to change our business policies and practices and may increase the cost of providing services to our customers which would have an adverse effect on our operations and our financial condition and results of operations.

Although the current Indian Government has continued India’s economic liberalization and deregulation programs, there can be no assurances that these liberalization policies will continue in the future. Significant changes in India’s economic liberalization and deregulation policies could adversely affect business and economic conditions in India in general as well as our business and our future financial performance.

The new tax reforms could adversely affect our business, prospects, cash flows, financial condition and results of operations.

There are two major reforms in Indian tax laws, namely the introduction of Goods and Services Tax (the “GST”) and provisions relating to General Anti-Avoidance Rules (“GAAR”).

The GST has been implemented from July 1, 2017, and has replaced the indirect taxes levied on goods and services subject to certain exceptions, which are collected by the government of India and state governments, such as central excise duty, service tax, central sales tax, state VAT, surcharge and cess. The laws relating to implementation of GST, i.e. the Central Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017 have been notified by the government of India, however, states are in the process of notifying the act governing the implementation of state GST. Pending the implementation of GST, we are unable to determine the consequences and effects which GST may have on our business, prospects, cash flows, financial condition and results of operations.

The provisions of GAAR came into effect on April 1, 2017. The GAAR provisions can be invoked once an arrangement is regarded as an “impermissible avoidance arrangement”, which is any arrangement the main purpose of which is to obtain a tax benefit and which satisfies at least one of the following tests: (i) creates rights, or obligations, which are not ordinarily created between persons dealing at arm’s length; (ii) results, directly or indirectly, in misuse, or abuse, of the provisions of the Income Tax Act, 1961; (iii) lacks commercial substance or is deemed to lack commercial substance, in whole or in part; or (iv) is entered into, or carried out, by means, or in a manner, which is not ordinarily employed for bona fide purposes. The onus to prove that the transaction is not an “impermissible avoidance agreement” is on the assesse, i.e. an arrangement shall be presumed, unless it is proved to the contrary by the assesse. If GAAR provisions are invoked, then the tax authorities have wide powers, including denial of tax benefit or a benefit under a tax treaty the consequences and effects of which are not determinable at present. Such effects could materially and adversely affect our business, prospects, cash flows, financial condition and results of operations.

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The occurrence of natural disasters may adversely affect our business, financial condition and results of operations.

India has experienced natural calamities such as earthquakes, tsunamis, floods and drought in the past few years. For example, in September 2014, the state of Jammu and Kashmir in northern India, a popular tourism destination, experienced widespread floods and landslides, and in April 2015, an earthquake occurred in the Federal Democratic Republic of Nepal with aftershocks and landslides subsequently affecting the country. Furthermore, several states in India including Rajasthan, Madhya Pradesh and Gujarat experienced severe heat waves in May 2016 that caused at least 370 deaths according to government estimates and floods that occurred in Gujarat in July 2017 displaced more than 25,000 people. The extent and severity of these natural disasters determines their impact on the Indian economy. Substantially all of our operations and employees are located in India and there can be no assurance that we will not be affected by natural disasters in the future. Although the long term effect of diseases such as the H5N1 “avian flu”, H1N1, the swine flu, or Middle East Respiratory Syndrome (“MERS”) cannot currently be predicted, previous occurrences of avian flu and swine flu had an adverse effect on the economies of those countries in which they were most prevalent. An outbreak of a communicable disease in India could adversely affect our business, financial condition and results of operations. We cannot assure you that natural disasters will not occur in the future or that our business, financial condition and results of operations will not be adversely affected.

Any downgrade of credit ratings of India or Indian companies may adversely affect our ability to raise debt financing.

As of March 31, 2017, India’s sovereign rating was rated (i) Baa3 with a “positive” outlook by Moody’s Investors Services Limited, or Moody’s (ii) BBB- with a “stable” outlook by Standard & Poor’s Rating Group, a division of McGraw Hill Companies, Inc., or Standard & Poor’s, and (iii) BBB- with a “stable” outlook by Fitch Ratings Ltd, or Fitch These ratings reflect an assessment of the GoI’s overall financial capacity to pay its obligations and its ability or willingness to meet its financial commitments as they become due.

No assurance can be given that Standard & Poor’s, Fitch, Moody’s or any other statistical rating organization will not downgrade the credit ratings of India. Any downgrade could cause interest rates and borrowing costs to rise, which may negatively impact both the perception of credit risk associated with our current variable rate debt and our ability to access the debt markets on favorable terms in the future. This could have an adverse effect on our financial condition.

A decline in India’s foreign exchange reserves may affect liquidity and interest rates in the Indian economy.

According to a report released by the RBI, India’s foreign exchange reserves totaled approximately US$ 381 billion as of June 2, 2017. Although India’s foreign exchange reserves have increased over the past year, they have declined in the recent past and any future decline in foreign exchange reserves may negatively affect the valuation of the Rupee against the U.S. dollar. A decline in the valuation of the Rupee could result in reduced liquidity and higher interest rates that could adversely affect our future financial condition and the market price of our ADSs.

Risks Related to Our ADSs

In the event that our shares required to be issued pursuant to certain agreed earnouts are issued by way of a bonus issue, the holders of the ADSs (including any holders of equity shares underlying such ADSs), other than the shareholders of our Company as of the date of the Contribution Agreement and the Sponsor, shall have no interest in or entitlement to equity shares issued pursuant to such bonus, and such holders have been deemed to have waived their interest in or entitlement to equity shares issued pursuant to such bonus.

Pursuant to the Contribution Agreement, our existing shareholders as of the date of the Contribution Agreement and the Sponsor, Global Eagle Acquisition LLC, are entitled to receive by way of a bonus issue of shares (or such other form of share issue as determined by the independent members of our board of directors) upon satisfaction of certain share price performance hurdles of the ADSs on Nasdaq being satisfied within three years of the initial listing of the ADSs (the “Earnout”), namely an “Initial Performance Hurdle” and a “Subsequent Performance Hurdle”, each as defined in the Contribution Agreement.

The board of directors of our Company, at their meeting held on July 22, 2015, determined that the Initial Performance Hurdle has been achieved and satisfied, as confirmed and certified by our independent statutory auditors, Khandelwal Jain & Co. Accordingly, having received the Ministry of Information and Broadcasting approval for the issuance of bonus shares on December 23, 2015, we allotted 23,360,000 equity shares (equivalent to 5,840,000 ADSs) to shareholders who held equity shares in our Company as of the date of the Contribution Agreement. In addition, the board of directors of our Company has approved the issuance of 3,999,984 equity shares (equivalent to 999,996 ADSs) to the Sponsor by way of a bonus issue, in accordance with the terms of the Contribution Agreement and the Articles of Association of our Company, which we intend to allot prior to the consummation of our proposed merger with Dish TV India Limited, after all required consents and approvals are obtained and all closing conditions are satisfied.

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In the event that we issue Earnout shares pursuant to the achievement of Subsequent Performance Hurdle by way of a bonus issue or otherwise, the holders of the ADSs (including any holders of equity shares underlying such ADSs), other than the shareholders of the Company as of the date of the Contribution Agreement and the Sponsor, shall have no interest in or entitlement to such shares issued pursuant to such bonus issue or otherwise, and such holders have been deemed to have waived their interest in or entitlement to such shares issued pursuant to such bonus issue or otherwise. See “Questions and Answers about the Proposals for Stockholders and Public Warrantholders” on the Form F-4 filed on February 4, 2015.

Since a majority of our directors, officers and assets reside or are located outside of the United States, investors may have difficulty enforcing judgments against us, our directors and officers.

We are incorporated under the laws of India. Furthermore, we conduct substantially all of our operations in India. The majority of our directors and officers reside outside the United States, and a majority of our assets and some or all of the assets of such persons are located outside the United States. As a result, it may be difficult or impossible to effect service of process within the United States upon us or those persons, or to recover against us or those persons on judgments of United States courts, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws. An award of punitive damages by a United States court based upon U.S. federal securities laws is likely to be construed by Indian courts to be penal in nature and therefore unenforceable in India. Further, no claim may be brought in India against us or our directors and officers in the first instance for a violation of U.S. federal securities laws because these laws have no extraterritorial application under Indian law and are not enforceable in India. However, an Indian court may impose civil liability, including the possibility of monetary damages, on us or our directors and officers if the facts alleged in a complaint constitute or give rise to a cause of action under Indian law. Moreover, it is unlikely that a court in India would award damages on the same basis as a foreign court if an action were brought in India or that the Indian court would enforce foreign judgments if it viewed the amount of damages as excessive or inconsistent with Indian practice or public policy.

Further, the United States has not been declared by the Government of India to be a reciprocating territory for the purposes of enforcement of foreign judgments, and there are grounds upon which Indian courts may decline to enforce the judgments of United States courts. Some remedies available under the laws of United States jurisdictions, including remedies available under the U.S. federal securities laws, may not be allowed in Indian courts if contrary to public policy in India. Because judgments of United States courts are not automatically enforceable in India, it may be difficult for you to recover against us or our directors and officers. In India, prior approval of the RBI is required in order to repatriate any amount recovered pursuant to such judgments.

As a foreign private issuer, we are permitted to follow certain home country corporate governance practices in lieu of certain Nasdaq requirements applicable to U.S. issuers. As a result, our shareholders will not have the protections afforded by these corporate governance requirements, which may make our ADSs less attractive to investors or otherwise negatively affect the ADS share price.

