2.4 Significant Accounting Policies
The significant accounting policies used in preparation
of the standalone financial statements have been
included in the relevant notes to the standalone financial
statements.
(a) Revenue Recognition
Ind AS 115 'Revenue from Contracts with Customers'
The Companies (Indian Accounting Standards)
Amendment Rules, 2018 issued by the Ministry of
Corporate Affairs (MCA) notified Ind AS 115"Revenue from
Contracts with Customers" related to revenue recognition
which replaces all existing revenue recognition standards
and provide a single, comprehensive model for all
contracts with customers. The revised standard contains
principles to determine the measurement of revenue and
timing of when it is recognised.
Revenue is recognized to the extent that it is probable
that the economic benefits will flow to the Company
and the revenue can be reliably measured. Revenue is
measured at the fair value of the consideration received
or receivable All revenues are accounted on accrual basis
except to the extent stated otherwise.
Revenue is measured based on the transaction price,
which is the consideration, adjusted for volume
discounts, service level credits, performance bonuses,
price concessions and incentives, if any, as specified in the
contract with the customer. Revenue also excludes taxes
collected from customers.
Unearned and deferred revenue ("contract liability") is
recognised when there is billings in excess of revenues.
In accordance with Ind AS 37, the Company recognises an
onerous contract provision when the unavoidable costs
of meeting the obligations under a contract exceed the
economic benefits to be received.
Contracts are subject to modification to account for
changes in contract specification and requirements.
The Company reviews modification to contract in
conjunction with the original contract, basis which the
transaction price could be allocated to a new performance
obligation, or transaction price of an existing obligation
could undergo a change. In the event transaction price is
revised for existing obligation a cumulative adjustment is
accounted for. The Company disaggregates revenue from
contracts with customers by geography and nature of
services.
Ý Revenue generated from the commissioned
television programs and Internet series produced for
broadcasters is recognized over the period of time
over the contract period.
Ý Rent income is recognised on accrual basis as per the
agreed terms on straight line basis.
Ý Sale of Rights are recognised in accordance with the
terms of agreements with customers.
Ý Revenue from other services is recognised as and
when such services are completed / performed.
Ý Income from infrastructure support, building rent
and royalty income is recognised based on the terms
of the underlying agreement.
Ý Interest income is accrued on a time basis, by
reference to the principal outstanding and at the
effective interest rate (EIR) applicable.
Ý Revenue from subsidiaries is recognised based on
transaction price which is at arm's length.
Ý Dividend income on investments is recognised when
the right to receive dividend is established.
The transaction price, being the amount to which the
Company expects to be entitled and has rights to under
the contract is allocated to the identified performance
obligations. The transaction price will also include
an estimate of any variable consideration where the
Company's performance may result in additional
revenues based on the achievement of agreed targets.
The Company does not expect to have any contracts
where the period between the transfer of the promised
goods or services to the customer and payment by the
customer exceeds one year. As a consequence, the group
does not adjust any of the transaction prices for the time
value of money.
(b) 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's lease asset classes primarily comprise
of lease for land and building. The Company assesses
whether a contract contains a lease, at inception of a
contract. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset
for a period of time in exchange for consideration. To
assess whether a contract conveys the right to control the
use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic
benefits from use of the asset through the period of the
lease and (iii) the Company has the right to direct the use
of the asset. The Company applies a single recognition
and measurement approach for all leases, except for
short-term leases and leases of low-value assets. For
these short-term and low value leases, the Company
recognizes the lease payments as an operating expense
on a straight-line basis over the term of the lease. The
Company recognises lease liabilities to make lease
payments and right-of-use assets representing the right
to use the underlying assets as below:
i) Right-of-use Assets
The right-of-use assets are initially recognised at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently
measured at cost less accumulated depreciation and
impairment losses, if any. Right-of-use assets are
depreciated from the commencement date on a straight¬
line basis over the shorter of the lease term and useful life
of the underlying asset.
ii) Lease Liabilities
The lease liability is initially measured at the present
value of the future lease payments. The lease payments
are discounted using the interest rate implicit in the lease
or, if not readily determinable, using the incremental
borrowing rates. The lease liability is subsequently
remeasured by increasing the carrying amount to reflect
interest on the lease liability, reducing the carrying
amount to reflect the lease payments made.
