2. Summary of material accounting policies and information
i. Basis of preparation
a. Statement of compliance
These standalone financial statements have been prepared in accordance with the Indian Accounting Standards
(hereinafter referred to as the 'Ind AS') as notified by Ministry of Corporate Affairs pursuant to section 133 of the
Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended, and
other relevant provisions of the Act and guidelines issued by the Securities and Exchange Board of India (SEBI).
The standalone financial statements have been prepared on an accrual and going concern basis. The accounting
policies are applied consistently to all the periods presented in the standalone financial statements except where
a newly issued accounting standard has been adopted or a revision to an existing accounting standard requires a
consequent change in the accounting policy hitherto in use.
b. Current versus non-current classification
All assets and liabilities have been classified as current or non-current as per the Company's normal operating
cycle.
An asset is treated as current when it is:
a) Expected to be realised or intended to be sold or consumed in the normal operating cycle.
b) Held primarily for the purpose of trading.
c) Expected to be realised within twelve months after the reporting period, or
d) A cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
a) It is expected to be settled in the normal operating cycle.
b) It is held primarily for the purpose of trading.
c) It is due to be settled within twelve months after the reporting period, or
d) There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Based on the nature of services and the time between acquisition of assets for processing and their realisation
in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose
of current or non-current classification of assets and liabilities. The standalone financial statements have been
prepared on a historical cost basis, except for certain financial assets and liabilities which are measured at fair
value (refer note ix below)
c. Functional currency
The functional currency of the Company is the Indian Rupee ('). These standalone financial statements are
presented in Indian Rupees rounded off to lakhs.
d. Critical estimates and judgements
The preparation of standalone financial statements requires the use of accounting estimates, which will seldom
equal the actual results. Management also needs to exercise judgement in applying the Company's accounting
policies. This note provides an overview of the areas that involved more judgement or complexity, and of items
which are more likely to be materially adjusted due to estimates and assumptions turning out to be different
than those originally assessed. Detailed information about each of these estimates and judgements is included
in relevant notes together with information about the basis of calculation for each affected line item in the
standalone financial statements.
The areas involving critical estimates or judgements are:
a. Useful life of property, plant and equipment, investment properties and intangible assets - Refer Note 3, Note
6, Note 7, Note 2(iv), Note 2 (vi) and Note 2(v) respectively
b. Impairment of trade receivables and investments - Refer Note 14, Note 9, Note 2 (ix)(d) and Note 2(ix)(iii)
c. Recognition and recoverability of deferred tax assets - Refer Note 12A, Note 35 and Note 2(xiv)
d. Recognition of revenue from contracts with customers - Refer Note 29 and Note 2(ii)
e. Current tax expense and payable - Refer Note 35, Note 45 (b) and Note 2(xiv)
f. Measurement of lease liabilities and right-of-use assets - Refer Note 4, Note 37 and Note 2(xi)
g. Measurement of defined benefit obligation - Refer Note 40 and Note 2(x)
h. Provisions and contingencies, including royalty - Refer Note 45 (a) and Note 2(xvii)
Estimates and judgements are continuously evaluated. They are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the Company. The estimates and
judgments made by the management are believed to be reasonable under the prevailing circumstances.
ii. Revenue from operations
The core principle of Ind AS 115 - Revenue from Contracts with Customers is that an entity should recognise revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. Further the standard requires enhanced disclosures
about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contract with
customers.
Revenue from contracts with customers is recognised when control of services is transferred to the customer at an
amount that reflects the consideration to which the Company expects to be entitled in exchange for those services.
Revenue is measured at the fair value of the consideration received or receivable. The revenue recognised is net
of discounts, volume rebate and any taxes or duties collected on behalf of the government which are levied on revenue
such as Goods and Services tax (GST).
The Company provides radio advertising services, Media Solutions to clients. The Company also earns subscription
revenue through the Gaana App.
