2.4 Summary of Material Accounting Policies
(a) Property, Plant & Equipment
Property, plant and equipment are stated at
cost, net of recoverable taxes, trade discount
and rebates less accumulated depreciation
and impairment losses, if any. Such cost
includes purchase price, borrowing cost and
any cost directly attributable to bringing
the assets to its working condition for
its intended use, net charges on foreign
exchange contracts and adjustments arising
from exchange rate variations attributable to
the assets.
Subsequent costs are included in the
asset’s carrying amount or recognised as a
separate asset, as appropriate, only when it
is probable that future economic benefits
associated with the item will flow the entity
and the cost can be measured reliably.
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.
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
deemed appropriate.
Gains or losses arising from derecognition
of a property, plant and equipment are
measured as the difference between the
net disposal proceeds and the carrying
amount of the asset and are recognised in
the standalone statement of Profit and Loss
when the asset is derecognised.
(b) Intangible assets
Intangible Assets are stated at cost of
acquisition net of recoverable taxes, trade
discount and rebate less accumulated
amortisation/ depletion and impairment
loss, if any. Such cost includes purchase
price, development costs, borrowing costs
and any cost directly attributable to bringing
the asset to its working condition for the
intended use and net charges on foreign
exchange contracts and adjustments arising
from exchange rate variations attributable to
the intangible assets.
Subsequent costs are included in the asset’s
carrying amount or recognized as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated
with the items will flow to the Company and
cost can be measured reliably.
Gains or losses arising from derecognition
of an intangible asset are measured as
the difference between the net disposal
proceeds and the carrying amount of the
asset and are recognised in the standalone
Statement of Profit and Loss when the asset
is derecognised.
(c) Depreciation and amortisation
Depreciation on property, plant and
equipment is provided using straight-line
basis using the rates arrived at based on the
useful lives estimated by the management,
or those prescribed under Part C of Schedule
II of the Companies Act, 2013, whichever is
lower.
Depreciation for property, plant and
equipment purchased/sold during the year
is proportionately charged. Property, Plant
& Equipment individually costing ' 10,000/-
or less are fully expensed out in the year of
acquisition. The Company has estimated the
useful lives for the fixed assets as follows :
* In case of office equipments, useful life is
estimated to approximate their expected
wear & tear, which is higher than the one
prescribed under Part C of Schedule II.
Software acquired initially together
with hardware is capitalised along with
the cost of hardware and depreciated
in the same manner as the hardware.
The Company has estimated the useful lives
for the intangible assets as follows :
Computer Software 5 years (or useful life
of computer software
whichever is lower)
(d) Borrowing Costs
Borrowing Cost includes interest expense
calculated using the effective interest
method under Ind AS 109 and exchange
differences arising from foreign currency
borrowings to the extent they are regarded
as an adjustment to the interest cost.
Borrowing costs directly attributable to the
acquisition, construction or production of
an asset that necessarily takes a substantial
period of time to get ready for its intended
use or sale are capitalised as part of the cost
of the respective asset.
All other borrowing costs are charged to the
standalone statement of Profit and Loss in
the period in which they are incurred.
(e) Impairment of non-financial assets -
property, plant and equipment, investment
property and intangible assets
The Company assesses at each reporting
dates as to whether there is any indication
that any property, plant and equipment
and intangible assets may be impaired. If
any such indication exists, the recoverable
amount of an asset is estimated to determine
the extent of impairment, if any.
If such recoverable amount of the 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. An impairment loss is recognized in
the standalone statement of the Profit and
Loss to the extent, asset’s carrying amount
exceeds its recoverable amount.
The impairment loss recognised in prior
accounting period is reversed if there has
been a change in the estimate of recoverable
amount.
(f) Investments
Investments, which are readily realizable
and intended to be held for not more than
one year from the date on which such
investments are made, are classified as
current investments. All other investments
are classified as non-current investments.
On the initial recognition, all investments
are measured at cost. The cost comprises
purchase price and directly attributable
acquisition charges such as brokerage, fees
and duties. If an investment is acquired, or
partly acquired, by the issue of shares or
other securities, the acquisition cost is the
fair value of securities issued. If an investment
is acquired in exchange for another asset,
the acquisition is determined by reference
to the fair value of the asset given up or by
reference to the fair value of the investment
acquired, whichever is more clearly evident.
Current investments are carried in the
standalone financial statements at cost.
Non-Current investments are carried at cost.
However, provision for diminution in value
is made to recognise a decline other than
temporary in the value of the investments.
On disposal of an investment, the difference
between its carrying amount and net
disposal proceeds is charged or credited to
the standalone statement of profit or loss.
(g) Inventories
The media content (copyrights) are stated
at lower of cost/unamortised cost or net
realisable value. The Company evaluates the
net realisable value and/or revenue potential
of inventory based on management estimate
of market conditions and future demand and
appropriate impairment is made in cases
where accelerated impairment is warranted.
The copyrights are valued at a percentage
of cost based on the nature of rights,
as estimated by the Management. The
Company evaluates the net realisable
value and/or revenue potential of inventory
based on management estimate of
market conditions and future demand and
appropriate write down is made in cases
where accelerated write down is warranted.