As a foreign private issuer, we are permitted to follow certain home country corporate governance practices in lieu of certain Nasdaq requirements, although we will be subject to certain independence requirements with respect to our audit committee under Nasdaq rules. Nasdaq listing rules require, inter alia, that (i) a majority of the board of directors of a listed company to comprise independent directors; (ii) each listed company to have an audit committee comprising at least three members, each of whom must be an independent director and (iii) each listed company to have a compensation committee comprising at least two members, each of whom must be an independent director.

In accordance with the Indian Companies Act, a public company with paid up share capital of Rs. 100 million or more; or turnover of Rs. 1,000 million or more; or outstanding loans, debentures and deposits which in aggregate exceed Rs. 500 million, is required to have at least two independent directors on its board of directors. Further, such company is required to constitute a Nomination and Remuneration Committee, comprising at least three non-executive directors, of which a majority must be independent directors, who shall be responsible for determining qualifications and independence of directors and formulating a policy relating to the remuneration of directors and key managerial personnel. A foreign private issuer must disclose in its annual reports filed with the Securities and Exchange Commission, or the SEC, each Nasdaq requirement it does not comply with, followed by a description of its applicable home country practice. As a company which is incorporated in India and listed on Nasdaq, we expect to follow our home country practice with respect to the composition of our board of directors and Nomination, Remuneration and Compensation Committees and executive sessions. Unlike the requirements of Nasdaq, the corporate governance practice and requirements in India include, that a “public company” under the Indian Companies Act, which is not listed on any stock exchanges in India, is required to comply with the provisions of the Indian Companies Act, including the following provisions relating to corporate governance:

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Composition of Board of Directors: In accordance with Indian Companies Act, a public company with paid up share capital of Rs. 100 million or more; or turnover of Rs. 1,000 million or more; or outstanding loans, debentures and deposits which in aggregate exceeds Rs. 500 million, is required to have at least two independent directors on its board of directors. The Indian Companies Act prescribes certain eligibility criteria for qualifying as an independent director.

Additionally, a public company with paid up share capital of Rs. 1,000 million or more; or turnover of Rs. 3,000 million or more is required to have at least one woman director on its board of directors with effect from April 1, 2015.

Board Committees: In accordance with the Indian Companies Act, a public company with paid up share capital of Rs. 100 million or more; or turnover of Rs. 1,000 million or more; or outstanding loans, debentures and deposits which in aggregate exceeds Rs. 500 million, is required to constitute the following committees.

In addition, should a company have a net worth of Rs. 5,000 million or more or turnover of Rs. 10,000 million or more or net profit of Rs. 50 million or more during any fiscal year, it will be required to constitute a Corporate Social Responsibility Committee of the Board composed of three or more directors, of which at least one director is required to be an independent director. Similarly, should a company have more than 1,000 security holders, it will be required to constitute a Stakeholders Relationship Committee for resolving the grievances of the security holders, composed of a chairman who is a non-executive director and such other members that the board of directors may decide.

Accordingly, our shareholders will not have the same protection afforded to shareholders of companies that are subject to all of the Nasdaq corporate governance requirements, which could make our ADSs less attractive to some investors or could otherwise negatively affect the ADS share price.

Future issuances of any equity shares by us may dilute your holdings and decrease the market value of your ADSs.

Any issuance of equity shares by us such as pursuant to ESOP 2014, could dilute our shareholders’ interests and could decrease the value of our equity shares and the ADSs. We may issue equity or equity linked securities in the future for a number of reasons, including to finance our operations and business strategy (including in connection with acquisitions and other transactions), to adjust debt to equity ratio, to satisfy our obligations upon the exercise of then outstanding options or other equity linked securities, if any, or for other reasons.

If we fail to establish and maintain an effective system of integrated internal controls, we may not be able to report our financial results accurately, which could have a material adverse effect on our business, financial condition and results of operations.

Establishing adequate internal financial and accounting controls and procedures in order to produce accurate financial statements on a timely basis is a costly and time consuming effort that will need to be frequently evaluated. Section 404 of the Sarbanes Oxley Act requires public companies to conduct an annual review and evaluation of their internal controls and provide attestations of the effectiveness of internal controls by independent auditors. We are required to perform the annual review and evaluation of our internal controls no later than for the fiscal year ending 2020. As an emerging growth company, we are exempt from the auditors’ attestation requirement until such time as we no longer qualify as an emerging growth company. We will need to implement substantial control systems and procedures in order to satisfy the reporting requirements under the Exchange Act and applicable Nasdaq requirements, among other items. Establishing these internal controls will be costly and may divert the management’s attention.

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Evaluation by us of our internal controls over financial reporting may identify material weaknesses that may cause us to be unable to report our financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of Nasdaq listing rules. There also could be a negative reaction in the financial markets due to a loss of investor confidence in us or the reliability of our financial statements. Confidence in the reliability of our financial statements also could suffer if we or our independent registered public accounting firm were to report a material weakness in our internal controls over financial reporting.

This could materially adversely affect our business, financial condition and results of operations and could also lead to a decline in the price of our ADSs.

If securities or industry analysts do not publish research or reports about our business, or if they downgrade their recommendations regarding our ADSs, the ADS market price and trading volume could decline.

The trading market for our ADSs will be influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us downgrade our ADSs or publish inaccurate or unfavorable research information about our business, our ADS market price may decline. If analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume of our ADSs to decline.

Our ADS price may be volatile.

The market price of our ADSs may be highly volatile and could be subject to wide fluctuations. Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could reduce the market price of our ADS in spite of our operating performance. In addition, our operating results could be below the expectations of public market analysts and investors due to a number of potential factors, including changes in our quarterly operating results or dividends, additions or departures of key management personnel, failure to meet analysts’ earnings estimates, publication of negative research reports about our industry, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, adverse market reaction to any indebtedness we may incur or securities we may issue in the future, changes in market valuations of similar companies or speculation in the press or investment community, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments, adverse publicity about the industry we operate in or individual scandals. Consequently, in response to these events, the market price of our ADSs could decrease significantly.

We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. Holders.

Based on a review of our financial statements for the taxable year ended March 31, 2017, the market price of our ADSs and the composition of our income and assets, we do not believe we were a PFIC for U.S. federal income tax purposes for our taxable year ended March 31, 2017. However, the application of the PFIC rules is subject to uncertainty in several respects. A non-U.S. corporation will be considered a PFIC for any taxable year if either (1) at least 75% of its gross income for such year is passive income or (2) at least 50% of the total value of its assets (based on an average of the quarterly value of the assets during such year) is attributable to passive assets, including cash, that produce or are held for the production of passive income. Whether we are a PFIC is a determination that must be made after the close of each taxable year. Because the aggregate value of our assets for purposes of the PFIC test will generally be determined by reference to the market price of our ADSs, fluctuations in the market price of the ADSs may cause us to become a PFIC. In addition, changes in the composition of our income or assets may cause us to become a PFIC. Accordingly, we cannot assure you that we will not be a PFIC for the taxable year ending on March 31, 2018 or any future taxable year. If we were a PFIC for any taxable year during which a U.S. Holder (as defined in Item 10 “Additional Information — Taxation — U.S. Federal Income Taxation”) holds an ADS or an equity share, certain adverse U.S. federal income tax consequences could apply to the U.S. Holder. A U.S. Holder of shares in a PFIC may sometimes mitigate such adverse tax consequences under the PFIC rules by making a “qualified electing fund” (“OEF”) election or a “mark-to-market” election. We currently do not intend to prepare or provide information to permit a U.S. Holder to make a QEF election. A discussion of the “mark-to-market” election is set out in Item 10 “Additional Information — Taxation — U.S. Federal Income Taxation — Passive Foreign Investment Company”.

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Holders of the ADSs might not have the same voting rights as the holders of our equity shares and might not receive voting materials in time to be able to exercise their right to vote.

Holders of the ADSs are not able to exercise voting rights attached to the equity shares evidenced by the ADSs on an individual basis. Under the Deposit Agreement, holders of ADSs must vote by giving voting instructions to the depositary, including instructions to give a discretionary proxy to a person designated by us. Upon receipt of such holder’s voting instructions, the depositary will vote the underlying equity shares in accordance with these instructions. Holders of ADSs will not be able to directly exercise their right to vote with respect to the underlying equity shares unless they withdraw the equity shares. Holders of ADSs may not receive voting materials in time to instruct the depositary to vote, and it is possible that holders of ADSs, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise their right to vote.

The voting rights of holders of ADSs are limited by the terms of the deposit agreement.

A holder of the ADSs may only exercise voting rights with respect to the underlying equity shares in accordance with the provisions of the deposit agreement. Upon receipt of voting instructions of a holder of ADSs in the manner set forth in the deposit agreement, the depositary will endeavor to vote the underlying equity shares in accordance with these instructions. When a general meeting is convened, holders of ADSs may not receive sufficient notice of a shareholders’ meeting to permit them to withdraw their equity shares to allow them to cast their votes with respect to any specific matter. In addition, the depositary and its agents may not be able to send voting instructions to holders of ADSs or carry out their voting instructions in a timely manner. We will make all reasonable efforts to cause the depositary to extend voting rights to holders of ADSs in a timely manner, but we cannot assure such holders that they will receive the voting materials in time to ensure that they can instruct the depositary to vote their shares. Furthermore, the depositary will not vote on any matter for which voting is conducted on a show of hands basis in accordance with our Articles of Association and will not have an obligation to demand voting on a poll basis. The depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast, or for the effect of any such vote. As a result, holders of ADSs may not be able to exercise their right to vote and may lack recourse if their equity shares are not voted as requested.

