2. MATERIAL ACCOUNTING POLICIES2.1 Statement of compliance
The financial statements have been prepared in accordance with
the Indian Accounting Standards (herein after referred to as 'Ind
AS') including the Rules notified under the relevant provisions of
Companies Act, 2013.
2.2 Basis of preparation and presentation
The financial statements have been prepared on the historical cost
basis except for certain financial instruments that are measured at
fair values at the end of each reporting period, as explained in the
accounting policies below.
Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
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, regardless of whether that
price is directly observable or estimated using another valuation
technique. In estimating the fair value of an asset or a liability, the
Company takes into account the characteristics of the asset or
liability if market participants would take those characteristics into
account when pricing the asset or liability at the measurement
date. Fair value for measurement and / or disclosure purposes in
these financial statements is determined on such a basis, except
for share-based payment transactions that are within the scope
of Ind AS 102, leasing transactions that are within the scope of
Ind AS 116, and measurements that have some similarities to fair
value but are not fair value, such as net realizable value in Ind AS
2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2, or 3 based on
the degree to which the inputs to the fair value measurements
are observable and the significance of the inputs to the fair value
measurements in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included
within Level 1, that are observable for the assets or liability,
either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle
and other criteria as set out in the Division II of Schedule III to
the Companies Act, 2013. Based on the nature of products
and 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 (12)
months for the purpose of current or non-current classification of
assets and liabilities.
The Company's financial statements are presented in Indian
Rupees ('), which is its functional currency, and all values are
rounded to the nearest lakhs.
2.3 Use of Estimates:
The preparation of financial statements requires the Management
to make estimates and assumptions considered in the reported
amounts of assets and liabilities (including contingent liabilities)
and the reported income and expenses during the year.
The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between
the actual results and the estimates are recognised in the periods
in which the results are known/materialise.
2.4 Revenue recognition
Revenue is recognized when a customer obtains control and has
the ability to direct the use of and obtain the benefits of products
or services for the consideration that the company expects to be
entitled to in exchange for those products and services.
The Company exercises judgment whether the revenue should
be recognized "over time' or 'at a point of time'. The company
considers detailed understanding of customer contractual
arrangements, transfer of control vis a vis transfer of risk and
reward, acceptance of delivery i.e when control is transferred.
Revenue is recognized only to the extent that it is highly probable
that the amount will not be subject to significant reversal when
uncertainty relating to its recognition is resolved.
Revenue from Music rights where the customer obtains "right to
use' is recognized at the point of time the license is made available
to the customer as per the terms of the agreement / contracts.
Revenue from Music rights where the customer obtains "right to
access" is recognized over the access period as per the terms of
agreement/contracts.
Dividend and interest income:
Dividend income from investments is recognised when the
shareholder's right to receive payment has been established
(provided that it is probable that the economic benefits will flow to
the Company and the amount of income can be measured reliably).
Interest income from a financial asset is recognised when it is
probable that the economic benefits will flow to the Company and
the amount of income can be measured reliably. Interest income
is accrued on a time basis by reference to the principal outstanding
and the effective interest rate applicable, which is the rate that
exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset's net carrying
amount on initial recognition.
2.5 Leasing2.5.1 The Company as lessor
Leases under which the Company is a lessor are classified
as finance or operating leases. Lease contracts where all the
risks and rewards are substantially transferred to the lessee,
the lease contracts are classified as finance leases. All other
leases are classified as operating leases.
For leases under which the Company is an intermediate
lessor, the Company accounts for the head-lease and the
sub-lease as two separate contracts. The sub-lease is
further classified either as a finance lease or an operating
lease by reference to the right-to-use asset arising from
the head-lease.
In respect of assets provided on finance leases, amounts
due from lessees are recorded as receivables at the amount
of the Company's net investment in the leases. Finance lease
income is allocated to accounting periods to reflect a constant
periodic rate of return on the Company's net investment
outstanding in respect of the leases. In respect of assets
given on operating lease, lease rentals are accounted in the
Statement of Profit and Loss, on accrual basis in accordance
with the respective lease agreements.
2.5.2 The Company as lessee
The Company enters into an arrangement for lease of
buildings, plant and machinery including computer software.
Such arrangements are generally for a fixed period but
may have extension or termination options. The Company
assesses, whether the contract is, or contains, a lease, at its
inception. A contract is, or contains, a lease if the contract
conveys the right to -
a) Control the use of an identified asset,
b) Obtain substantially all the economic benefits from use
of the identified asset, and
c) Direct the use of the identified asset
The Company determines the lease term as the
non-cancellable period of a lease, together with periods
covered by an option to extend the lease, where the
Company is reasonably certain to exercise that option.