The Company classifies its media solutions as under:
i. Branded Solutions: The Company provides various branded services which include Concerts, Award Shows, On-Air
properties, Brand Licensing, Multimedia and Digital services.
ii. Managed Solutions: The Company provides services to manage the intellectual properties, activities or events of
Clients.
Revenue from Radio Broadcasting, other services and subscription income
a. Revenue from radio broadcasting is recognised on an accrual basis on the airing of client's commercials at a point in
time.
b. Revenue from media solutions business is recognised in the period in which the performance obligations are satisfied.
c. Revenue from subscription is recognised over the period in which the performance obligations are satisfied.
Contract balances
Contract assets
A contract asset is the right to consideration in exchange for services transferred to the customer. Contract assets are
recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled
revenues (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is
required, as per contractual terms.
Trade receivables
A receivable represents the Company's right to an amount of consideration that is unconditional (i.e., only the passage of
time is required before payment of the consideration is due or payments are already due but yet to be realized).
Contract Liability
A contract liability is the obligation to transfer services to a customer for which the Company has received consideration
(or an amount of consideration is due) from the customer. Contract liabilities are recognised as revenue when the Company
satisfies its performance obligation under the contract. Unearned and deferred revenue is recognised when there are billings
in excess of revenues.
The Company disaggregates revenue from contracts with customers by the nature of services it provides to the customers.
The billing schedules agreed with customers include periodic performance based payments. Invoices are payable within
contractually agreed credit period.
Use of significant judgements in revenue recognition
a. The Company's contracts with customers could include promises to transfer multiple services to a customer. The
Company assesses the services promised in a contract and identifies distinct performance obligations in the contract.
Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the
customer to benefit independently from such deliverables.
b. Judgement is also required to determine the transaction price for the contract. The transaction price could either be a
fixed amount of customer consideration or variable consideration with elements such as volume rebates and discount.
Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct
service from the customer. The estimated amount of variable consideration is adjusted in the transaction price only
to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised
will not occur and is reassessed at the end of each reporting period. The Company allocates the elements of variable
considerations to all the performance obligations of the contract unless there is observable evidence that they pertain
to one or more distinct performance obligations.
c. The Company uses judgement to determine an appropriate standalone selling price for a performance obligation. The
Company allocates the transaction price to each performance obligation on the basis of the relative stand-alone selling
price of each distinct service promised in the contract.
d. The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time
or over a period of time. The Company considers indicators such as how customer consumes benefits as services are
rendered or existence of enforceable right to payment for performance to date and alternate use of such service,
transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc.
iii. Other income
a. Dividends, if any are recognised in statement of profit and loss only when:
i) the right to receive payment is established;
ii) it is probable that the economic benefits associated with the dividend will flow to the Company; and
iii) the amount of the dividend can be measured reliably.
b. Interest income from financial assets is recognised using the effective interest rate method. The effective interest
rate is the rate that discounts estimated future cash receipts through the expected life of the financial asset to the
gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the
expected cash flows by considering all the contractual terms of the financial instrument but does not consider the
expected credit losses.
iv. Property, plant and equipment
Property, plant and equipment are stated at acquisition cost less accumulated depreciation and impairment losses, if
any. Cost of Property, plant and equipment comprises purchase price, duties, levies (excluding input tax credit), and any
directly attributable cost of bringing the asset to its working condition and location for the intended use.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of
the item can be measured reliably. All other repairs and maintenance are charged to statement of profit and loss during
the reporting period in which they are incurred. The carrying amount of any component accounted for as a separate
asset is derecognised when replaced. The present value of the expected cost for the decommissioning of an asset (after
its use) is included in the cost of the respective asset if the recognition criteria for a provision are met.
Cost incurred on Property, plant and equipment not ready for their intended use is disclosed as Capital Work-in-Progress.