The right of a holder of ADSs, or a future holder of New GDRs, to participate in any future rights offerings or any future allotment of new securities (including any New GDRs), or to exercise their pre-emption rights may be limited, which may cause dilution to such holder’s holdings.

We may, from time to time, distribute rights to our shareholders, including rights to acquire our securities or to participate in any future allotment of new securities. Similarly, after the consummation of our proposed merger with Dish TV India Limited, Dish TV Videocon may, from time to time, distribute rights to its shareholders, including rights to acquire its securities or to participate in any future allotment of new securities (including New GDRs). However, securities laws of certain jurisdictions may restrict the participation, or our Company’s or Dish TV Videocon’s ability to allow participation, by certain security holders in such jurisdictions in any future issue of securities carried out by our Company or Dish TV Videocon.

Indian company law provides for pre-emptive rights for existing holders of equity shares pursuant to which, if a company proposes to increase its subscribed share capital by the issue of further equity shares, such equity shares will have to be offered to such existing holders of equity shares in proportion, as nearly as circumstances admit, to the paid-up share capital on the equity shares held by them. However, these pre-emptive rights may be disapplied by a duly passed special resolution of shareholders (i.e., passed by at least 75% of the shareholders entitled and voting on the matter). Accordingly, in a future distribution of rights to the shareholders of our Company or Dish TV Videocon, including rights to acquire securities of our Company or Dish TV Videocon or allotment of new securities, such pre-emptive rights of existing holders of equity shares, may be disapplied by such a special resolution, in which event the interests of the then-existing holders of ADSs or New GDRs could be diluted.

Furthermore, we cannot make rights available to holders of ADSs and Dish TV Videocon will not be able to make rights available to future holders of New GDRs in the United States unless we or Dish TV Videocon register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. In addition, the deposit agreement governing our ADSs provides that the depositary will not make rights available to holders of ADSs unless the distribution to ADS holders of both the rights and any related securities are either registered under the Securities Act or exempted from registration under the Securities Act.

We and Dish TV Videocon are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we and Dish TV Videocon may not be able to establish an exemption from registration under the Securities Act. Accordingly, ADS holders and future New GDRs holders may be unable to participate in any rights offerings and may experience dilution in their holdings. In addition, if the depositary of our ADSs is unable to sell rights that are not exercised or not distributed, or if the sale is not lawful or reasonably practicable, it will allow the rights to lapse, in which case holders of ADSs will receive no value for these rights.

Shares of Dish TV Videocon including new equity shares to be issued upon implementation of the Scheme of Arrangement and New GDRs that will represent such shares will be subject to restrictions on resales and transfers.

Shares of Dish TV Videocon including new equity shares to be issued upon implementation of the Scheme of Arrangement and New GDRs that will represent such shares will not be registered under the Securities Act or any U.S. state securities laws or under the securities laws of any other jurisdiction and will be issued and sold in reliance upon exemptions from registration provided by such laws. We and Dish TV Videocon are under no obligation to file a registration statement with respect to any such securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we and Dish TV Videocon may not be able to establish an exemption from registration under the Securities Act. Accordingly, no share of Dish TV Videocon or any New GDRs may be sold or transferred unless such sale or transfer is exempt from the registration requirements of the Securities Act (for example, in reliance on the safe harbor provided by Regulation S under the Securities Act) and applicable state securities laws.

Holders of ADSs may be subject to limitations on transfer of their ADSs.

ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems necessary in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deem it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement.

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Holders of ADSs might not receive distributions on our equity shares, or any value for them at all, if it is unlawful or impracticable for us to make them available to such holders.

The depositary of the ADSs has agreed to pay holders of ADSs the cash dividends or other distributions it or the custodian for the ADSs receives on our equity shares or other deposited securities after deducting our fees and expenses in accordance with the deposit agreement. Holders of ADSs will receive these distributions in proportion to the number of our equity shares that their ADSs represent. However, the depositary is not responsible if it is unlawful or impracticable to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act but such securities are not properly registered or distributed pursuant to an applicable exemption from registration. The depositary is not responsible for making a distribution available to any holders of ADSs if any government approval or registration is required for such distribution. We have no obligation to take any other action to permit the distribution of the ADSs, equity shares, rights or anything else to holders of the ADSs. This means that holders of ADSs might not receive the distributions that we make on our equity shares or any value for them at all if it is unlawful or impracticable for us to make them available to you.

ITEM 4. INFORMATION ON THE COMPANY

HISTORY AND DEVELOPMENT OF THE COMPANY

2002

Incorporated as Bharat Business Channel Limited.

2009

DTH services launched in July 2009.

2010

Achieved one million gross subscriber base.

2011

Launched the HD DVR with 3D.

2011

Achieved three million gross subscriber base.

2012

Achieved five million gross subscriber base.

Title sponsor of the Kings XI Punjab cricket team in the Indian Premier League 2012.

Achieved six million gross subscriber base.

2013

Achieved eight million gross subscriber base.

2014

Achieved 10 million gross subscriber base.

Sponsored an Indian Super League team (FC Goa).

Changed our business name to Videocon d2h Limited.

2015

Launched 4K set-top boxes in January 2015.

2016

Achieved 15 million gross subscriber base.

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Launched new smart services, namely, Smart English, Smart Games and Smart Kids

Launched new active channel services, namely, d2h Hollywood HD, d2h Kids, d2h Rhymes, d2h Darshan and d2h Spice

2017

Achieved 18 million gross subscriber base.

Entered into the Scheme of Arrangement to effect a merger with Dish TV India Limited.

Awards, Certifications and Recognitions

We have received the following, awards, certifications and recognitions:

2009

Recognized as one of the most successful brand launches across product categories at the Business Standard Brand Derby survey.

2012

Received a silver trophy for the ‘Best Search Engine Optimization Campaign’ by the Indian Digital Media Awards 2012.

2013

Recognized as ‘Asia’s Most Promising Brand 2012 - 2013’ in the DTH category by iBrands 360 (Iconic Brands 360), a World Consulting and Research Corporation enterprise.

2014

Endorsed as one of the top brands in India by the Economic Times Best Brands 2014. Recognized as “Asia’s Most Promising Brand 2013 - 2014” in the DTH category by iBrands 360 (Iconic Brands 360), a World Consulting and Research Corporation enterprise.

2015

Became the first Indian media company to be listed on Nasdaq.

Awarded as Economic Times Promising Brand for 2015.

Received BCS Ratna Award by Aavishkar Media Group for the most effective packages and highest subscriber additions.

Awarded as India’s Most Trusted Brand for 2015 by IBC Infomedia, New Jersey.

Awarded as Asia’s Most Promising Brand for 2015 by World Consulting and Research Corporation (WCRC) (i360 Brands).

Awarded as pay TV service of the year at MIPCOM (Marche International des Programmes de Communication) 2015, Cannes, France

2016

Recognized as one of the top 50 dream companies to work for by World HRD Congress.

Awarded as India’s Most Trusted Brand for the year 2016 (Power of Trust) by TRA Research Pvt Ltd.

Awarded as The Economic Times Outstanding Hospitality Brand 2016 by Economic Times

PENDING MERGER WITH DISH TV INDIA LIMITED

We entered into the Scheme of Arrangement with Dish TV India Limited and the shareholders and creditors of our Company and Dish TV India Limited under the provisions of Sections 230-232 and other applicable provisions of the Companies Act, 2013, to effect the following transactions: (i) amalgamation of our Company, as transferor company, with and into Dish TV India Limited, as transferee company; (ii) dissolution without the winding up of our Company; (iii) transfer of our authorized share capital to Dish TV India Limited; and (iv) renaming of Dish TV India Limited, as successor entity, to Dish TV Videocon. The Scheme of Arrangement has been approved by the Mumbai Bench of the National Company Law Tribunal at its hearing on July 27, 2017. The appointed date for the Scheme of Arrangement is October 1, 2017, from which date the businesses of Videocon d2h Limited and Dish TV India Limited will be amalgamated. For more information, see Item 7 “Major Shareholders and Related Party Transactions — Major Shareholders — Change in Control”.

BUSINESS PORTFOLIO

DTH Subscription Television Services

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Our primary business is the provision of DTH subscription television services to subscribers in India. We operate under the “Videocon d2h” brand. We carry out transmission of programming to subscribers through satellite broadcasting, which allows a subscriber to directly receive a broadcast signal from a satellite, through a satellite dish antenna and other equipment installed at the subscriber’s premises, which is then decoded by a set-top box.

All of our channels are turnaround channels meaning that Videocon d2h rebroadcasts all of the channels offered without modifying the content. Videocon d2h also derives advertising revenue from selling advertising on the “home” channel, which is the channel that comes on when the system is powered on, and certain pathway channels which serve as pathways to popular channels.

Subscription Packages and Package Options

Our subscribers have access to over 650 national and international channels and services, including 62 HD channels and 42 audio and video channels through our Music Channel Services through several subscription packages, as well as the option of choosing add-ons and a la carte channels and receiving certain discounts through long-term recharge offers. We also launch various subscription packages to cater to the varied needs of customers from time to time.

