2. Significant Accounting Policies
This note provides a list of the significant accounting policies adopted in the preparation of these financial
statements. These accounting policies have been consistently has been applied in all the financial statements
presented by the Company unless otherwise stated.
A) Basis of preparation of financial statements
The financial statements of the Company have been prepared in accordance with Indian Accounting
Standards (hereinafter referred to as Ind-AS) notified under section 133 of Companies Act, 2013, read with
Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act and rules
thereunder. The financial statements have been prepared on the historical cost basis except for certain
financial assets and liabilities measured at fair value (refer accounting policies for financial instruments).
Accounting policies have been consistently applied except where a newly issued accounting standard is
initially adopted or a revision to an existing accounting standard requires a change in accounting policy
hetherto in use The Company's financial statements are presented in Indian Rupees ('), which is also its
functional currency.
B) Use of Estimates and Judgements :
The preparation of the financial statements in conformity with Ind AS requires management to make
estimates, judgments and assumptions. These estimates, judgments and assumptions affect the
application of accounting policies and the reported amounts of assets and liabilities, the disclosures of
contingent assets and liabilities at the date of the financial statements and reported amounts of revenues
and expenses during the period. Accounting estimates could change from period to period. Actual results
could differ from those estimates. Appropriate changes in estimates are made as management becomes
aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the
financial statements in the period in which changes are made and, if material, their effects are disclosed in
the notes to the financial statements.
Critical estimates and judgments
The preparation of financial statements requires management to make judgments, estimates and
assumptions in the application of accounting policies that effect the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates. Continuous evaluation is done on the
estimation and judgments based on historical experience and other factors, including expectations of future
events that are believed to be reasonable. Revisions to accounting estimates are recognized prospectively.
Information about critical judgments in applying accounting policies, as well as estimates and assumptions
that have the most significant effect to the carrying amounts of assets and liabilities within the next financial
year, are included in the relevant notes
C) Current vs Non-current classification
The company presents assets and liabilities in the balance sheet based on current/ non-current classification.
All the assets and liabilities have been classified as current/non-current as per the Company's normal
operating cycle and other criteria set out in Division II to Schedule III of the Companies Act, 2013.
Based on the nature of services and their realization in cash and cash equivalents, the company has
ascertained its operating cycle as 12 months for the purpose of current - noncurrent classification of assets
and liabilities.
D) Revenue recognition and expenses
Company earns revenue primarily from IT Based Engineering Services. The company derives revenue
from producing television programs, Internet series, sale or licensing movie rights, delivering events to its
customers, distribution of films, service fees for content development and licensing and subscription of its
content to its customers. Some of the contracts include multiple deliverables, such as promises to provide
a library of content at inception as well as content updates over the term. The company identifies and
evaluates each performance obligation under the contract. Revenue recognition is based on the delivery
of performance obligations and an assessment of when control is transferred to the customer. Revenue
is recognized either when the performance obligation in the contract has been performed ('point in time'
recognition) or 'over time' as control of the performance obligation is transferred to the customer.
Revenue is recognised upon transfer of control of promised services or products to customers in an amount
that reflects the consideration which Company expects to receive in exchange for those services or products.
Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the
goods have been passed to the customer. Sales are net off sales returns, free quantities delivered and
trade discounts.
• Revenue from time and material and job contracts is recognised on output basis measured by units
delivered, efforts expended, number of transactions processed, etc.
• Revenue related to fixed price maintenance and support services contracts where Company is
standing ready to provide services is recognised based on time elapsed mode and revenue is straight
lined over the period of performance.
• In respect of other fixed-price contracts, revenue is recognised using percentage-of-completion
method ('POC method') of accounting with contract costs incurred determining the degree of
completion of the performance obligation. The contract costs used in computing the revenues
include cost of fulfilling warranty obligations.
• Revenue from the sale of distinct third party hardware and / or software is recognised at the point in
time when control is transferred to the customer.
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.
Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract
assets are classified as unbilled revenue when there is unconditional right to receive cash, and only passage
of time is required, as per contractual terms.
The billing schedules agreed with customers include periodic performance based payments and / or
milestone based progress payments. Invoices are payable within contractually agreed credit period.
In accordance with Ind AS 37, 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.
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.
Company disaggregates revenue from contracts with customers by geography.
Expenses are accounted for on accrual basis and provisions are made for all known liabilities and losses.