Advances paid towards the acquisition of Property, Plant and Equipment outstanding at each balance sheet date are
classified as capital advances under other non-current assets. Unpaid amounts towards acquisition of Property, Plant
and Equipment outstanding at each balance sheet date are classified under other current financial liabilities if due
within one year from the date of these standalone financial statements and under other non-current financial liabilities
if due after a year from the date of these standalone financial statements.
Depreciation on Property, plant and equipment other than leasehold improvements, is provided on written down value
(WDV) method as per the useful life and in the manner specified in Schedule II to the Act. Leasehold improvements are
depreciated on straight line basis, over the lease period.
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end.
An item of Property, Plant & Equipment is derecognised upon disposal and any gain or loss arising on derecognition
of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is
included in the statement of profit and loss when the asset is derecognised. Assets to be disposed off are reported at
the lower of the carrying value or the fair value less cost to sell.
r. Intangible assets
a. Frequency Module (FM) Radio Licenses
Non-Refundable One Time Migration Fee paid by the Company for existing FM Radio licenses upon migration to
Phase III of the Licensing policy and Non-Refundable One Time Entry Fee paid by the Company for acquiring new
FM radio licenses have been capitalised as an intangible asset. These assets are stated at cost less accumulated
amortisation and impairment losses, if applicable.
b. Software
a. Software acquired initially together with hardware is capitalised along with the cost of hardware and
depreciated in the same manner as the hardware. All subsequent purchases of software licenses are treated
as revenue expenditure and charged to the statement of profit and loss account in the year of purchase.
b. Expenditure on Enterprise Software such as SAP, Sales CRM and Performance Appraisal Software etc. where the
economic benefit is expected to be more than a year is recognised as an "Intangible Asset” and are amortised
over a period of 45 to 60 months.
vi. Investment properties
Investment in buildings that is not intended to be occupied substantially for use by, or in the operations of the Company,
have been classified as investment property. Investment properties are measured initially at cost, including
transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated
depreciation and accumulated impairment loss, if any. All repairs and maintenance costs incurred for the investment
properties are charged to statement of profit and loss account when incurred.
Investment properties are depreciated using the written down value method over their estimated useful lives. Investment
properties generally have a useful life of 60 years.
Though the Company measures investment property using cost based measurement, the fair value of investment
property is disclosed in the notes (Refer note 6). Fair values are determined based on an annual evaluation performed
by a registered valuer. If at the balance sheet date there is an indication that a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a
maximum of depreciated historical carrying value.
Investment properties are derecognised either when they have been disposed of or when they are permanently
withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net
disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.
vii. Borrowing cost
Borrowing cost directly attributable to qualifying assets, which take substantial period to get ready for its intended use,
are capitalized to the extent they relate to the period until such assets are ready to be put to use. Other borrowing costs
are recognised as an expense in the period in which they are incurred. The Company is debt free and hence there are
no borrowing cost.
viii. Foreign currency transactions
Foreign currency transactions are recorded at the exchange rates prevailing on the date of the transaction. Gains and
losses arising out of subsequent fluctuations are accounted for on actual payment or realisation. Monetary items
denominated in foreign currency as at the balance sheet date are converted at the exchange rates prevailing on that
day. Exchange differences 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.
ix. Financial instruments
a. Recognition and initial measurement
The Company recognizes trade receivables and trade payables when they are originated at transaction price. All
other financial assets and financial liabilities are recognised when the Company becomes a party to the contractual
provisions of the instrument. All financial assets and liabilities are recognised at fair value. In case of financial assets
and liabilities that are not measured at fair value through profit or loss, directly attributable transaction costs are added
to the fair value on initial recognition.
b. Classification and subsequent measurement
i. Financial assets
The Company classifies its financial assets in the following measurement categories:
Ý those to be measured at fair value through profit or loss; and
Ý those measured at amortised cost.
The classification depends on the Company's business model for managing the financial assets and the
contractual terms of the cash flows.
