2. Material Accounting Policies

2.1 Statement of Compliance with Ind AS

The financial statements have been prepared in accordance with Ind AS
prescribed under Section 133 of the Companies Act, 2013 (“Act”) read
with Rule 3 of the Companies (Indian Accounting Standards) Rules,
2015 and the Companies (Indian Accounting Standards) (Amendment)
Rules, 2016.

All the Ind AS issued and notified by the Ministry of Corporate Affairs
under the Companies (Indian Accounting Standards) Rules, 2015 (as
amended) till the financial statements are approved for issue by the
Board of Directors has been considered in preparing these financial
statements.

2.2 Basis of Preparation of Financial Statements

These financial statements are prepared on the accrual basis of
accounting, under the historical cost convention except for the
following:

i) Certain financial assets and financial liabilities measured at fair
value; and

ii) Defined benefits plan - plan assets measured at fair value.

There is no change in the system of accounting as being consistently
followed from earlier years unless otherwise stated

All assets and liabilities have been classified as current or non-current
as per company’s normal operating cycle and other criteria set out
in the Schedule III to the Companies Act, 2013. Based on the nature
of operations and time between procurement of raw material and
realization in cash and cash equivalents, the Company has ascertained
its operating cycle as 12 months for the purpose of current and non¬
current classification of assets and liabilities

2.3 Use of Estimates

The preparation of the Financial Statements in conformity with Ind
AS requires management to make estimates and assumptions that
affect the reported balances of assets and liabilities and disclosures
relating to contingent liabilities as at the date of the financial statements
and reported amounts of income and expenditure during the period.
Management believes that the estimates made in the preparation of the
financial statements are prudent and reliable. Actual results might differ
from the estimates. Difference between the actual results and estimates
are recognized in the period in which results are known / materialized.

2.4 Property, plant and equipment (PPE) and Capital work-in-progress
(CWIP)

The Company has elected to continue with carrying value of all Property,
plant and equipment and Capital work-in-progress (CWIP).

The Property, plant and equipment were stated at their original cost (net
of accumulated depreciation and impairment) adjusted by revaluation of
certain assets.

The Property, plant and equipment (PPE) and Capital work-in-progress
(CWIP) are stated at cost net of GST credit and/or at revalued price less
accumulated depreciation and Accumulated Impairment.

Interest on borrowings used to finance the construction of qualifying
assets are capitalized as part of the cost of the asset until such time that
the asset is ready for its intended use.

Depreciation on Property, plant and equipment (PPE) is provided on
written down value method as prescribed under Part C of Schedule II to
the Companies Act, 2013.

Useful life of assets is considered on the basis of schedule-II of
Companies Act 2013.

Subsequent costs are included in the asset’s carrying amount only
when it is probable that future economic benefits associated with the

item will flow to the entity and the cost of the item can be measured
reliably.

All other repair and maintenance costs are recognized in the Statement
of Profit and Loss as incurred.

Each item of PPE individually costing Rs.5,000/- or less is depreciated
fully in the year of their put to use.

Depreciation/amortization on assets added, sold or discarded during
the year is provided on pro-rata basis.

2.5 Intangible Assets (Computer Software)

Intangible assets expected to provide future enduring economic benefits
are recorded at the consideration paid for acquisition of such assets
and are carried at cost of acquisition less accumulated amortization and
impairment, if any.

Intangible assets: Computer software is amortized over a period of 5
years.

2.6 Revenue Recognition and Expenses

(i) Revenue on supply and service contracts are recognized as the related
performance obligation is completed.

Revenue from fixed-price, fixed-timeframe contracts, where the
performance obligations are satisfied over time and where there is
no uncertainty as to measurement or collectability of consideration,
is recognized as per the percentage-of-completion method. When
there is uncertainty as to measurement or ultimate collectability,
revenue recognition is postponed until such uncertainty is resolved.
Efforts or costs expended have been used to measure progress
towards completion as there is a direct relationship between input and
productivity.

Arrangements with customers for services and goods are either on a
fixed-price, fixed-timeframe or on a time-and-material basis.

Revenues in excess of invoicing are classified as contract assets (which
we refer to as unbilled revenue) while invoicing in excess of revenues
are classified as contract liabilities (which we refer to as unearned
revenues).