Interest Income:
Interest income is recognized on a time proportion basis taking into account the amount outstanding and
the rate applicable. For all debt instruments measured either at amortized cost or at fair value through other
comprehensive income, interest income is recorded using the effective interest rate (EIR).
Dividend Income:
Dividend income is accounted for when the right to receive the same is established, which is generally when
shareholders approve the dividend.
Other Income:
Other income is accounted for on accrual basis except where the receipt of income is uncertain in which
case it is accounted for on receipt basis.
E) Property, Plant and equipments
Property, plant and equipment's (PPE) are stated at cost less accumulated depreciation and impairment
losses, if any. Cost of acquisition includes directly attributable costs for bringing the assets to its present
location and use.
The cost of an item of PPE comprises its 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 assets up to the date the asset is ready for its
intended use.
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with
the expenditure will flow to the company.
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 Statement
of Profit and Loss when the assets derecognized.
Depreciation / Amortization is charged on a pro-rata basis on assets purchased/ sold during the year, with
reference to date of installation/ disposal.
Assets costing individually '5,000/- or less are fully depreciated in the year of purchase / installation.
Residual value is considered as Nil for all the assets.
Intangible Assets
Intangibles are stated at the acquisition price including directly attributable costs for bringing the asset
into use, less accumulated amortization and impairment. Direct expenditure, if any, incurred for internally
developed intangibles from which future economic benefits are expected to flow over a period of time is
treated as intangible asset as per the Ind AS on Intangible Assets.
Depreciation:
Depreciation on Intangible assets is provided on straight line method as per the useful life prescribed in
Schedule II of the Companies Act, 2013 except in case of following category of Intangible assets in which
case the life of the items of Intangible assets has been assessed as under based on technical estimate,
taking into account the nature of the asset, the estimated usage of the asset, the operating condition of
the asset, past history of replacement, anticipated technological changes, manufacturer's warranties and
maintenance support etc.
Depreciation / Amortization is charged on a pro-rata basis on assets purchased/ sold during the year, with
reference to date of installation/ disposal. Assets costing individually ' 5,000/- or less are fully depreciated
in the year of purchase / installation. Residual value is considered as Nil for all the assets.
F) Borrowing Costs
Borrowing costs, if any, directly attributable to the acquisition of the qualifying asset are capitalized for
the period until the asset is ready for its intended use. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. Other borrowing costs are recognized as expense
in the period in which they are incurred.
G) Financial Instruments
Initial measurement
The company recognizes financial assets and financial liabilities when it becomes a party to the contractual
provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition
except for the trade receivables which are initially measured at transaction price. Transaction costs that are
directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair
value through profit or loss, are added to or deducted from the fair value on initial recognition.
a) Subsequent measurement (Non derivative financial instruments)
1. Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized 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 for payments of principal and interest on the principal amount outstanding.
2. Financial assets at fair value through other comprehensive income
A financial asset is subsequently 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 for payments of principal and interest
on the principal amount outstanding. The Company has made an irrevocable election for its
investments which are classified as equity instruments to present the subsequent changes in
fair value in other comprehensive income based on its business model.
3. Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair
valued through profit or loss.
4. Financial Liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest
method.
5. Investment in Subsidiaries and Associates:
Investment in subsidiaries and Associates are carried at cost less impairment.
b) Share Capital - Ordinary Shares
An equity instrument is a contract that evidences residual interest in the assets of the company after
deducting all its liabilities. Equity instruments recognised at the proceeds received net of direct issue
cost.
c) De-recognition 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 de-recognition
under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the
Company's Balance Sheet when the obligation specified in the contract is discharged or cancelled or
expires.
H) Fair Value measurement of Financial Instruments
Fair value is the price that would be received on sale of 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 which can be accessed by the
Company 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.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing
the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized within the fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
• Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
• Level 2 Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable;
• Level 3 Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company
determines whether transfers have occurred between levels in the hierarchy by reassessing categorization
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of
each reporting period.
I) Impairment of assets
(i) Financial Assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial
assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no
significant financing component is measured at an amount equal to lifetime ECL. The amount of
expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to
the amount that is required to be recognized is recognized as an impairment gain or loss in profit or loss.
(ii) Non-Financial Assets
Intangible assets and property, plant and equipment
Intangible assets and 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.
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 amortization or
depreciation) had no impairment loss been recognized for the asset in prior years.