Investments that are intended to be held for not more than a year from the date of investment are classified
as current investments. All other investments are termed as long term investments. The portion of long term
investments which is expected to be realized within twelve months from the balance sheet date are classified
as current investments.
Realised and unrealised gains/ (losses) arising from changes in the fair value of the "financial assets at fair
value through profit or loss” investment category are included in the statement of profit and loss in the period
in which they arise.
ii. Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest rate method. For
trade and other payables, the carrying amounts represents the fair value due to the short maturity of these
instruments.
Realised and unrealised gains/ (losses) arising from changes in the fair value of the "financial liabilities at fair
value through profit or loss” are included in the statement of profit and loss in the period in which they arise.
iii. Investment in subsidiaries
Investment in subsidiaries are carried at cost less impairment, if any.
Subsidiary means an entity in which the Company controls the composition of the Board of Directors; or
exercises or controls more than one-half of the total voting power either at its own or together with one or
more of its subsidiaries
The Company's investments in subsidiaries are recognised at cost as per Ind AS 27. The Company determines
whether it is necessary to recognise an impairment loss in its investment in its subsidiaries. At each reporting
date, the Company determines whether there is objective evidence that the investment in the subsidiary
has impaired. If there is such evidence, the Company calculates the amount of impairment as the difference
between the recoverable amount of the subsidiary and its carrying value and recognises the impairment loss
in the statement of profit and loss.
c. Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset
expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109- 'Financial
Instruments'. A financial liability (or part of a financial liability) is derecognised from the Company's Balance Sheet
when the obligation specified in the contract is discharged or cancelled or expires.
d. Impairment of financial assets
The Company assesses on a forward-looking basis the expected credit losses associated with its assets carried at
amortised cost. The impairment methodology applied depends on whether there has been a significant increase
in the credit risk.
For trade receivables, the Company applies the simplified approach permitted by Ind AS 109- 'Financial Instruments',
which requires expected lifetime losses to be recognised from initial recognition of the receivables. Lifetime losses
are the expected credit losses resulting from all possible default events over the expected life of a trade receivables.
The Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables.
The provision matrix is based on its historically observed default rates over the expected life of the trade receivables
and is adjusted for forward-looking estimates. Every year, the historically observed default rates are updated and
changes in the forward-looking estimates are analysed.
x. Employee benefits
a. Defined Contribution Plans:
The Company has defined contribution plans for post-employment benefits such as Provident Fund, National
Pension Scheme, Employee's State Insurance and Employee's Pension Scheme, 1995. The Company contributes to a
government administered Provident Fund, state plan namely Employee's Pension Scheme, 1995, Employee's State
Insurance Scheme and National Pension Scheme on behalf of its employees and has no further obligation beyond
making its contribution.
The Company's contributions to the above funds are recognised in the statement of profit and loss every
year.
b. Defined Benefit Plans:
The Company provides for gratuity benefit, which is a defined benefit plan, covering all its eligible employees.
Liability for defined benefit plans is provided based on valuations, as at the balance sheet date, carried out by an
independent actuary. The actuarial valuation method used by the independent actuary for measuring the liability
is the projected unit credit method.
Actuarial losses and gains are recognised in other comprehensive income and shall not be reclassified to the
statement of profit and loss in a subsequent period.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are
recognised immediately in the statement of profit and loss as past service costs.
c. Other short term benefits
The Company has other short term benefits namely compensated absences for all its employees. The liabilities in
respect of compensated absences which are expected to be encashed / utilised within twelve months from the
balance sheet date are current. Other such liabilities are considered non-current.
d. Termination benefits are recognised as an expense as and when incurred.
xi. 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 a 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 in respect of future lease payments and right of use
assets representing the right to use the underlying assets.
i) 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 lease term.
ii) Lease liabilities
The Company recognises lease liabilities measured at the present value of lease payments to be made over the
lease term. The lease payments include fixed payments less any lease incentives receivable
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the
lease commencement date or April 1, 2019 whichever is later. 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 or a change in the lease term or a
change in the lease payments.