A lease liability is remeasured upon the occurrence
of certain events such as a change in the lease term or
a change in an index or rate used to determine lease
payments. The remeasurement normally also adjusts the
leased assets.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments have
been classified as financing cash flows.
Company as a Lessor
Leases for which the Company is a lessor is classified as
finance or operating lease. Leases in which the Company
does not transfer substantially all the risks and rewards
incidental to ownership of an asset are classified as
operating leases. Rental income arising is accounted for
on a straight-line basis over the lease terms. Initial direct
costs incurred in negotiating and arranging an operating
lease are added to the carrying amount of the leased
asset and recognised over the lease term on the same
basis as rental income. Contingent rents are recognised
as revenue in the period in which they are earned.
[c> Property, Plant and Equipment
Property, plant and equipment are stated at costs less
accumulated depreciation (other than freehold land)
and impairment loss, if any. The cost includes purchase
price net of any trade discounts and rebates, any import
duties and other taxes (other than those subsequently
recoverable from the tax authorities), any directly
attributable expenditure on making the asset ready for
its intended use, other incidental expenses and interest
on borrowings attributable to acquisition of qualifying
fixed assets up to the date the asset is ready for its
intended use. Subsequent expenditure on fixed assets
after its purchase / completion is capitalised only if such
expenditure results in an increase in the future benefits
from such asset beyond its previously assessed standard
of performance.
Depreciation is provided for property, plant and
equipment on pro-rata basis over the estimated useful life
from the date the assets are ready for intended use. The
estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period,
with the effect of any changes in estimate accounted for
on a prospective basis.
The carrying amount of an item of property, plant and
equipment shall be derecognised on disposal or when
no future economic benefits are expected from its use or
disposal. Gains or losses arising on retirement or disposal
of property, plant and equipment are recognised in the
standalone statement of profit and loss.
The Management believes that the useful lives best
represents the period over which the management
expects to use these assets based on an internal
assessment and technical evaluation where necessary.
Capital work-in-progress:
Amount paid towards the acquisition of property, plant
and equipment outstanding as of each reporting date
and the cost of property, plant and equipment not ready
for intended use before such date are disclosed under
capital work-in-progress. The capital work- in-progress is
carried at cost, comprising direct cost, related incidental
expenses and attributable interest.
Depreciation is not recorded on capital work-in-progress
until construction and installation are complete and the
asset is ready for its intended use.
Impairment
Property, plant and equipment are evaluated for
recoverability whenever events or changes in
circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair
value less cost to sell and the value-in-use) is determined
on an individual asset basis unless the asset does not
generate cash flows that are largely independent of those
from other assets. In such cases, the recoverable amount
is determined for the Cash Generating Unit (CGU) to
which the asset belongs.
If such assets are considered to be impaired, the
impairment to be recognized in the Statement of Profit
and Loss is measured by the amount by which the carrying
value of the assets exceeds the estimated recoverable
amount of the asset. An impairment loss is reversed in the
Statement of Profit and Loss if there has been a change in
the estimates used to determine the recoverable amount.
The carrying amount of the asset is increased to its
revised recoverable amount, provided that this amount
does not exceed the carrying amount that would have
been determined (net of any accumulated depreciation)
had no impairment loss been recognized for the asset in
prior years.
(d> Financial Instruments
Financial assets and liabilities are recognised when the
Company becomes a party to the contractual provisions
of the instrument. Financial assets and liabilities are
initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of financial
assets and financial liabilities (other than financial assets
and financial liabilities at fair value through profit or loss)
are added to or deducted from the fair value measured on
initial recognition of financial asset or financial liability.
Cash and Cash Equivalents
Cash comprises cash on hand and demand deposits with
banks. Cash equivalents are short- term balances (with an
original maturity of three months or less from the date
of acquisition), highly liquid investments that are readily
convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
Financial Assets at Amortised Cost
Financial assets are subsequently measured at amortised
cost if these financial assets are held within a business
whose objective is to hold these assets in order to collect
contractual cash flows and the contractual terms of the
financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest on the
principal amount outstanding.