As of March 31, 2017, the charges for our monthly subscription packages ranged from Rs. 215 to Rs. 680 per month (inclusive of taxes). The packages offered are similar throughout India All packages include the Doordarshan channels and other free-to-air channels.

The following are the key monthly subscription packages currently been offered, in addition to certain other regional and HD related packages:

Entry level

Flexi Pack. Under this package, the subscriber receives up to 232 channels and services for Rs. 99 per month (inclusive of taxes). This package includes popular Hindi channels, in addition to regional channels and free-to-air channels.

Super Gold Pack. Under this package, the subscriber receives up to 309 channels and services for Rs. 285 per month (inclusive of taxes). This package includes popular Hindi channels, in addition to regional channels.

Gold Lite. Under this package, the subscriber receives up to 225 channels and services for Rs. 215 per month (inclusive of taxes). This package includes popular Hindi channels, in addition to regional channels.

Mid-tier

Gold Kids. Under this package, the subscriber receives up to 311 channels and services for Rs. 340 per month (inclusive of taxes). This package includes popular Hindi channels, in addition to regional channels.

New Gold Sports Pack. Under this package, the subscriber receives up to 319 channels and services for Rs. 380 per month (inclusive of taxes). This package provides the Super Gold Pack channels, plus a variety of sports channels.

Gold Sports Kids. Under this package, the subscriber receives up to 326 channels and services for Rs. 435 per month (inclusive of taxes). This package provides the Super Gold Pack channels, plus a variety of sports channels.

New Diamond Pack. Under this package, the subscriber receives up to 356 channels and services for Rs. 450 per month (inclusive of taxes). This package provides the New Gold Sports Pack channels, plus additional English channels.

High-tier

Platinum Pack. Under this package, the subscriber receives up to 361 channels and services for Rs. 525 per month (inclusive of taxes). This package provides the New Diamond Pack channels, plus additional lifestyle channels.

Platinum HD Pack. Under this package, the subscriber receives up to 419 channels and services for Rs. 680 per month (inclusive of taxes). This package, in addition to all the channels offered in the Platinum Pack, provides additional lifestyle channels and all of the HD channels offered by us.

For any of the packages that are selected, the subscriber has a choice of 11 different language zones: Hindi, English, Punjabi, Marathi, Gujarati, Oriya, Bengali, Tamil, Malayalam, Kannada and Telugu. Upon selection of a language zone, the subscriber receives certain regional programming in his or her chosen language.

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Add-Ons. With add-ons, a subscriber may add a set of channels to their current subscription package.

A La Carte. With a la carte programming, a subscriber may create a custom subscription package by selecting individual or a set of different channels.

Long-Term Recharge Offers. Long-term recharge offers reward subscribers who have subscribed to our services for a duration of at least three months with special promotions.

Additional subscriptions are required for the use of an additional set-top box in the same household by a subscriber. We charge a reduced price for the additional subscription and also subsidize the payment relating to the installation of an additional set-top box as an incentive to subscribers.

User Experience Services

In addition to subscription packages and package options, we offer certain services designed to augment customers’ viewing experiences. The following sets forth the key services that we offer currently:

26 Picture-in-Picture Mosaic. This feature allows a subscriber to view an on screen mosaic of the current programming of up to 26 channels.

Electronic Program Guide. The Electronic Program Guide is a graphical user interface that allows subscribers to browse channels and program schedules.

Value-Added Services

In addition to subscription packages, package options, and user experience services, we offer a variety of value-added services. The following sets forth the key value-added services that we offer currently:

Movie Channel Services: We offer four movie channel services to subscribers which are available as an add-on which can be subscribed for on a monthly basis.

Active Music Channel Services: We offer 42 Music Channel Services that include a variety of musical genres.

HD 3D Active Channel Service: We offer a HD 3D Active Channel Service which provides a variety of HD 3D content.

Tickers: We offer a variety of screen “tickers” that appear at the bottom of the screen which can be viewed simultaneously with any channel. The tickers display information, such as sports scores, stock market numbers and a variety of news, including Bollywood, politics, sci-tech, business, lifestyle and general news.

Smart Services: We offer smart services to subscribers, namely, Smart English, Smart Kids and Smart Games. Smart English provides videos to help subscribers learn correct pronunciation, grammar and vocabulary in English. Smart Kids provide a collection of popular stories, nursery rhymes and educational science videos, narrated with colorful pictures and a background voice. Smart Games includes games such as Aladdin, Road Racer, Terror Attack and Defender.

New Active Channel Services: We added five new active channel services, namely, d2h Hollywood HD, d2h Kids, d2h Rhymes, d2h Darshan and d2h Spice. d2h Hollywood HD presents handpicked Hollywood movies in HD format. d2h Kids and d2h Rhymes are provided as add-ons under the d2h Kids World Pack. d2h Darshan is a divinity channel which includes prayers, mantras, bhajans and pilgrimages. d2h Spice contains hit numbers and popular dance songs.

Our subscriber base has increased significantly since commencing operations in July 2009. Our gross DTH subscriber base has increased from approximately 0.44 million as of March 31, 2010 to 17.98 million as of March 31, 2017.

The following table presents information regarding our gross and net subscriber base in million as of March 31, 2015, 2016 and 2017:

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SALES, DISTRIBUTION AND MARKETING

Sales and Distribution

We use a zonal sales and distribution network to facilitate distribution across India and to provide an optimum level of service throughout India. As of March 31, 2017, we had over 5,300 distributors and direct dealers, and over 250,000 sub-dealers and recharge counters. As of March 31, 2017, we had a team of 366 sales executives working in 25 offices that sign up new distributors and dealers to expand our network.

Our distributors act as wholesale distributors of our consumer premises equipment and recharge vouchers, and are typically distributors of products that are in a related category or synergistic to those of Videocon d2h, such as durable consumer goods, consumer electronics or telecommunications. We appoint distributors based on certain key criteria, such as location, track record, potential for expansion, technological competence and business type.

Dealers provide product and service demonstrations, sell consumer premises equipment and subscription packages and serve as collection and service points for existing subscribers. Dealers are typically retail outlets of various kinds. Certain dealers also provide installation and other services and are typically not exclusive to any particular DTH operator.

Seasonality

We experience seasonal fluctuations in our business, whereby we have increased subscriptions during the holiday seasons in India and sporting events such as the Olympics, the football world cup and the cricket world cup. See Item 3 “Key Information — Risk Factors — Risks Related to our Company and the Industry in which we operate — We experience seasonal fluctuations in our business”.

Marketing

Our marketing program includes the use of retail signage, print, television, radio and digital advertising, social media, road shows, exhibitions and special events and promotional campaigns to market our products and services. We have strategically targeted what we believe to be high value and high growth markets, focusing on the youth, urban and suburban segments. We determine the platform to be utilized for our marketing efforts on the basis of various factors such as the target group, the location, the communication suitability, the return on investment and the final expected outcome from the initiative.

As part of our marketing initiatives, we have sponsored teams participating in Indian Premier League cricket matches and Indian Super League soccer matches. In order to market our brand, we have used actors, such as Mr. Abhishek Bachchan and Ms. Parineeti Chopra, as national brand ambassadors. These ambassadors and the associated marketing initiatives reinforce our belief in investing in sports and Bollywood to connect with the youth segment in India, which is the largest demographic in the country.

Advertising

We derive advertising revenue from selling advertising on the “home” channel, which is the channel that comes on when the system is powered on, and certain pathway channels which serve as pathways to popular channels.

Sources of content and equipment

We enter into content agreements with channel broadcasters and distributors to license channels and we pay them content and programming fees that are stipulated under the agreements. The major channel broadcasters and distributors, from whom we procure content include Star India Private Limited, Zee Entertainment Enterprises Ltd (formerly Taj Television (India) Private Limited), Turner International India Private Limited, TV 18 Broadcast Limited, and Sony Pictures Networks India Private Limited (formerly Multi Screen Media Private Limited).

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We procure consumer premises equipment, which primarily comprises set-top boxes, outdoor units, accessories and smart cards, from our suppliers and distribute such equipment through our distribution network to subscribers at subsidized prices. We purchase a majority of the set-top boxes, outdoor units and its accessories and spares from Trend Electronics Limited. See Item 7 “Major Shareholders and Related Party Transactions — Related Party Transactions” and Note 28 to financial statements for the fiscal year ended March 31, 2017 in Item 18 “Financial Statements”.

Marketing Strategy

Our marketing strategy is to:

LICENSING

We entered into the DTH License Agreement pursuant to which we have been granted a DTH license. The DTH license is valid until December 12, 2018 (10 years from the date of the issue of the wireless operational license from Wireless Planning & Coordination Wing, Ministry of Communications and Information Technology, Department of Telecommunications, Government of India, or “PW”).

Pursuant to the terms of the DTH License Agreement, we paid a non-refundable entry fee of Rs. 100.00 million and are required to pay an annual fee of 10.0% of gross revenue to the MIB. The determination of gross revenue is currently subject to the Telecom Disputes Settlement Appellate Tribunal’s ruling which determined that gross revenue should be determined after taking into consideration certain deductions. See Item 3 “Key Information — Risk Factors — Risks Related to our Company and the Industry in which we operate — Our failure to adhere to the terms and conditions contained in the DTH License Agreement could have an adverse effect on our business, financial condition and results of operations. In addition, we may owe additional amounts under our DTH License Agreement for prior years of operations”. We are also required to pay license fees and royalty for the spectrum we use, as determined by the PW.

