2. Material accounting policies
2.1 Basis of compliance and basis of preparation of standalone financial statements
The standalone financial statements of the Company have been prepared in accordance with Indian Accounting
Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from
time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013 (Ind-AS
compliant Schedule III), as applicable. These standalone financial statements have been prepared on a going
concern basis. The standalone financial statements have been prepared on an accrual basis under the histor¬
ical cost basis, except for certain assets and liabilities that are measured at fair value as required by relevant
Ind AS.
The standalone financial statements have been presented in Indian Rupees (Rs.), which is also functional cur¬
rency of the Company. All the values are rounded off to the nearest million up to two decimals places, unless
otherwise stated.
2.2 Summary of material accounting policies
(a) Investment in subsidiaries and controlled trust
A subsidiary and controlled trust is an entity that is controlled by another entity. The Company’s invest¬
ments in its subsidiaries and controlled trust are accounted at cost less impairment. The Company reviews
its carrying value of investments carried at cost annually, or more frequently when there is indication for
impairment. If the recoverable amount is less than its carrying amount, the impairment loss is recorded
in the statement of profit and loss.
(b) Current versus non-current classification
The Company segregates assets and liabilities into current and non-current categories for presentation
in the balance sheet after considering its normal operating cycle and other criteria set out in Ind AS 1,
“Presentation of Financial Statements”. For this purpose, current assets and liabilities include the current
portion of non-current assets and liabilities respectively. Deferred tax assets and liabilities are always
classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realization in
cash and cash equivalents. The Company has identified period up to twelve months as its operating cycle.
(c) Foreign currencies
The Company’s standalone financial statements are presented in Indian rupees, which is also the
Company’s functional currency. Transactions in foreign currencies are initially recorded by the Company
at functional currency spot rates at the date the transaction first qualifies for recognition. However, for
practical reasons, the Company uses average rate if the average approximates the actual rate at the date
of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the
functional currency spot rates of exchange at the reporting date. Exchange differences arising on settle¬
ment or translation of monetary items are recognised in the statement of profit and loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date when the fair value is deter¬
mined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in
line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differ¬
ences on items whose fair value gain or loss is recognised in other comprehensive income (OCI) or profit
or loss respectively).
In determining the spot exchange rate to use on initial recognition of the related asset, expense or income
(or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance
consideration, the date of the transaction is the date on which the Company initially recognises the
non-monetary asset or non-monetary liability arising from the advance consideration. If there are multi¬
ple payments or receipts in advance, the Company determines the transaction date for each payment or
receipt of advance consideration.
(d) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based
on the presumption that the transaction to sell the asset or transfer the liability takes place either in the
principal market for the asset or liability, or in the absence of a principal market, in the most advanta¬
geous market for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would
use when pricing the asset or liability, assuming that market participants act in their economic best inter¬
est. A fair value measurement of a non-financial asset takes into account a market participant’s ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another market
participant that would use the asset in its highest and best use. The Company uses valuation techniques
that are appropriate in the circumstances and for which sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the standalone financial state¬
ments are categorised within the fair value hierarchy, described as follows, based on the lowest level
input that is significant to the fair value measurement as a whole:
• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company
determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisa¬
tion (based on the lowest level input that is significant to the fair value measurement as a whole) at the
end of each reporting period.
The Company’s management determines the policies and procedures for fair value measurement.
External valuers are involved, wherever considered necessary. For the purpose of fair value disclosures,
the Company has determined classes of assets and liabilities on the basis of the nature, characteristics
and risks of the asset or liability and the level of the fair value hierarchy, as explained above. This note
summarizes accounting policy for fair value, and the other fair value related disclosures are given in the
relevant notes.
(e) Revenue from contract with customer
Revenues from contract with customer is recognised when, or as, control of a promised services transfers
to customers, in an amount that reflects the consideration to which the Company expects to be entitled in
exchange for transferring those services. The Company collects Goods and Services Tax (GST) on behalf of
the government and, therefore, it is not an economic benefit flowing to the Company. Hence, it is excluded
from revenue.