Financial Assets at Fair Value through other
Comprehensive Income
Financial assets are measured at fair value through other
comprehensive income if these financial assets are held
within a business whose objective is achieved by both
collecting contractual cash flows and selling financial
assets and the contractual terms of the financial asset
gives rise on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.
Financial Assets at Fair Value through Profit or Loss
Financial assets are measured at fair value through profit
or loss unless it is measured at amortised cost or at fair
value through other comprehensive income on initial
recognition. The transaction costs directly attributable
to the acquisition of financial assets and liabilities at fair
value through profit or loss are immediately recognised
in profit or loss.
Financial Liabilities at Fair Value through Profit or
Loss
Financial liabilities are classified as measured at amortised
cost or FVTPL. A financial liability is classified as at FVTPL
if it is classified as held for trading, or it is a derivative or
it is designated as such on initial recognition. Financial
liabilities at FVTPL are measured at fair value and net gains
and losses, including any interest expense, are recognised
in profit or loss. Other financial liabilities are subsequently
measured at amortised cost using the effective interest
method. Interest expense and foreign exchange gains
and losses are recognised in profit or loss. Any gain or loss
on derecognition is also recognised in profit or loss.
Derecognition
Financial Assets
The Company derecognises a financial asset when the
contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual
cash flows in a transaction in which substantially all of the
risks and rewards of ownership of the financial asset are
transferred or in which the Company neither transfers
nor retains substantially all of the risks and rewards of
ownership and does not retain control of the financial
asset. If the Company enters into transactions whereby
it transfers assets recognised on its balance sheet, but
retains either all or substantially all of the risks and
rewards of the transferred assets, the transferred assets
are not derecognized.
Financial Liabilities
The Company derecognises a financial liability when
its contractual obligations are discharged or cancelled,
or expire. The Company also derecognises a financial
liability when its terms are modified and the cash flows
under the modified terms are substantially different. In
this case, a new financial liability based on the modified
terms is recognised at fair value. The difference between
the carrying amount of the financial liability extinguished
and the new financial liability with modified terms is
recognised in profit or loss.
Impairment of Financial Assets (other than at Fair
Value)
The Company assesses at each date of balance sheet
whether a financial asset or a group of financial assets
is impaired. Ind AS 109 requires expected credit losses
to be measured through a loss allowance. The Company
recognises lifetime expected losses for all contract assets
and / or all trade receivables that do not constitute
a financing transaction. For all other financial assets,
expected credit losses are measured at an amount equal
to the 12 month expected credit losses or at an amount
equal to the life time expected credit losses if the credit
risk on the financial asset has increased significantly since
initial recognition.
(e) Investments in Subsidiaries:
Investments in Subsidiaries are carried at cost less
accumulated impairment losses, if any. Where an
indication of impairment exists, the carrying amount of
the investment is assessed and written down immediately
to its recoverable amount. On disposal of investments in
subsidiaries, associates and joint venture, the difference
between net disposal proceeds and the carrying amounts
are recognised in the Statement of Profit and Loss.
(f) Inventories:
Inventories are valued at the lower of cost and net
realisable value. Cost is computed on a weighted average
basis.
Cost of raw materials and stores and spares includes
cost of purchase and other costs incurred in bringing
the inventories to their present location and condition.
The this items are valued at net realisable value if the
finished products in which they are to be incorporated
are expected to be sold at a loss.
Cost of finished goods and work-in-progress include
all costs of purchases, conversion costs and other costs
incurred in bringing the inventories to their present
location and condition. The net realisable value is the
estimated selling price in the ordinary course of business
less the estimated costs of completion and estimated
costs necessary to make the sale.
(g) Cash and Cash Equivalents:
The Company considers all highly liquid investments,
which are readily convertible into known amounts of
cash that are subject to an insignificant risk of change in
value, to be cash equivalents. Cash and cash equivalents
consist of balances with banks which are unrestricted for
withdrawal and usage.
|