1 BACKGROUND
Inspire Films Limited (Formerly known as Inspire Films Private Limited) was incorporated on January 19, 2012 under the Companies Act, 1956. It is engaged in the business of producing original Digital Content of various genres for Television and OTT Channels.
The Company made an Initial Public Offering of 35,98,000 of Equity Shares of a Face Value of ^ 10/- at a Premium of ^ 49/- aggregating to ^ 21.23 crores. The IPO was oversubscribed 129.08 times.
2 SIGNIFICANT ACCOUNTING POLICIES a Basis of Accounting
The financial statements have been prepared under historical cost convention on accrual basis of accounting, in accordance with the accounting principles generally accepted in India (GAAP) and in compliance with the Accounting Standards notified by the Central Government of India under Section 133 of the Companies Act, 2013, read with Companies (Accounting Standards) Rules, 2014 and the provisions of the Act.
Accounting policies not specifically referred to otherwise are consistent and in accordance with Generally Accepted Accounting Principles. b Revenue Recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
Revenue is recognised as and when the relevant episodes of the approved Content are delivered to, and ready for telecast by, the Television and/or OTT Channels.
Interest is accounted on accrual basis. c Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Differences between the actual results and estimates are recognized in the period in which the results are known / materialized. d Property Plant and Equipment
Fixed assets are stated at cost inclusive of incidental expenses less accumulated depreciation and impairment loss, if any. Depreciation has been provided on the basis of Useful Life as given in Schedule II of the Companies Act, 2013. e Taxes on Income
Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.
Deferred Tax is recognized on timing differences between accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on Balance sheet date.
Deferred Tax Assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. f Indirect Taxes
The Company follows exclusive method for recognition of Income and Expenses liable to indirect taxes including Goods and Service Tax (GST). The excess amount paid is recognized as refund. The same are subject to assessment by the relevant tax authorities. g Interest on Statutory Liabilities
Interest for delay in payment of Statutory Dues is accounted for on payment basis. h Materiality
The concept of materiality is followed in the process of recognition, aggregation, classification & presentation of financial information. i Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the year.
For calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
j Employee Benefits
Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.
The Company does not have more than 10 employees, the management is of the opinion that provisions of Payment of Gratuity Act, 1972 are not applicable. Hence no provision has been made in the accounts for any retirement benefits. k Provisions
A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. l Valuation of Work-in-Progress
"Work-in-Progress compromises of the following elements:
i) The cost of TV serial episodes shot but not aired according to the percentage of completion as estimated by the management.
ii) Major One Time Cost incurred for which the benefit will accrue over several episodes.
iii) Cost incurred for conceptualization, production and marketing of new serials which have been bagged either during the year or even after the year before the accounts are finalized.
iv) Cost incurred for conceptualisation and development of new web series for hosting on Television and OTT Channels.
v) Work-in-Progress is valued at lower of cost or net realisable value. m Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
n Borrowing Cost
Borrowing costs directly attributable to the acquisitions, construction or production of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
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