The DTH License Agreement is effective until December 12, 2018, unless terminated earlier for default, insolvency or transfer of the DTH license or in the event that MIB revokes or suspends the DTH License in the event of any breach of terms and conditions of the license. The DTH license may be terminated by the licensor without compensation to us if we become bankrupt or otherwise insolvent or apply for being adjudicated as insolvent or bankrupt.

Under the terms of the DTH License Agreement, any change in our equity structure is required to be carried out in consultation and with the prior approval of the licensor. In addition, a majority of the board and the chief executives of our Company are required to be Indian citizens. See Item 4 “Information on the Company — Government Regulations — Foreign investment regulations” for details on foreign investment permitted in companies involved in the DTH industry.

TRADEMARKS, COPYRIGHTS, INDUSTRIAL DESIGNS AND PATENTS

We have entered into a trademark license agreement with CE India Limited, a Videocon Group entity, for the use of the “Videocon” and “V” trademarks on a non-exclusive basis for a nominal fee. This license is valid until March 31, 2022, and is renewable upon mutual agreement. We have registered 33 trademarks, including in relation to the “d2h “brand name and have applied for registration of further 62 trademarks.

COMPETITION

We compete directly with other DTH operators, as well as indirectly with cable operators, free-to-air television, Internet Protocol Television and other mass media, including print media, film, computer and video games, and internet media. We believe that we compete primarily based on price, programming offerings, service, subscriber satisfaction, network quality and content delivery. We believe that our key DTH competitors are Tata Sky Limited which operates the “Tata Sky” brand and Bharti Telemedia Limited which operates the “Airtel” brand. We have entered into the Scheme of Arrangement to effect a merger with our key DTH competitor, Dish TV India Limited, which operates the “Dishtv” brand. The appointed date for the Scheme of Arrangement is October 1, 2017, from which date the businesses of Videocon d2h Limited and Dish TV India Limited will be amalgamated.

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GOVERNMENT REGULATIONS

We are subject to various laws and regulations in India arising from our operations in India, including specific regulations and policies applicable to the DTH broadcasting services sector.

We were granted a license to establish, maintain and operate a DTH platform, on the terms and conditions set out in the DTH License Agreement. The DTH License Agreement is effective for a period of 10 years from the date of issue of the wireless operational license (which was issued to us on December 12, 2008), unless terminated earlier in accordance with our terms. Pursuant to the terms of the DTH License Agreement, we are required to pay an annual fee of 10% of our gross revenue (gross revenue includes, among other things, the gross inflow of cash, receivables, or other consideration arising in the course of ordinary activities of the DTH enterprise from rendering services and from the use by others of the enterprise resources yielding rent, interest, dividend, royalties or commissions). Further, pursuant to the terms of the DTH License Agreement, prior approval of the Licensor is required for effecting any change in our equity structure and the transfer of the license or any rights and obligations under the DTH License Agreement.

On July 23, 2014, TRAI released its Recommendations to MoIB on Issues related to New DTH Licenses (“New DTH License Recommendations”), which included recommendations relating to a new DTH licensing regime. TRAI has recommended that, among other things, the period of the DTH license be increased to 20 years, renewable for 10 years at a time and the license fee be reduced from 10% of gross revenue to 8% of adjusted gross revenue (where adjusted gross revenue is calculated by excluding service tax, entertainment tax and sales tax / VAT actually paid from the gross revenue). TRAI has also recommended that once the GoI notifies the new DTH licensing regime, an existing DTH operator should be allowed to migrate to the new regime at any time during the currency of their existing licenses, provided that it clears all its dues and fulfils all obligations under the terms and conditions of the existing license as well as those arising out of legal cases pending before various courts of law. However, the New DTH License Recommendations are not binding in any manner and we have no further information on if or when the GoI will notify a new DTH licensing regime or whether such new regime, if notified, will retain the recommendations, either in full or in part, made by TRAI through the New DTH License Recommendations.

As a licensed DTH broadcasting service provider, we are subject to the terms of the Guidelines for Obtaining License for Providing Direct-To-Home (DTH) Broadcasting Service in India issued by the MIB on March 15, 2001, as amended from time to time (“DTH Guidelines”). Under the DTH Guidelines, only companies registered under the laws of India with Indian management control (i.e., with a majority of the members of the board of directors as well as the chief executive of such company being Indian residents) are permitted to provide DTH services in India, and any Company providing DTH services cannot hold more than 20% of the total equity of a company engaged in the business of cable network services or vice versa. Further, the licensee company must adhere to the program and advertising codes issued by the MIB and follow the prescribed technical standards and other obligations. Licensees are prohibited from carrying any television broadcast or channel which has not been registered by the Central Government for being viewed within the territory of India and must carry the television channels notified by the MIB for mandatory and compulsory carriage from time to time.

The Direct to Home Broadcasting Services (Standards of Quality of Service and Redressal of Grievances) Regulations, 2007, as amended, establishes the standards of quality of DTH services that Indian DTH service providers are required to maintain, including standards relating to provision of consumer premises equipment to subscribers through outright purchase, hire purchase and rental agreements and procedures for billing and effective redress of subscribers’ grievances.

Under the Indian Wireless Telegraphy Act, 1933, as amended (“Wireless Act”), no person is permitted to possess a wireless telegraphy apparatus without obtaining a license. Accordingly, we have obtained a certificate from the Department of Telecommunication, Ministry of Communications and Information Technology, Government of India (“MIT”) permitting us to establish, maintain and work wireless telegraphs in India, which is renewable on an annual basis. This license granted to us is currently valid until December 31, 2017. Additionally, we have obtained a license, dated November 2, 2007, issued by the WPC for establishing a wireless telegraph station at Greater Noida, Uttar Pradesh, India(where the headquarters is located) and an approval dated November 14, 2007, from the Standing Advisory Committee of Radio Frequency Allocation (“SACFA”) for installation of a wireless station at such location.

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On May 27, 2013, TRAI issued the Telecommunication (Broadcasting and Cable) Services (6th) (The Direct to Home Services) Tariff Order, 2013 (“DTH Tariff Order”), directing all DTH service providers in India to offer to every subscriber the standard packages for supply and installation of the consumer premises equipment, as specified in the DTH Tariff Order, in addition to any other packages that may be offered. The standard packages prescribe, among other things, the rent per month (for the consumer premises equipment) and the refundable/adjustable security deposit that a subscriber may be charged. Certain DTH service providers, including our Company, have challenged the DTH Tariff Order before the appropriate telecom disputes redressal forum in India on various grounds, including that TRAI lacks jurisdiction to issue such a tariff order and that it has incorrectly computed the cost of consumer premises equipment in determining the standard packages.

TDSAT rendered a decision, confirming TRAI’s authority to regulate prices charged by DTH operators related to consumer premises equipment on October 1, 2014. DTH operators including us filed an appeal challenging TDSAT’s decision regarding Telecommunication (Broadcasting and Cable) Services (Sixth) (The Direct to Home Services) Tariff Order, 2013 before the Supreme Court and our Special Leave Petition has been admitted. The matter is yet to be listed.

Additionally, an appeal challenging TRAI’s new tariff order called the Telecommunication (Broadcasting and Cable) Services (Seventh) (The Direct to Home Services) Tariff Order, 2015 dated April 1, 2015 for Commercial Interoperability has been filed before TDSAT. The appeal was filed because TRAI failed to consider certain cost components significant to the business of DTH operators, resulting in the revised tariff order being adverse to the interests of DTH operators.

TDSAT through its judgement and order dated June 3 2011 has directed Union of India (UOI) to direct Bureau of Indian Standards (BIS) to lay down the standards for MPEG 4.TRAI has filed an appeal before the Supreme Court against the Order of TDSAT challenging the powers of TDSAT.

Under the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations, 2004 (“Interconnection Regulations”), distributors of TV channels in India are ensured non-discriminatory access to content of all broadcasters, and the Interconnection Regulations mandate that broadcasters issue a public notice before disconnecting signals to enable consumers to protect their interests.

Environmental regulations

We have obtained consents to operate under the Air (Prevention and Control of Pollution) Act, 1981 and the Water(Prevention and Control of Pollution) Act, 1974, each, from the Uttar Pradesh Pollution Control Board, with respect to the premises where our digital broadcast centre is located at Greater Noida, Uttar Pradesh, India. These consents are subject to renewal from time to time and are currently valid until December 31, 2018.

Labor regulations

Under the terms of the Contract Labor (Regulation and Abolition) Act, 1970 (“CLRA”) we have obtained the necessary Certificate of Registration from the Office of the Registering Officer & Assistant Labor Commissioner (Central), Ministry of Labor & Employment, Government of India as a principal employer for engaging contract labor. This Certificate of Registration is valid from February 9, 2015 onwards.

Trademarks

The Trade Marks Act, 1999 (“Trade Marks Act”) provides for the application and registration of trademarks in India. The purpose of the Trade Marks Act is to grant exclusive rights to marks such as a brand, label and heading, and to provide relief in case of infringement for commercial purposes as a trade description. The Trade Marks Act prohibits registration of, among other things, deceptively similar marks. It also provides for penalties for infringement, falsifying and falsely applying trademarks. We have obtained registrations in our name for various trademarks, including ‘D2H’, ‘Direct Hai Correct Hai’. Further, we have entered into a deed of trademark usage license dated September 11, 2009 with CE India Limited, whereby we have been authorized by CE India Limited to use the trademarks ‘Videocon’ and ‘V’, for our DTH broadcasting business activities, on a non-exclusive basis. The current term of this agreement expires on March 31, 2022, subject to further renewal.