To recognise revenue, the five step approach is applied: (i) identify the contract with a customer, (ii) iden¬
tify the performance obligation in the contract, (iii) determine the transaction price, (iv) allocate the
transaction price to the performance obligations in the contract, and (v) recognise revenues when a per¬
formance obligation is satisfied. The Company has generally concluded that it is the principal in its reve¬
nue arrangements, because it typically controls the services before transferring them to the customer.
The following specific recognition criteria must also be met before revenue is recognized:
Sale of services
Revenue from distribution and playout service is recognised over the specified period of service as per
the terms of contract with customer. The initial/one-time set-up fees included in certain contracts is rec¬
ognised over the contract term. Revenue from service contract, where the performance obligation is
satisfied at a point in time, is recognized as and when such services are rendered and no performance
obligation remains.
Revenue from information technology and other support services to subsidiaries is recognised as and
when such services are rendered, as per the terms of contract and transfer pricing arrangement.
If the consideration in a contract includes a variable amount, the Company estimates the amount of con¬
sideration to which it will be entitled in exchange for transferring the services to the customer. The vari¬
able consideration is estimated at contract inception and constrained until it is highly probable that a
significant revenue reversal in the amount of cumulative revenue recognised will not occur when the
associated uncertainty with the variable consideration is subsequently resolved.
Unearned revenue included in current liabilities represents billings in excess of revenues recognized. The
Company applies the practical expedient for short-term advances received from customers. That is, the
promised amount of consideration is not adjusted for the effects of a significant financing component if
the period between the transfer of the promised service and the payment is one year or less.
Contract balances
Contract assets
A contract asset is the right to consideration in exchange for services transferred to the customer. If the
Company performs by transferring services to a customer before the customer pays consideration or
before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Contract assets are subject to impairment assessment.
Trade receivables
A trade receivable is recognised if an amount of consideration is unconditional (i.e., only the passage of
time is required before payment of the consideration is due).
Contract liabilities
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from
the customer before the Company transfers the related services. Contract liabilities are recognised as rev¬
enue when the Company performs under the contract (i.e., transfers control of the related services to the
customer).
(f) Income taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised outside the statement of profit and loss is recognised
outside the statement of profit and loss (either in OCI or in equity in correlation to the underlying transac¬
tion). Management periodically evaluates positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and considers whether it is probable that a
taxation authority will accept an uncertain tax treatment. The Company reflects the effect of uncertainty
for each uncertain tax treatment by using either most likely method or expected value method, depend¬
ing on which method predicts better resolution of the treatment.
Deferred tax
Deferred tax is provided on temporary differences between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities and assets
are recognized for all taxable temporary differences and deductible temporary differences, except:
• when the deferred tax liability or asset arises from the initial recognition of goodwill or an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss and does not give rise to equal taxable and
deductible temporary differences;
• in respect of taxable temporary differences or deductible temporary differences associated with
investments in subsidiaries, when the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable
that taxable profit will be available against which the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date
and are recognised to the extent it has become probable that future taxable profits will allow the deferred
tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date. Deferred tax relating to items recognised outside the state¬
ment of profit and loss is recognised outside the statement of profit and loss (either in OCI or in equity in
correlation to the underlying transaction).
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off cur¬
rent tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and
the same taxation authority.
Goods and Services Tax (GST) paid on acquisition of assets or on incurring expenses
Expenses and assets are recognised net of the amount of GST paid, except when the tax incurred on a
purchase of assets or services is not recoverable from the taxation authority, in which case, the tax paid
is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable.
The net amount of tax recoverable from, or payable to, the taxation authority is included as part of other
current/non-current assets/ liabilities in the balance sheet.
(g) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation, and accumulated impair¬
ment loss, if any. Such cost comprises of the purchase price including duties and non-refundable taxes,
borrowing cost if capitalisation criteria are met, directly attributable expenses incurred to bring the asset
to the location and condition necessary for it to be capable of being operated in the manner intended by
management.
Subsequent costs related to an item of property, plant and equipment are recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item will flow
to the Company and the cost of the item can be measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are
recognised in statement of profit and loss as incurred.
Leasehold improvements are amortised over the period of the lease or life of the asset, whichever is lower.
The management believes that these estimated useful lives are realistic and reflect fair approximation of
the period over which the assets are likely to be used.