J) Leases
Leases under which the company assumes substantially all the risks and rewards of ownership are classified
as finance leases. When acquired, such assets are capitalized at fair value or present value of the minimum
lease payments at the inception of the lease, whichever is lower. Each lease rental paid is allocated between
the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding
liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with
the lessor are recognised as operating leases.Lease payments under operating leases are recognized as an
expense on a straight line basis in net profit in the Statement of Profit and Loss over the lease term.
K) Foreign Currency Transactions
All transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date
when the relevant transactions take place.
Exchange differences arising on foreign exchange transactions settled during the year are recognized in the
Statement of Profit and Loss of the year. Monetary assets and liabilities in the form of Loans, Current Assets
and Current Liabilities in foreign currency, which are outstanding as at the year-end, are translated at the
year-end closing exchange rate and the resultant exchange differences are recognized in the Statement of
Profit and Loss.
The premium or discount arising at the inception of the forward exchange contracts related to underlying
receivables and payables, if any, are amortized as an expense or income recognized over the period of the
contracts. Gains or losses on renewal or cancellation of foreign exchange forward contracts are recognized
as income or expense for the period.
Investments in overseas entity are recognized at the relevant exchange rates prevailing on the date of
investments.
All transactions of the foreign branch during the year are included in the accounts at the rate of exchange
prevailing at the end of the month in which the transactions took place.Net Gain / Loss in foreign currency
transactions are recognized in the Statement of Profit and Loss. Monetary assets and liabilities are translated
at the rates prevailing on the balance sheet date.
L) Employee Benefits
Short-term employee benefits - Employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits and are recognized in the period in which the
employee renders the related service.
Post-employment benefits (defined benefit plans) - The employees' gratuity scheme is a defined benefit
plan. The present value of the obligation under such defined benefit plan is determined at each Balance
Sheet date based on management estimates unless they are significant for actuarial valuation.
Post-employment benefits (defined contribution plans) - Contributions to the provident fund is defined
contribution plan and is recognized as an expense in the Statement of Profit and Loss in the period in which
the contribution is due.
Long-term employee benefits - Long-term employee benefits comprise of compensated absences and
other employee incentives, if any. These are measured based on management estimates unless they are
significant for actuarial valuation.
M) Taxation
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability
during the year. Current and deferred tax are recognized in the statement of profit and loss, except when they
relate to items that are recognized in other comprehensive income or directly in equity, in which case, the
current and deferred tax are also recognized in other comprehensive income or directly in equity, respectively.
Current Income Tax
Current income tax for the current and prior periods are measured at the amount expected to be recovered
from or paid to the taxation authorities based on the taxable income for that period. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet
date.
Current tax assets and liabilities are offset only if, the Company:
• Has a legally enforceable right to set off the recognized amounts; and
• Intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Defered Income Tax
Deferred tax is recognized for the future tax consequences of deductible temporary differences between the
carrying values of assets and liabilities and their respective tax bases at the reporting date, using the tax
rates and laws that are enacted or substantively enacted as on reporting date.
Minimum Alternate Tax ('MAT') under the provisions of the Income Tax Act, 1961 is recognised as deferred
tax in the Statement of Profit and Loss. The credit available under the Income Tax Act, 1961 in respect of
MAT paid is recognised as an asset only when and to the extent it is probable that future taxable profit will
be available against which these tax credit can be utilised. Such an asset is reviewed at each Balance Sheet
date.
Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available
against which the deductible temporary differences, unused tax losses and credits can be utilized.
Deferred tax assets and liabilities are offset only if:
• Entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
• Deferred tax assets and the deferred tax liabilities relate to the income taxes levied by the same
taxation authority
N) Earnings per Share (EPS)
Basic earnings per share is computed by dividing the net profit after tax by the weighted average number of
equity shares outstanding during the period. Diluted earnings per share is computed by dividing the profit
after tax by the weighted average number of equity shares considered for deriving basic earnings per share
and also the weighted average number of equity shares that could have been issued upon conversion of all
dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable
had the shares been actually issued at fair value which is the average market value of the outstanding shares.
Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a
later date. Dilutive potential equity shares are determined independently for each period presented.
O) Cash and Cash Equivalents
Cash and Cash equivalents comprises cash and calls on deposit with banks and corporations. The Company
considers all highly liquid financial instruments, which are readily convertible into cash and have original
maturities of three months or less from the date of purchase, to be cash equivalent.
P) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of
transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or
payments and items of income or expenses associated with investing or financing cash flows. The cash
flows from operating, investing and financing activities of the Company are segregated.
Q) Dividends
Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim
dividends are recorded as a liability on the date of declaration by the Company's Board of Directors.
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