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its leases that have a lease term of twelve
months or less and leases of low value assets. The Company recognises the lease payments associated with these
leases as an expense in the statement of profit and loss.
iv) Termination/Modification of lease
The gain or loss arising from termination shall be determined as the difference between the carrying value of lease
liability, and the carrying amount of right to use asset. It shall be recognised in statement of profit and loss when
the asset is derecognised.
For a lease modification that is not accounted for as a separate lease, the Company accounts for the remeasurement
of the lease liability by:
(a) decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease
for lease modifications that decrease the scope of the lease. The Company recognises in profit or loss any gain
or loss relating to the partial or full termination of the lease.
(b) making a corresponding adjustment to the right-of-use asset for all other lease modifications.
xii. Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits with banks and other short-term highly liquid
investments with original maturities of three months or less. Bank overdrafts, if any are shown as borrowings under
current financial liabilities in the balance sheet.
xiii. Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders
by the weighted average number of equity shares outstanding during the period. The weighted average number of equity
shares outstanding during the period and for all periods presented are adjusted for events (such as bonus shares), if
any, other than the conversion of potential equity shares that have changed the number of equity shares outstanding
without a corresponding change in resources. For calculating diluted earnings per share, the net profit or loss for the
period attributable to equity shareholders and the weighted average number of shares outstanding during the period
are adjusted for the effects of all dilutive potential equity shares.
xiv. Taxes
Tax expense comprises current and deferred tax. Current income tax and deferred tax are measured based on the
amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961.
Current Tax
Current tax in the Statement of Profit and Loss is provided as the amount of tax payable in respect of taxable income
for the period using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
Minimum Alternate Tax (MAT)
MAT paid in accordance with tax laws which give rise to future economic benefits in the form of adjustment to future
income tax liability is considered as an asset, if there is convincing evidence that the Company will pay normal tax in
future. Accordingly, MAT is recognised as a deferred tax asset in the balance sheet when it is probable that the future
economic benefit associated with it will flow to the Company and the asset can be measured reliably. The Company
reviews the 'Minimum Alternate Tax (MAT) Credit Entitlement' asset at each reporting date and writes down the asset to
the extent the Company does not have convincing evidence that it will pay normal tax during the specified period i.e. the
period for which MAT credit is allowed to be carried forward.
Deferred tax assets and liabilities
Deferred tax assets and liabilities are recognised for all temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the standalone financial statements. Deferred tax assets are recognised
only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realised. Deferred tax assets and liabilities are measured using the tax rates that have
been enacted or substantively enacted by the balance sheet date.
Tax assets and liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there
is an intention to settle the asset and the liability on a net basis.
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, if any are re-assessed at each reporting date and are recognised to the extent that it
has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Current and deferred tax is recognised in the statement of profit and loss, except to the extent that it relates to the items
recognised in other comprehensive income or directly in equity. In such situations, the tax is also recognised in other
comprehensive income or directly in equity, as the case may be.
xv. GST paid on acquisition of assets or on incurring expenses
Expenses and assets are recognised net of the amount of GST, except
a. When the tax incurred on 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.
b. The net amount of tax receivable/ payable is included as part of receivables/payables, as the case may be, in the
balance sheet.
xvi. Impairment of non-financial assets
The Company assesses at each balance sheet date whether there is any indication that a non-financial asset, other than
goodwill, may be impaired. If any such indication exists, the Company estimates the recoverable amount of such asset.
If recoverable amount of such asset or the recoverable amount of the cash generating unit to which the asset belongs is
less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date there is an indication
that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount subject to a maximum of depreciated historical carrying value.
Goodwill if any, is not subject to amortisation and is tested for impairment at each reporting date. An impairment loss
recognised for goodwill shall not be reversed in a subsequent period.
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