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Foreign investment regulations

The Department of Industrial Policy and Promotion has issued the Consolidated FDI Policy, with effect from June 7, 2016 which consolidates the policy framework on FDI in Indian companies, and is updated from time to time. Currently, under the provisions of the Consolidated FDI Policy, FDI in a company engaged in the DTH broadcasting sector, like Videocon d2h is permitted in up to 100% of the paid-up equity share capital of such company under the automatic route, (provided that infusion of fresh foreign investment beyond 49% in a company not seeking permission from the applicable sectoral ministry, resulting in change in the ownership pattern or transfer of stake by existing investor to new foreign investor, will require prior approval of the GoI) subject to, among others, the following conditions:

Additionally, under the Consolidated FDI Policy, such company is also required to provide traceable identity of the subscribers to its DTH services and to ensure that such subscribers’ database is not transferred to any person or place outside India, unless permitted by applicable law. Further, companies are obligated to utilize equipment which enables lawful interception and monitoring from a centralized location as and when required by the GoI.

We benefit from our relationship with the Videocon Group. We believe that the “Videocon” brand is well recognized in India. Videocon Industries Limited is the flagship entity of the Videocon Group, a group that we have a strong relationship with. The Videocon Group has diversified interests in consumer electronics, oil and gas, power, retail and insurance, among others.

We have no subsidiaries or associate companies.

We maintain a registered office in Aurangabad, Maharashtra, India, a corporate office in Mumbai, Maharashtra, India and a digital broadcast facility in Greater Noida, Uttar Pradesh, India where our digital broadcast center is located.

Pursuant to a Transfer Deed of Leasehold Rights for Industry dated April 25, 2008, Videocon Industries transferred its leasehold rights in the industrial plot leased from the GNIDA (under a lease deed dated March 29, 2000 executed between Videocon Industries and GNIDA), and the ownership rights in the buildings constructed by it, comprising a covered area measuring 25 square meters and an industrial shed covering 2,358.29 square meters to our Company. We have the right to use this industrial plot until 2090. We operate our digital broadcast center at these premises.

“Auto Cars,” a partnership firm, comprising members of the Dhoot family, has authorized us to use the premises where our registered office is located pursuant to a letter dated August 1, 2012. We are licensed to use the premises where our corporate digital DTH service office is located pursuant to a leave and license agreement dated October 23, 2012 executed with V-Techweb (India) Private Limited, which is valid until September 30, 2017.

Additionally, we entered into leave and license agreements with various parties in respect of 316 premises as of March 31, 2017, which are used by us as branch offices and service centers for carrying out our business and marketing activities across India.

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INSURANCE

We maintain insurance on our Greater Noida digital broadcast center infrastructure assets, and consumer premises equipment up to the point where we deliver the equipment to distributors, for a variety of risks, including fire. We have also taken insurance coverage on Directors and Officers liability to minimize risks associated with litigations for us. We do not maintain any insurance for business interruption caused by satellite failure or liability for breach of environmental regulations

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis of our financial condition and results of operations is based upon, and should be read in conjunction with, our financial statements and related notes that appear elsewhere in this Annual Report. Our financial statements are prepared in accordance with IFRS. Our fiscal year ends on March 31 of each year. Accordingly, all references to a particular fiscal year are to the twelve months ended March 31 of that year. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. For additional information regarding such risks and uncertainties, see Item 3 “Key Information — Risk Factors” and “Forward-Looking Statements”.

Overview

We are a fast-growing direct-to-home, or DTH, service provider in India, adding approximately 15.12 million gross subscribers during the period from April 2011 to March 2017 across India. We distribute multiple digital television channels and allied video and audio services to subscribers via direct satellite feeds as part of our DTH services. We bring our subscribers quality digital television viewing and currently we carry over 650 national and international channels and services, including 62 high definition, or HD, channels and 42 audio and video channels as part of our Music Channel Services. We commenced DTH operations in July 2009 and have since grown to a gross subscriber base of 17.98 million. We provide our services throughout India and believe we are well positioned to capitalize on the growth opportunities in the Indian DTH market, including as a result of India’s ongoing digitalization program. In December 2015, India began implementing Phase III Digitalization in cities that come under that phase of the digitalization scheme. We expect that Phase III and Phase IV of the Digitalization program will affect a substantial number of television homes in India, thus increasing the target market for subscribers to switch to the digital platform.

Principal Factors Affecting our Financial Condition and Results of Operations

Pending Merger with Dish TV India Limited

We entered into the Scheme of Arrangement with Dish TV India Limited and the shareholders and creditors of our Company and Dish TV India Limited under the provisions of Sections 230-232 and other applicable provisions of the Companies Act, 2013, to effect the following transactions: (i) amalgamation of our Company, as transferor company, with and into Dish TV India Limited, as transferee company; (ii) dissolution without the winding up of our Company; (iii) transfer of our authorized share capital to DishTV India Limited; and (iv) renaming of Dish TV India Limited, as successor entity, to Dish TV Videocon. The Scheme of Arrangement has been approved by the Mumbai Bench of the National Company Law Tribunal at its hearing on July 27, 2017. The appointed date for the Scheme of Arrangement is October 1, 2017, from which date the businesses of Videocon d2h Limited and Dish TV India Limited will be amalgamated. For more information, see Item 7 “Major Shareholders and Related Party Transactions — Major Shareholders — Change in Control”.

Subscriber Growth

Almost all of our revenue comprises income from DTH subscribers, particularly, subscription revenue and activation revenue and lease of consumer premises equipment. Subscription and activation revenue is dependent upon the number of subscribers, pricing of offerings and services and subscriber loyalty. Our total number of gross subscribers was 15.74 million and 17.98 million as of March 31, 2016 and 2017, respectively.

Our revenue growth is driven primarily by subscriber additions and subscriber churn management. We seek to increase our subscriber base by providing a wide range of subscription packages at competitive prices, along with providing attractive value-added services that we believe are competitive. Additionally, with our marketing efforts, we intend to increase our subscriber base by reaching out to a wider population. We also utilize dealer incentives to drive subscriber growth. As subscribers grow, so does the amount of consumer premise equipment leased, which results in an increase in lease revenue.

Subscriber churn is a critical factor affecting our results of operations. We calculate churn as the number of subscribers who have not made payments and remain disconnected for at least 120 days. Any amount of churn tends to result in loss of operating revenue from those subscribers. Our monthly churn rate (as a percentage of average net subscribers) was 0.73% in the fiscal year 2016 and 0.80% in the fiscal year 2017. Churn arises mainly as a result of personal economic factors and, to a lesser extent, changes in consumer preferences and competitor offerings. Churn also tends to increase after major sports events which have led to a spike in new subscriber additions. Churn may also increase due to factors beyond our control, including, a slowing economy and consumer fraud. We seek to control churn through managing the consumer life cycle, continuously improving and increasing content, providing innovative products and technology, and providing quality customer service. We controlled exclusive direct service centers in over 230 cities as of March 31, 2017, which allows us to retain control of the customer service experience, unlike certain of our competitors which outsource the majority of their customer service operations. We also believe the reliability of our content offerings serves to limit churn. We have been able to maintain good relationships with broadcasters, allowing access to the full range of offerings from such content providers. We also believe that the quality of new subscribers can also serve to decrease churn. In line with industry practice, we ceased the practice of granting a free viewing period to new subscribers in recent years. We believe that this has led to increased quality of new subscribers and a decrease in our churn rate, as new subscribers have demonstrated a willingness to pay for our services. However, as competition for new subscribers increases in the market, for example as a result of digital platforms competing to attract customers affected by Phase III and Phase IV digitalization, competitive factors may lead to the reinstatement of free viewing periods, which could have an impact on our churn in the future. Our total number of net subscribers, which is calculated as gross subscribers less churn, was 11.86 million and 12.91 million for the fiscal years 2016 and 2017, respectively.

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We intend to capitalize on the digitalization of the analog market in India in order to grow our subscriber base. This digitalization program provides DTH operators, such as Videocon d2h, a significant opportunity to further expand our subscriber base in urban areas and cable stronghold markets. We believe the DTH market is projected to grow rapidly over the next few years, garnering a high share of new pay-TV subscribers as well as increasing its share of the pay-TV market from the market share of cable television as a result of the digitalization initiative. We believe that our pan-India presence, along with our broad distribution network, wide selection of channels, service offerings and content help us leverage off the new digital addressable cable TV system, or DAS being implemented, and maximize subscriber additions.

Content and Programming Costs

Content and programming costs comprise the largest portion of our operating expenses, comprising 40.4% and 44.5% of our total expenses for the fiscal years 2016 and 2017, respectively. Programming procurement by DTH operators in India, including Videocon d2h, generally takes place through channel distributors or owners. These programming procurement costs consist primarily of license fees paid to broadcasters and distributors of channels and content. We enter into content agreements with channel broadcasters and distributors to license channels and we pay them content and programming fees that are stipulated under the agreements. The major channel broadcasters and distributors, from whom we procure content include Star India Private Limited, Zee Entertainment Enterprises Ltd (formerly Taj Television (India) Private Limited), Turner International India Private Limited, TV 18 Broadcast Limited, and Multi Screen Media Private Limited. Under these agreements, a portion of our costs is determined on a variable basis depending on our number of subscribers. Thus, as our number of gross subscribers increases, we can expect the variable cost portion of our content agreements to increase as well.