The Company at the commencement of the lease contract
recognizes a Right-to-Use asset at cost and corresponding
lease liability, except for leases with term of less than twelve
months (short term leases) and low-value assets. 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 lease term.
The cost of the right-to-use asset comprises the amount
of the initial measurement of the lease liability, any lease
payments made at or before the inception date of the lease,
plus any initial direct costs, less any lease incentives received.
Subsequently, the right-to-use assets are measured at
cost less any accumulated depreciation and accumulated
impairment losses, if any. The right-to-use assets are
depreciated using the straight-line method from the
commencement date over the shorter of lease term or
useful life of right-to-use asset. The estimated useful life of
right-to-use assets are determined on the same basis as
those of property, plant and equipment.
The Company applies Ind AS 36 to determine whether a
right-to-use asset is impaired and accounts for any identified
impairment loss.
For lease liabilities at the commencement of the lease, the
Company measures the lease liability at the present value of
the lease payments that are not paid at that date. The lease
payments are discounted using the interest rate implicit in
the lease, if that rate can be readily determined, if that rate is
not readily determined, the lease payments are discounted
using the incremental borrowing rate that the Company would
have to pay to borrow funds, including the consideration of
factors such as the nature of the asset and location, collateral,
market terms and conditions, as applicable in a similar
economic environment. After the commencement date, the
amount of lease liabilities is increased to reflect the accretion
of interest and reduced for the lease payments made.
The Company recognizes the amount of the re-measurement
of lease liability as an adjustment to the right-to-use assets.
Where the carrying amount of the right-to-use asset is
reduced to zero and there is a further reduction in the
measurement of the lease liability, the Company recognizes
any remaining amount of the re-measurement in statement
of profit and loss.
Lease liability payments are classified as cash used in
financing activities in the cash flow statement.
2.6 Foreign currencies
In preparing the financial statements, transactions in currencies
other than the Company's functional currency (foreign currencies)
are recognised at the rates of exchange prevailing at the dates of
the transactions. At the end of each reporting period, monetary
items denominated in foreign currencies are retranslated at the
rates prevailing at that date. Non-monetary items carried at fair
value that are denominated in foreign currencies are retranslated
at the rates prevailing at the date when the fair value was
determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in profit
or loss in the period in which they arise except for:
• exchange differences on foreign currency borrowings relating
to assets under construction for further productive use,
which are included in the cost of those assets when they are
regarded as an adjustment to interest costs on those foreign
currency borrowings;
• exchange differences on transactions entered into in order to
hedge certain foreign currency risks.
2.7 Employee benefits2.7.1 Retirement benefit costs and termination benefits
Payments to defined contribution retirement benefit plans
are recognised as an expense when employees have
rendered service entitling them to the contributions.
For defined benefit retirement plans, the cost of providing
benefits is determined using the projected unit credit
method, with actuarial valuation being carried out at the
end of each annual reporting period. Re-measurement,
comprising actuarial gains and losses, is reflected
immediately in the balance sheet with a charge or credit
recognised in other comprehensive income in the period
in which they occur. Re-measurement recognised in other
comprehensive income is reflected immediately in retained
earnings and is not reclassified to profit or loss. Past service
cost is recognised in profit or loss in the period of a plan
amendment. Net interest is calculated by applying the
discount rate at the beginning of the period to the net
defined benefit liability or asset.
Defined benefit costs are categorised as follows:
• Service cost (including current service cost, past
service cost, as well as gains and losses on curtailments
and settlements);
• Net interest expense or income; and
• Re-measurement
The Company presents the first two components of defined
benefit costs in profit or loss in the line item 'Employee
benefits expense'. Curtailment gains and losses are
accounted for as past service costs.
A liability for termination benefit is recognised at the earlier
of when the Company can no longer withdraw the offer of
the termination benefit and when the Company recognises
any related restructuring costs.
2.7.2 Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees
in respect of wages and salaries, annual leave and sick
leave in the period the related service is rendered at the
undiscounted amount of the benefits expected to be paid in
exchange for that service.
Liabilities recognised in respect of short-term employee
benefits are measured at the undiscounted amount of the
benefits expected to be paid in exchange for the related
service. Liabilities recognised in respect of other long-term
employee benefits are measured at the present value of the
estimated future cash outflows expected to be made by the
Company in respect of services provided by employees up
to the reporting date.
2.8 Taxation
Income tax expense represents the sum of current tax
and deferred tax.
2.8.1 Current tax
The tax currently payable is based on taxable profit for
the year. Taxable profit differs from 'profit before tax' as
reported in the Statement of Profit and Loss because of
items of income or expense that are taxable or deductible in
other years and items that are never taxable or deductible.
The Company's current tax is calculated using tax rates that
have been enacted or substantively enacted by the end of
the reporting period.