(ii) Insurance claims have been accounted for on cash basis looking in to
the uncertainty and its collection as per past practice.

(iii) Interest Income is accounted for on time proportionate basis.

2.7 Expenses

(i) All expenses are accounted for on accrual basis.

2.8 Inventory

a) Cost of inventory comprises of purchase price, cost of conversion
and other cost that have been incurred in bringing the inventories to
their respective present location and condition. Interest costs are not
included in value of inventory.

Inventories are valued as under:

Finished Goods are carried at lower of cost or net realizable value. Cost
of finished goods is determined following first in first out method.

Traded Goods/ Music Album are carried at lower of cost or net realizable
value. Cost of traded goods is determined following first in first out
method.

2.9 Fair value measurement

The Company measures financial instruments at fair value at each
balance sheet date.

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 advantageous
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 interest.

A fair value measurement of a non-financial asset takes into account
a market participant’s ability to generate economic benefits by using

3) At fair value through profit or loss (FVTPL).

Debt instruments at amortised cost

A ‘debt instrument’ is measured at the amortised cost if both the
following conditions are met:

1) The asset is held within a business model whose objective is to
hold the asset for collecting contractual cash flows, and

2) Contractual terms of the asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.

After initial measurement, such financial assets are subsequently
measured at amortised cost using the effective interest rate (EIR)
method. Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral part of
the EIR.

Equity investments

All equity investments in the scope of Ind AS 109 are measured at fair
value except in case of investment in subsidiary carried at deemed cost
and associate carried at cost.

Equity instruments included within the FVTPL category, if any, are
measured at fair value with all changes recognized in profit or loss.
The Company may make an irrevocable election to present in OCI
subsequent changes in the fair value.

The Company makes such election on an instrument-by-instrument
basis. The classification is made on initial recognition and is irrevocable.
When the fair value has been determined based on level 3 inputs, the
difference between the fair value at initial recognition and the transaction
price is deferred and after initial recognition

Deferred difference is recognised as gain or loss to the extent it arises
from change in input to valuation technique. If the Company decides to
classify an equity instrument at FVTOCI, then all fair value changes on
the instrument, excluding dividends, are recognized in OCI.

There is no recycling of the amounts from OCI to profit or loss, even on
sale of investment. However, the Company may transfer the cumulative
gain or loss within equity.

De-recognition

The Company derecognizes a financial asset only when the contractual
rights to the cash flows from the asset expires or it transfers the financial
asset and substantially all the risks and rewards of ownership of the
asset.

2.11 Employees Benefits

(i) Short term employee benefits

Employee benefits payable wholly within twelve months of receiving
employee services are classified as short-term employee benefits.
These benefits include salaries and wages, bonus and ex-gratia. The
undiscounted amount of short-term employee benefits to be paid in
exchange for employee services are recognized as an expense as the
related service is rendered by employees.

(ii) Post employment benefits

a) Defined contribution plans;

A defined contribution plan is a post-employment benefit plan under
which an entity pays specified contributions to a separate entity and
has no obligation to pay any further amounts. The company makes
specified monthly contributions towards provident fund. The Company’s
contribution is recognized as an expense in the statement of profit and
loss during the period in which employee renders the related service.

b) Defined benefit plan:

The Company’s gratuity benefit scheme is a defined benefit plan. The
Company’s net obligation in respect of a defined benefit plan is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior periods;
that benefit is discounted to determine its present value, and the fair
value of any plan assets is deducted.

The present value of the obligation under such defined benefit plan
is determined based on actuarial valuation using the Projected Unit
Credit Method, which recognizes each period of service as giving rise
to additional unit of employee benefit entitlement and measures each

unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plan, are based on the market
yields on Government securities as at the balance sheet date.

When the calculation results in a benefit to the Company, the recognized
asset is limited to the net total of any unrecognized actuarial losses and
past service costs and the present value of any future refunds from the
plan or reductions in future contributions to the plan.