Inventories of Raw material Stock are valued
at cost or estimated net realizable value
whichever is lower.
Projects in progress and movies under
production are stated at cost. Cost comprises
the cost of materials, the cost of services,
labour and other expenses, to the extent
they are incurred for creating an asset.
Inventories of physical media which consists
of DVDs, Blu-ray, Physical Equipments &
Merchandising are valued on FIFO basis.
The borrowing costs directly attributable to
a movie is capitalised as part of the cost.
(h) 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).
(i) Cash and cash equivalents
Cash comprises cash in 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.
(j) Cash Flow Statement
Cash flows from operating activities are
stated using the indirect method, whereby
profit/(loss) before extraordinary items and
tax is adjusted for the effects of transactions
of non-cash nature and any deferrals or
accruals of past or future cash receipts or
payments. The cash flows from operating,
investing and financing activities of the
Company are segregated in a manner which
is most appropriate to the business.
(k) Financial Assets
A. Initial recognition and measurement :
All financial assets are initially recognised
at fair value. Transaction costs that are
directly attributable to the acquisition
of financial assets, which are not at fair
value through profit or loss, are adjusted
to the fair value on initial recognition.
Purchase and sale of financial assets are
recognised using trade date accounting.
B. Subsequent measurement :
a) Financial assets carried at
amortised cost
A financial asset is subsequently
measured at amortised cost if it
is held within a business model
whose objective is to hold the asset
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.
b) Financial assets at fair value
through other comprehensive
income (FVTOCI)
A financial asset is measured at fair
value through other comprehensive
income if it is held within a business
model whose objective is achieved
by both collecting contractual
cash flows and selling financial
assets 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.
c) Financial assets carried at fair
value through profit or loss
(FVTPL)
A financial asset which is not
classified in the above categories
are fair valued through profit or loss.
C. Investment in subsidiaries, associates
and joint ventures :
The Company has accounted for its
investments in subsidiaries, associates
and joint venture at cost.
D. Impairment of Financial assets :
In accordance with Ind AS 109, the
Company uses ‘Expected Credit Loss’
(ECL) model, for evaluating impairment
assessment of financial assets other
than those measured at fair value
through profit and loss (FVTPL).
The Company measures the expected
credit loss associated with its assets
based on historical trend, industry
practices and the business environment
in which the entity operates or any other
appropriate basis. The impairment
methodology applied depends on
whether there has been a significant
increase in credit risk.
As a practical expedient, 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 historical observed
default rates are updated and changes
in the forward-looking estimates are
analysed.
(l) Derivative Financial Instrument
The Company uses various derivative
financial instruments such as interest rate
swaps, currency swaps, forwards & options
and commodity contracts to mitigate the
risk of changes in interest rates, exchange
rates and commodity prices. At the inception
of a hedge relationship, the Company
formally designates and documents the
hedge relationship to which the Company
wishes to apply hedge accounting and the
risk management objective and strategy for
undertaking the hedge. Any gains or losses
arising from changes in the fair value of
derivatives are taken directly to Standalone
Statement of Profit and Loss.
(m) Financial Liabilities
A. Initial recognition and measurements:
All financial liabilities are recognized
initially at fair value and in case of loans
net of directly attributable cost. Fees of
recurring nature are directly recognised
in profit or loss as finance cost.
B. Subsequent measurement :
Financial liabilities are carried at
amortized cost using the effective
interest method. For trade and other
payables maturing within one year from
the Balance Sheet date, the carrying
amounts approximate fair value due to
the short maturity of these instruments.
(n) Leases
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.
At the date of commencement of the lease,
the Company recognizes a right-of-use asset
(“ROU”) and a corresponding lease liability
for all lease arrangements in which it is a
lessee, except for leases with a term of twelve
months or less (short-term leases) and low
value leases. 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.
Certain lease arrangements include the
options to extend or terminate the lease
before the end of the lease term. ROU assets
and lease liabilities includes these options
when it is reasonably certain that the option
to extend will be exercised and the option to
terminate will not be exercised.
The right-of use assets are initially recognized
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.
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. Right of use assets
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 cashflows 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.
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 in the country of domicile of
these leases. Lease liabilities are remeasured
with a corresponding adjustment to the
related right of use asset if the Company
changes its assessment of whether it will
exercise an extension or a termination
option. Lease liability and ROU asset are
separately presented in the Standalone
Balance Sheet and lease payments are
classified as financing cash flows.
(o) Employee Benefits
Short Term Employee Benefits
The undiscounted amount of short term
employee benefits expected to be paid
in exchange for the services rendered by
employees are recognised as an expense
during the period when the employees
render the services.
Long Term Employee Benefits
Compensated absences which are not
expected to occur within twelve months after
the end of the period in which the employee
renders the related service are recognised as
a liability as at the Balance Sheet date on the
basis of actuarial valuation.
Post-employment Benefits
Defined Contribution Plans
A Defined contribution plan is a post¬
employment benefit plan under which
the Company pays specified contributions
towards Provident Fund and Pension
Scheme. The Company’s contribution is
recognised as an expense in the Standalone
Statement of Profit and Loss during the
period in which the employee renders the
related service.