2.8.2 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
liabilities are generally recognised for all taxable temporary
differences. Deferred tax assets are generally recognised for
all deductible temporary differences to the extent that it is
probable that taxable profits will be available against which
those deductible temporary differences can be utilised.
Such deferred tax assets and liabilities are not recognised if
the temporary differences arise from the initial recognition
(other than in a business combination) of assets and liabilities
in a transaction that affects neither the taxable profit nor the
accounting profit. In addition, deferred tax liabilities are not
recognised if the temporary differences arises from the initial
recognition of goodwill.
The carrying amount of deferred tax assets is reviewed
at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset
to be recovered.
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 the 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 the
reporting period, to recover or settle the carrying amount of
its assets and liabilities.
2.8.3 Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss,
except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case,
the current and deferred tax are also recognised in other
comprehensive income or equity respectively. Where current
tax or deferred tax arises from the initial accounting for a
business combination, the tax effect is included in the
accounting for the business combination.
2.9 Property, plant and equipment (PPE)
PPE are stated at cost of acquisition or construction. They are stated
at historical cost less accumulated depreciation and impairment
loss, if any. The cost comprises the purchase price and any directly
attributable cost of bringing the asset to its working condition for
its intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price.
Subsequent expenditure related to an item of PPE is added to its
book value only if it increases the future benefits from the existing
asset beyond its previously assessed standards of performance.
All other expenses on existing PPE, including day-to-day repair
and maintenance expenditure and cost of replacing parts, are
charged to the Statement of Profit and Loss for the period during
which such expenses are incurred.
Depreciation is recognised so as to write off the cost of assets
(other than freehold land and properties under construction) less
their residual values using the straight-line method over their
useful lives estimated by Management, which are similar to
useful life prescribed under Schedule II of the Companies Act,
2013. The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period,
with the effect of any changes in estimate accounted for on a
prospective basis.
Cost of Leasehold improvements and Leasehold building is
amortised over a period of lease.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or loss arising
on the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised
in profit or loss.
2.10 Investment properties
Property which is held for long-term rental yields or for capital
appreciation or both, and that is not occupied by the Company,
is classified as an investment property. Investment property is
measured initially at its cost, including related transaction costs.
Though the Company measures investment property using
cost-based measurement, the fair value of investment property
is disclosed in the notes. Fair values are determined based
on an annual evaluation performed by an accredited external
independent valuer applying a valuation model recommended by
the International Valuation Standards Committee.
Subsequent expenditure is capitalized to the asset's carrying
amount only when it is probable that future economic benefits
associated with the expenditure will flow to the Company and
the cost of the item can be measured reliably. Repairs and
maintenance costs are expensed when incurred.
Depreciation on investment property is provided on a pro rata basis
on a straight-line method over the estimated useful lives. Useful life
of assets, as assessed by the Management, corresponds to those
prescribed by Schedule II- Part 'C' of the Companies Act, 2013.
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 recognized in Statement of
Profit and Loss in the period of derecognition.
2.11 Intangible assets2.11.1 Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired
separately are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is
recognised on a straight-line basis over their estimated useful
lives. The estimated useful lives and amortisation method
are reviewed at the end of each reporting period, with
the effect of any changes in estimate being accounted for
on a prospective basis. Intangible assets with indefinite
useful lives are acquired separately are carried at cost less
accumulated impairment losses.
2.11.2 Useful lives of intangible assets
Software is amortised on straight line basis over the
estimated useful life of up to three years.
De-recognition of intangible assets
An intangible asset is de-recognised on disposal, or when no
future economic benefits are expected from use or disposal.
Gains or losses arising from de-recognition of an intangible
asset, measured as the difference between the net
disposal proceeds and the carrying amount of the asset, are
recognised in profit or loss when the asset is de-recognised.
2.12 Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews
the carrying amounts of its tangible and intangible assets to
determine whether there is any indication that those assets
have suffered an impairment loss. If any such indication
exists, the recoverable amount of asset is estimated in
order to determine the extent of the impairment loss (if
any). When it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which
the asset belongs. When a reasonable and consistent
basis of allocation can be identified, corporate assets are
allocated to individual cash-generating units, or otherwise
they are allocated to the smallest of the cash-generating
units for which a reasonable and consistent allocation basis
can be identified.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment at
least annually, and whenever there is an indication that the
asset may be impaired.
Recoverable amount is the higher of fair value less costs
of disposal and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the
risks specific to the asset for which the estimates of future
cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is
reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying
amount of the asset (or a cash-generating unit) is increased
to the revised estimate of its recoverable amount, so that
the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment
loss been recognised for the asset (or cash-generating unit)
in prior years. A reversal of an impairment loss is recognised
immediately in profit or loss.
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