Typically upon expiration of existing contracts, content suppliers renegotiate the commercial terms based on subscriber and ARPU growth, which tends to increase content and programming costs. Given the competitive DTH market, broadcasters have limited ability to pass on increases in content and programming costs to the subscribers. As such, increases in content and programming costs may have an impact on our results of operations.

Subscriber Acquisition Costs

We incur significant expenses in acquiring new subscribers. Subscriber acquisition cost per subscriber was Rs. 1,774 and Rs. 1,901 in the fiscal years 2016 and 2017, respectively. We calculate subscriber acquisition cost as the difference between upfront charges received from new subscribers (net of taxes) and costs incurred towards activation of those subscribers, including the cost of consumer premises equipment and distributors’ margin. We previously included marketing cost in our subscriber acquisition cost, but, in line with market practice among competitors in the DTH market in India, we began computing subscriber acquisition cost without including marketing cost in the fiscal year 2016. The subscriber acquisition cost figures included in this Annual Report are all presented without including marketing cost. Our subscriber base has grown significantly since the commencement of operations. As we grow our business, our subscriber acquisition costs may increase to the extent we continue to add new subscribers or due to increased competition.

Adoption of New Accounting Treatment of Entertainment Tax

We have adopted a change in the accounting treatment of entertainment tax effective April 1, 2016. This change has resulted in subscription and activation revenue being presented net of entertainment tax, effective from April 1, 2016. Prior to April 1, 2016, entertainment tax was accounted for under operating expenses, thus subscription and activation revenue was presented without deduction of entertainment tax, and both subscription and activation revenue and operating expenses were higher under the Old Method than under the New Method. We reported our earnings for the fiscal years 2015 and 2016 using the Old Method, resulting in higher subscription and activation revenue and higher operating expenses than would be applicable under the New Method. Under the New Method, subscription and activation revenue was Rs. 28,075.20 million and operating expenses Rs. 16,191.51 million for the fiscal year 2017, both Rs. 2,263.52 million lower than as would be presented under the Old Method. We note that both the Old Method and the New Method are permitted under applicable accounting principles but have decided to adopt the New Method which is in line with industry practice in India. As a result of the foregoing, subscription and activation revenue and operating expenses (and, as a result, revenue from operations and total expenses) for the fiscal year 2017 are not be comparable with prior periods. See Item 3 “Key Information — Risk Factors — Risks Related to our Company and the Industry in which we operate — Subscription and activation revenue and operating expenses (and, as a result, revenue from operations and total expenses) and ARPU for the fiscal year 2017 are not comparable with prior periods”.

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Subscriber Choice of Packages

We provide subscribers with a choice of packages through three tiers: entry level, mid-tier and high-tier, as well as add-on à la carte channels. As of March 31, 2017, our monthly subscription packages ranged from Rs. 215 to Rs. 680 per month (inclusive of taxes). Generally, the sale of higher priced packages is more profitable and positively affects our results of operations. We seek to improve ARPU by encouraging customers to adopt higher-priced packages, à la carte channels and value-added services; and seek to minimize lapses in subscription payments.

Competition

We compete directly with other DTH operators, as well as indirectly with cable operators, free-to-air television, media-on-demand and other mass media. We believe that we compete primarily based on price, content offering, service, viewing experience and customer satisfaction, and the quality of the system and distribution network and content delivery.

We believe that our key DTH competitors are Tata Sky Limited, which operates the “Tata Sky” brand and Bharti Telemedia Limited, which operates the “Airtel” brand. We have entered into the Scheme of Arrangement to effect a merger with our key DTH competitor, Dish TV India Limited, which operates the “Dishtv” brand. The appointed date for the Scheme of Arrangement is October 1, 2017, from which date the businesses of Videocon d2h Limited and Dish TV India Limited will be amalgamated. We incur substantial expense in acquiring new subscribers, including activation expenses, marketing and promotional expenses, installation costs and consumer premises equipment costs. As competition intensifies, we may have to increase subsidies for consumer premises equipment and increase marketing and sales and distribution expenses in order to grow our subscriber base and maintain market share.

Finance Costs

We use debt to finance our business and operations. We had total long-term and short-term borrowings outstanding of Rs. 23,171.70 million and Rs. 20,320.45 million, as of March 31, 2016 and 2017, respectively. Finance costs (net of finance income) in the fiscal years 2016 and 2017 were Rs. 3,142.83 million and Rs. 2,815.88 million, respectively. The decrease in total borrowings and in finance costs in the fiscal year 2017 was due to repayment of loans in the fiscal year 2017. We expect that we will continue to use debt to finance our business and operation.

Depreciation

Consumer premise equipment comprises a large part of our property, plant and equipment. As we add subscribers, the amount of consumer premise equipment deployed increases along with the related depreciation. As of March 31, 2016 and 2017, we had deployed consumer premise equipment of Rs. 40,594.22 million and Rs. 45,953.22 million, respectively. We depreciate consumer premise equipment over a seven year period using the straight line method. In the fiscal years 2016 and 2017, our depreciation expenses relating to this equipment were Rs. 5,428.49 million and Rs. 6,248.93 million, respectively.

Going Concern

We incurred losses for the years ended March 31, 2015 and 2016 of Rs. 2,726.64 million and Rs. 922.05 million, respectively. We have accumulated losses amounting to Rs. 17,918.32 million as of March 31, 2017. Our auditors have stated in their audit opinion that our ability to continue as a going concern is dependent on our ability to fund our operations and capital expenditure requirements. In addition, our accumulated losses exceed our paid-up share capital.

Critical Accounting Policies

In preparing our financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and various assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our results of operations may differ if prepared under different assumptions or conditions. We believe the following principal accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements:

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Impairment reviews

IFRS requires the management to undertake an annual test for impairment for finite lived assets, to test for impairment if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment testing is an area involving management judgment, requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections that have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain matters including the management’s expectations of:

Our property, plant & equipment are mainly classified under two broad categories:

Revenue recognition

The subscribers to our services buy a recharge balance from our distribution network (which includes our distributors, direct dealers and sub-dealers)and which enables them to recharge their subscription account with us. The current recharge balances appear as liabilities under the head “Income Received in Advance” under current liabilities in our financial statements. On delivering the services we provide to the subscribers with the recharge balance, the revenue is recognized on a time proportionate basis. We debit the Daily Burn Rate based on the package selected by the subscriber, which gets accumulated over a period of a month or over a period of service, whichever is less, and this is accounted for at the end of the month.

Arrangements with multiple deliverables

In revenue arrangements including more than one deliverable, the arrangement consideration is assigned to one or more separate deliverables based on the relative fair value of the applicable deliverable for revenue recognition purposes.

The initial amount charged to new subscribers is assigned to various deliverables including activation charges, service access fees, and lease rental of set top box, outdoor unit and accessories on the basis of fair value of each element. While determining the fair value of each of these deliverables, we consider the relevant cost of the service and/or goods provided to the new subscriber. We also incur charges such as discounts and margin to the distribution network (which includes our distributors, dealers and sub-dealers) and other charges relating to the creation of a subscriber data base, the assigning of the selected packages, and other such matrix at the time the new subscriber are activated. We assign our activation revenue considering these costs towards activation.

Income taxes

We are subject to income taxes in a number of Indian jurisdictions. A significant amount of judgment is required to determine the amount of provision for income taxes. There are certain transactions and calculations for which the ultimate determination by the relevant taxing authorities is uncertain. We recognize liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be found to be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. Where considered necessary, estimates are computed by management based on advice from an external specialist, such as an actuary.

Recognition of deferred assets

We need to make substantial investments to grow our subscriber’s base. We fund this investment through a mix of borrowing and funding from operations in order, which increase our interest payments going forward. In addition, our revenue may decrease if we are unable to increase our subscription package pricing due to the competition. Furthermore, any change in government regulations or increase in any levy of taxes or duties may impact our revenue, but this tax burden can be passed on to subscribers.

Notwithstanding the above, we believe that we will be able to achieve sufficient taxable profits within the next six years to utilize the benefit of our deferred tax assets as we have acquired a threshold level of subscriber base which has resulted in cash profits. We believe that we will be able to make cash profits as we expect to maintain and grow the subscriber market share. In addition, we expect to add new subscribers as the DTH pay-TV industry will benefit from the digitalization in Phase III and IV of the Government’s DAS program. We expect to gain additional subscribers during Phase III and Phase IV of the Government’s DAS program as a result of the conversion of analog cable, terrestrial and free air satellite to the digital base. We believe that these additions in subscriber base and favorable pricing trends in the industry will help us achieve sufficient taxable profits to utilize the deferred tax assets.

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Deferred tax assets are recognized to the extent that it is probable that sufficient taxable profit will be realized.

We note that we reduce deferred tax assets to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefit of part or all of the deferred tax asset to be utilized. We will reverse any such reduction to the extent that it becomes probable that sufficient taxable profit will be available.