Defined Benefit Plans :-
Gratuity
The liability in respect of gratuity and other
post employment benefits is calculated
using the Projected Unit Credit Method
and spread over the period during which
the benefit is expected to be derived from
employee’s services.
Re-measurement of Defined benefit plans
in respect of post-employment and other
long term benefits are charged to the Other
Comprehensive Income.
(p) Tax Expenses
The tax expense for the year comprises
current and deferred tax. Tax is recognised in
standalone statement of Profit and Loss, except
to the extent that it relates to items recognised
in the comprehensive income or in equity.
Current Tax
Current tax assets and liabilities are
measured at the amount expected to be
recovered from or paid to the taxation
authorities, based on tax rates and laws that
are enacted or substantively enacted at the
Balance Sheet date.
Deferred Tax
Deferred Tax is recognised on temporary
differences between the carrying amounts
of assets and liabilities in the financial
statements and the corresponding tax bases
used in the computation of taxable profit.
Deferred tax liabiliies are recognised for all
taxable temporory differences except to the
extent they arise from the initial recognition
of goodwill or from initial recognition of an
asset or liability in a transaction which is not
a business combination & at the time of the
transaction affects neither accounting profit
nor taxable profit (tax loss).
Deferred income tax assets are recognised
to the extent that it is probable that taxable
profits will be available against which the
deductible temporary differences and the
carry forward of unused tax credits and
unused tax losses can be utilised.
The carrying amount of deferred income
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
income tax assets to be utilised.
Deferred tax liabilities and assets are
measured at the tax rates that are expected
to apply in the period in which the liability
is settled or the asset realised, based on tax
rates (and tax laws) that have been enacted
or substantively enacted by the end of the
reporting period. The carrying amount
of deferred tax liabilities and assets are
reviewed at the end of each reporting period.
(q) Foreign currencies transactions and
translation
Transactions in foreign currencies are
recorded at the exchange rate prevailing on
the date of transaction. Exchange differences
arising on settlement or translation of
monetary item are recognised in Standalone
Statement of Profit and Loss.
Monetary assets and liabilities denominated
in foreign currencies are translated at the
functional currency closing rates of exchange
at the reporting date. 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.
(r) Revenue recognition
Ind AS 115 ‘Revenue from Contracts with
Customers’
Revenue is recognised to the extent it is
probable that economic benefits will flow
to the Company and the revenue can be
reliably measured. Revenue is measured at
the transaction value.
1. Sale of Content, Content Production,
Film Distribution and Syndication
- Revenue is recognised, when the
Company satisfies the performance
obligation by transferrring the control
over the item in accordance with the
agreed terms, to the extent that it is
probable that amount can be measured
reliably and expected as collectible.
Unbilled Revenue
An unbilled revenue is the right
to consideration in exchange for
services transferred to the customer.
If the Company transfers services to a
customer before the customer pays
consideration or before payment is due,
a unbilled revenue is recognised for the
earned consideration that is conditional.
Unbilled revenues are recognised when
there is excess of revenue earned
over billings on contracts. Unbilled
revenues are classified as such (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.
Deferred Revenue
A deferred revenue 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. If a customer pays
consideration before the Company
transfers services to the customer,
a deferred revenue is recognised
when the payment is made, or the
payment is due (whichever is earlier).
Deferred Revenue 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.
2. Broadcasting revenue - Advertisement
revenue (net of discount and volume
rebates) is recognised when the related
advertisement or commercial appears
before the public i.e. on telecast.
Subscription revenue (net of share to
broadcaster) is recognised on time basis
on the provision of television / digital
broadcasting service to subscribers.
3. Sale of goods
Revenue from sale of goods (ACDs/
VCDs/DVDs/ACS/BRDs) is recognised
when all the significant risks and
rewards of ownership of the goods
have been passed to the buyer, usually
on delivery of goods measured at the
transaction value of the consideration
received or receivable, net of returns and
allowances, trade discounts and volume
rebates and excluding taxes or duties
collected on behalf of the government.
4. Subscription Revenue
Revenue from rendering of services
is recognised over time where the
Company satisfies the performance
obligation over the period agreed as per
the respective contract.
(s) Other income
i) Interest Income
Interest Income from a financial asset is
recognised based on Effective Interest
Rate (EIR). Interest Income is included
under the head “ other income” in the
statement of profit and loss.
ii) Dividend Income
Dividend income is recognised when
the Group’s right to receive the payment
has been established, it is probable that
the economic benefits associated with
the dividend will flow to the company
& the amount of dividend can be
measured reliably.
iii) Rent Income is recognised on accrual
basis as per the agreed terms on straight
line basis.
(t) Earnings per share
Basic earnings per share is computed by
dividing the profit/(loss) after tax (including
the post tax effect of extraordinary items,
if any) attributable to equity shareholders
by the weighted average number of equity
shares outstanding during the year. For
calculating diluted earnings per share, the
profit or (loss) for the period attributable
to equity shareholders and the weighted
average number of shares outstanding
are adjusted for the effects of all dilutive
potential equity shares.
|