Actuarial gains and losses are recognized in the other comprehensive
income

c) Estimation of Defined benefit obligations

The cost of the defined benefit gratuity plan and the present value
of the gratuity obligation are determined using actuarial valuations.
An actuarial valuation involves making various assumptions that
may differ from actual developments in the future. These include the
determination of the discount rate, future salary increases and mortality
rates. Due to the complexities involved in the valuation and its long¬
term nature, a defined benefit obligation is highly sensitive to changes
in these assumptions. All assumptions are reviewed at each financial
year end. The parameter most subject to change is the discount rate.
In determining the appropriate discount rate for plans, the actuary
considers the interest rates of government bonds. The mortality rate is
based on publicly available mortality tables. Those mortality tables tend
to change only at interval in response to demographic changes. Future
salary increases and gratuity increases are based on expected future
inflation rates.

(iii) Long term employment benefits

The Company’s net obligation in respect of long-term employment
benefits is the amount of future benefit that employees have earned in
return for their service in the current and prior periods. The obligation is
calculated using the projected unit credit method and is discounted to
its present value and the fair value of any related assets is deducted.
The discount rates used for determining the present value of the
obligation under defined benefit plan, are based on the market yields
on Government securities as at the balance sheet date.

(iv) Compensated absences

The employees can carry-forward a portion of the unutilized accrued
compensated absences and utilize it in future service periods or
receive cash compensation on termination of employment. Since the
compensated absences do not fall due wholly within twelve months
after the end of the period in which the employees render the related
service and are also not expected to be utilized wholly within twelve
months after the end of such period, the benefit is classified as a long¬
term employee benefit. The Company records an obligation for such
compensated absences in the period in which the employee renders
the services that increase this entitlement. The obligation is measured
on the basis of independent actuarial valuation using the projected unit
credit method.

Short term employee benefits are recognized as an expense at the
undiscounted amount in the Statement of Profit & Loss for the year in
which the related service is rendered.

2.12 Borrowing Costs

Borrowing costs attributable to the qualifying assets are capitalized up to
the period such assets are ready for the intended use and commenced
commercial production. All other borrowing cost is charged to the
Statement of Profit & Loss in the period in which they are incurred.

2.13 Foreign Currency Transactions and Translations

a) Transactions denominated in foreign currencies are recorded at
the exchange rates prevailing on the date of transaction. Monetary
items denominated in foreign currency at the year end are
translated at year end rates.

b) Non-monetary items which are carried at historical cost denominated
in a foreign currency are reported using the exchange rate at the
date of the transaction.

c) In respect of monetary items which are covered by forward
exchange contracts, the difference between the year end and the
rate on the date of contract is recognized as exchange difference

and the premium on such forward contracts is recognized over the
life of the forward contract.

d) The exchange differences arising on settlement/translation are
recognized in the Statement of Profit and Loss.

2.14 Taxes on Income

(a) Current Tax

Tax on income for the current period is determined on the basis of
taxable income computed in accordance with the provisions of the
Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws,
which give future economic benefit in the form of adjustment to future
income tax liability is considered as an asset to the extent there is
convincing evidence that the company will pay normal income tax.

(b) Deferred Tax

Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the financial statement and
the corresponding tax bases used in the computation of taxable profit.

Deferred tax assets are recognised for all deductible temporary
differences to the extent that it is probable that taxable profit will be
available against which the deductible temporary difference can be
utilised. Such deferred tax assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of an asset
or liability in a transaction (other than a business combination) affects
neither accounting profit nor taxable profit (tax loss).

Deferred tax assets are recognised for the carry forward of unused tax
losses and unused tax credit to the extent that it is probable that future
taxable profit will be available against which the unused tax losses and
unused tax credits can 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 measurement of deferred tax liabilities
and assets reflects the tax consequences that would follow from the
manner in which the Company expects, at the end of reporting period,
to recover or settle the carrying amount of its assets and liabilities.
Deferred tax liabilities are generally recognised on all taxable temporary
differences.

2.15 Impairment of Non-Financial Assets

(i) No financial assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount may
not be recoverable.

(ii) An impairment loss is recognised for the amount by which the
assets' carrying amount exceeds its recoverable amount, costs of
disposal and value in use.

(iii) For the purpose of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
flows which are largely independent of the cash inflows from other
assets or group of assets (cash generating units).

(iv) Non financial assets other than goodwill that suffered impairment
are reviewed for possible reversal of the impairment at the end of
each reporting period.