An item of property, plant and equipment is derecognised on disposal or when no future economic bene¬
fits are expected from its use or disposal. The gains or losses arising from derecognition are measured as
the difference between the net disposal proceeds and the carrying amount of the asset and are recognised
in the statement of profit and loss when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted prospectively, if appropriate.
(h) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial rec¬
ognition, intangible assets are carried at cost less any accumulated amortisation and accumulated
impairment losses. Internally generated intangibles, excluding capitalised development costs, are not
capitalised and the related expenditure is reflected in the statement of profit and loss in the period in
which the expenditure is incurred.
Intangible assets are amortized over the useful economic life and assessed for impairment, whenever
there is an indication that the intangible asset may be impaired. The amortisation period and the amor¬
tisation method for an intangible asset are reviewed at least at the end of each reporting period. The
amortisation expense on intangible assets is recognised in the statement of profit and loss, unless such
expenditure forms part of carrying value of another asset.
An intangible asset is derecognised on disposal or when no future economic benefits are expected from its
use or disposal. The gains or losses arising from derecognition are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit
and loss when the asset is derecognised.
Intangible assets are amortized using the straight-line method over a period based on management’s esti¬
mate of useful lives as below:
(i) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that nec¬
essarily takes a substantial period of time to get ready for its intended use or sale (qualifying asset) are
capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which
they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with
the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an
adjustment to the borrowing costs.
(j) Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments
and right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and
lease payments made at or before the commencement date less any lease incentives received. Right-of-use
assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful
lives of the assets.
If ownership of the leased asset is transferred to the Company at the end of the lease term or the cost
reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the
asset. The right-of-use assets are also subject to impairment. Refer to the accounting policy on impair¬
ment of non-financial assets.
Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the pres¬
ent value of lease payments to be made over the lease term. The lease payments include fixed payments
(including in substance fixed payments) less any lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The
lease payments also include the exercise price of a purchase option reasonably certain to be exercised by
the Company and payments of penalties for terminating the lease, if the lease term reflects the Company
exercising the option to terminate.
Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they
are incurred to produce inventories) in the period in which the event or condition that triggers the pay¬
ment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate
at the lease commencement date because the interest rate implicit in the lease is not readily determin¬
able. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g.,
changes to future payments resulting from a change in an index or rate used to determine such lease pay¬
ments) or a change in the assessment of an option to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases
that have a lease term of twelve months or less from the commencement date and do not contain a pur¬
chase option). It also applies the lease of low-value assets recognition exemption to leases that are consid¬
ered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as
expense on a straight-line basis over the lease term.
(k) Impairment of non-financial assets
The Company assesses at each reporting date, whether there is an indication that an asset may be impaired.
If any indication exists, or when annual impairment testing for an asset is required, the Company estimates
the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-gener¬
ating unit’s (CGU) fair value less costs of disposal and its value in use. The recoverable amount is deter¬
mined for an individual asset, unless the asset does not generate cash inflows that are largely independent
of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken
into account. If no such transactions can be identified, an appropriate valuation model is used. These cal¬
culations are corroborated by valuation multiples, quoted share prices for publicly traded companies or
other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecasts calculations, which
are prepared separately for each of the Company’s cash generating unit's (CGU's) to which the individual
assets are allocated. These budgets and forecast calculations generally cover a period of five years. For
longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth
year. To estimate cash flow projections beyond periods covered by the most recent budgets/forecasts, the
Company extrapolates cash flow projections in the budget using a steady or declining growth rate for sub¬
sequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the
long-term average growth rate for the products, industries, or country or countries in which the Company
operates, or for the market in which the asset is used. Impairment losses of continuing operations are rec¬
ognised in the statement of profit and loss.
For assets, an assessment is made at each reporting date to determine whether there is an indication that
previously recognised impairment losses no longer exist or have decreased. If such indication exists, the
Company estimates the asset’s or cash generating unit's (CGU’s) recoverable amount. A previously rec¬
ognised impairment loss is reversed only if there has been a change in the assumptions used to determine
the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so
that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been recognised
for the asset in prior years. Such reversal is recognised in the statement of profit and loss.
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