Employee benefits

The present value of the employee benefit obligation is determined upon actuarial valuation made in conformity with generally accepted actuarial principles and practices by the professional actuary, industry practices and underlying assumptions. The assumptions used in determining the net cost (income) for employment benefits include mortality, retirement age, attrition rate, salary escalation rate, discount rate, and others which are done by professional actuary as per the actuary practices prevailing in India. For example, management confirmed the discount rate of 7.80% and 7.45% for the fiscal years 2016 and 2017, respectively. Any changes in these assumptions will have an effect on the carrying amount of employment benefits. After considering professional advice, management determines the appropriate discount rate at the end of each fiscal year. This is the interest rate used to discount the defined benefit obligation and calculate the net interest recognized in profit or loss on the net defined benefit liability. In determining the appropriate discount rate, consideration is given to the interest rates of high quality corporate bonds that are denominated in the currency in which the benefits are to be paid and that have terms of maturity approximating the terms of the related pension obligation. For example, management confirmed that the other key assumptions relevant to the defined employment benefit obligations are based in part on current market conditions.

ESOP 2014 and Sweat Equity Shares

We estimate the fair value of shares issued under ESOP 2014 and sweat equity shares in accordance with Guidance Note on Employee Share-based payments issued by Institute of Chartered Accountants of India at the date at which such equity instruments are granted and we recognize their issuance as expenses over the vesting period, which ends on the date on which the employee becomes fully entitled to the award. We utilize the Black-Scholes-Merton closed-form model to estimate the fair value of shares issued under ESOP 2014. We estimate the fair value of sweat equity shares by using a weighted average of their book value and their estimated valuation as calculated using discounted cash flow methodologies.

License Fees

Management uses its discretion and interpretation of law to determine the amount of license fees we should pay to the Government. The Government interprets the license agreement differently and accordingly believes that a different amount is due as license fees. This dispute is currently in litigation. We recognize liabilities based on estimates of whether additional fees will be found to be due. Where the final outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income statement and liabilities for the applicable period. See Item 3 “Key Information — Risks Related to our Company and the Industry in which we operate — Our failure to adhere to the terms and conditions contained in the DTH License Agreement could have an adverse effect on our business, financial condition and results of operations. In addition, we may owe additional amounts under our DTH License Agreement for prior years of operations”.

Property, plant and equipment

Estimates of useful life

The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. Depreciation is charged so as to write off the cost of assets, other than land and properties under construction, using the straight-line method, over their estimated useful lives, which are as follows:

Increasing an asset’s expected life or its residual value would result in a reduced depreciation charge in the income statement.

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The useful lives and residual values of our assets are determined by management at the time the asset is acquired and reviewed annually for appropriateness. The lives are based on historical experience with similar assets, certificates obtained from technical persons and anticipation of future events which may impact their life such as changes in technology. Historically, changes in useful lives and residual values have not resulted in material changes to our depreciation charge and as of date hereof no such adjustments have been made.

Provisions and contingent liabilities

We exercise judgment in measuring and recognizing provisions and the exposures to contingent liabilities related to pending litigation or other outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation, as well as other contingent liabilities. Judgment is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise, and to quantify the possible range of the financial settlement. Because of the inherent uncertainty in this evaluation process, actual losses may be different from the originally estimated provision.

A. Operating Results

The following table sets forth select financial data from our income statement for the periods indicated, the components of which are also expressed as a percentage of total revenue for such periods.

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Non-IFRS Measures

Earning before interest, tax and depreciation & amortization (EBITDA)

Revenue

Our revenue comprises revenue from operations and other income.

Revenue from Operations

Our revenue from operations comprises (i) subscription and activation revenue, (ii) other operating revenue, (iii) lease rentals and (iv) sale of set-top box and accessories.

The following table shows a breakdown of our revenue from operations for the periods indicated:

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Subscription and Activation Revenue: Subscription and activation revenue comprises (i) monthly subscription fees paid by our subscribers for our programming packages, (ii) fees for extra services such as additional channels, combination of channels or other add-on packages or value-added services that we offer and (iii) fees for activation that are collected up front and recognized as revenue upon the activation of consumer premises equipment. Fees for activation are reflected net of any applicable activation expenses. The total amount of subscription revenue depends on the number of paying subscribers and the amount of monthly subscription fees paid for the packages subscribed by the subscribers. We have adopted a change in the accounting treatment of entertainment tax effective April 1, 2016. This change has resulted in subscription and activation revenue being presented net of entertainment tax, effective from April 1, 2016. Prior to April 1, 2016, entertainment tax was accounted for under operating expenses, thus subscription and activation revenue was presented without deduction of entertainment tax, and both subscription and activation revenue and operating expenses were higher under the Old Method than under the New Method. As a result of the foregoing, subscription and activation revenue (and, as a result, revenue from operations) for the fiscal year 2017 are not be comparable with prior periods. See Item 3 “Key Information — Risk Factors — Risks Related to our Company and the Industry in which we operate — Subscription and activation revenue and operating expenses (and, as a result, revenue from operations and total expenses) and ARPU for the fiscal year 2017 are not comparable with prior periods”.

Other Operating Revenue: Other operating revenue comprises income received from advertisement, carriage fees received from broadcasters for carrying their channels on our platform, revenue received for repairs undertaken and for services provided to the subscriber.

Lease Rental: Lease rental represents the rental revenues for the lease of set-top boxes and outdoor units and any associated spares and accessories. The lease rental we receive from a new subscriber is recognized over a period of seven years from the date of activation. We offer subscribers the option to lease, buy or rent-to-own the set-top box, in accordance with applicable Indian regulations.

Sale of Set-top Boxes and Other Accessories: Sale of set-top boxes and other accessories primarily comprises revenue received from the sale of set-top boxes, spares and tools. The sale price of set-top boxes depends on the model type of the product. These sales also include the sale of related spares and accessories.

Other Income

Our other income comprises fees received from the depository and, in previous years, it included liabilities/provisions no longer required to be written back which primarily relate to recovery of credit provided to customers once their subscriptions expire and other non-operating income. The following table shows our components of other income for the periods indicated:

Expenses

Our expenses comprise (i) operating expenses; (ii) employee benefits expense: (iii) administrative and other expenses: and (iv) selling and distribution expenses.

We have adopted a change in the accounting treatment of entertainment tax effective April 1, 2016. This change has resulted in subscription and activation revenue being presented net of entertainment tax, effective from April 1, 2016. Prior to April 1, 2016, entertainment tax was accounted for under operating expenses, thus subscription and activation revenue was presented without deduction of entertainment tax, and both subscription and activation revenue and operating expenses were higher under the Old Method than under the New Method. We reported our earnings for the fiscal years 2015 and 2016 using the Old Method, resulting in higher subscription and activation revenue and higher operating expenses than would be applicable under the New Method. Under the New Method, operating expenses was Rs. 16,191.51 million for the fiscal year 2017, which was Rs. 2,263.52 million lower than as would be presented under the Old Method. As a result of the foregoing, operating expenses (and, as a result, total expenses) for the fiscal year 2017 are not be comparable with prior periods. See Item 3 “Key Information — Risk Factors — Risks Related to our Company and the Industry in which we operate — Subscription and activation revenue and operating expenses (and, as a result, revenue from operations and total expenses) and ARPU for the fiscal year 2017 are not comparable with prior periods”.

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Operating Expenses: Operating expenses comprise content and programming costs, license fees and taxes, space segment charges and fees, installation and service expenses, IT support costs, and cost of materials and components consumed. Content and programming costs comprise monthly license fees due to television broadcasters and channel distributors. License fees and taxes comprise license fees payable to the MIB. We have adopted a change in the accounting treatment of entertainment tax effective April 1, 2016. This change has resulted in subscription and activation revenue being presented net of entertainment tax, effective from April 1, 2016. Prior to April 1, 2016, entertainment tax was accounted for under operating expenses, thus subscription and activation revenue was presented without deduction of entertainment tax, and both subscription and activation revenue and operating expenses were higher under the Old Method than under the New Method. As a result of the foregoing, operating expenses (and, as a result, total expenses) for the fiscal year 2017 are not be comparable with prior periods. Space segment charges and fees comprise fees paid towards the rental of the transponders of the ST2 satellite of SingTel pursuant to the KuBand Lease Agreements, with the Department of Space, as well as the network operations control center fee and spectrum charges. Installation and service expenses comprise expenses incurred for support during the installation of consumer premises equipment for a new subscriber and expenses incurred towards repair of such equipment. IT support costs comprise expenses for IT support activities. Cost of materials and components consumed comprise the cost of set-top boxes that are sold to subscribers and the cost of consumption of spares and tools for the purpose of undertaking repairs of consumer premises equipment.

The following table shows the components of our operating expenses for the periods indicated:

Employee Benefits Expense: Our employee benefits expense comprises salaries, discretionary bonuses and allowances, contributions to Provident and other funds, and staff welfare expenses. The following table shows the components of our employee benefits expenses for the periods indicated:

Administrative and Other Expenses: Administrative and other expenses include, among other things, expenses related to state government fees and taxes, travelling and conveyance expenses, rent, office and general expenses and power and fuel expenses. The following table shows the components of our administrative and other expenses for the periods indicated:

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Selling and Distribution Expenses: Selling and distribution expenses comprise advertisement and marketing expenses, customer support services, which are expenses incurred towards customer care, subscriber management and logistics costs, and expenses incurred for distribution. The following table shows the components of our selling and distribution expenses for the periods indicated:

Finance Costs/Finance Income (Net): Finance costs comprise interest expense, other borrowing costs and bank charges incurred. Finance income comprises interest income on deposits. The following table shows the components of our finance costs/finance income (net) for the periods indicated: