1.1 Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956.The financial statements
have been prepared under the Historical Cost Convention on the
Mercantile System of accounting and in accordance with the accounting
standards referred to in Section 211(3C) of the Companies Act, 1956, to
the extent applicable. The accounting policies adopted in the
preparation of the financial statements are consistent with those
followed in the previous year.
1.2 Use of Estimates
The preparation of the financial statements is in accordance with
Generally Accepted Accounting Principles. It requires the management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosures relating to contingent liabilities
as at the date of the financial statements and reported amounts of
revenues and expenses during the year. Actual results could differ from
these estimates and a revision to such accounting estimates is
recognized in the accounting period in which such a revision takes
Stock of Tapes, Cassettes, Discs and Electronic Devices
Inventories of raw stock consists of tapes, cassettes, compact discs
and other electronic devices which are valued at lower of cost or
estimated net realizable value. Cost is taken on First in First Out
Inventories Related to Television Software and Programme Pilots
The entire cost of the programme is charged to income when the
programme is first exploited. The inventory thus comprises of
unamortized cost of such programmes. In case of Programme Pilots, the
cost is expensed-off on first telecast and after the review of
Inventories Related to Movies (Feature Films)
Movies under production (WIP) - at actual unamortized cost or net
realizable value whichever is lower. The company amortizes 75% of the
cost of movie rights acquired or produced by it, on the first
theatrical release of the movie. The said amortization is made
proportionately on Domestic Theatrical Rights, International Theatrical
Rights and Video Rights based on Management estimate of revenues from
each of these rights. In case of aforesaid rights are not exploited
along with or prior to the first theatrical release, proportionate
appropriated cost of the said right is carried forward to be written
off as and when such right is commercially exploited or at the end of
one year from the date of first theatrical release, whichever occurs
earlier. Balance 25% is amortised over the balance license period or
based on management estimate of future revenue potential, as the case
may be. Thus inventory comprises of unamortized cost of such movie
1.4 Cash and Cash Equivalents
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are highly liquid investments that are readily convertible
into known amounts of cash and which are subject to insignificant risk
of changes in value.
1.5 Cash Flow Statement
Cash flows are reported 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 based on the available information.
Depreciation on fixed asset is provided on Written Down Value method at
the rates and in the manner prescribed in Schedule XIV of the Companies
1.7 Revenue Recognition
In respect of Commissioned programmes, revenue is recognized as and
when the relevant Software programme is delivered to the customers.
Production expenses are net of recoveries, if any.
Interest is recognized using time proportion method and dividend income
is recognized when the company''s right to receive dividend is
Lease rental on equipment is recognized as revenue as per the terms of
the lease agreement.
In all other cases, revenue is recognized when no significant
uncertainty as to its determination or realization exists.
1.8 Other Income
Interest income is accounted on accrual basis.
1.9 Fixed Assets & Capital Work-in-Progress
Tangible fixed assets
The Fixed assets are stated at cost less accumulated depreciation and
impairment. The cost of fixed assets includes interest on borrowings
attributable to acquisition of qualifying fixed assets up to the date
the asset is ready for its intended use and other incidental expenses
incurred up to that date. Cost includes capital cost, freight,
installation cost, duties and taxes and other incidental expenses
incurred during the construction/ installation and attributable to
bringing the asset to its intended use. Fixed assets are further
adjusted by the amount of CENVAT credit available, wherever applicable.
Subsequent expenditure relating to fixed assets is capitalized only if
such expenditure results in an increase in the future benefits from
such asset beyond its previously assessed standard of performance.
Capital work in progress comprises of cost of fixed assets that are not
yet ready for their intended use and outstanding advances paid to
acquire fixed assets, at the balance sheet date.
1.10 Intangible Fixed Assets
The Intangible assets are stated at cost less accumulated depreciation
and impairment. Cost includes capital cost, freight, installation cost,
duties and taxes and other incidental expenses incurred during the
construction/installation and attributable to bringing the asset to its
intended use. Fixed assets are further adjusted by the amount of CENVAT
credit available, wherever applicable.
1.11 Foreign Currency Transactions
As per Companies (Accounting Standard) Rules 2006, exchange difference
arising on settlement or restatement of foreign currency denominated
liabilities relating to the acquisition of fixed assets, which is in
accordance with Accounting Standard-11 issued by the Institute of
Chartered Accountants of India are recognized in the Profit & Loss
As per Schedule-VI of the Companies Act, 1956 exchange differences
arising on foreign currency denominated liabilities relating to the
Capital work in progress/Capital advance forms part of the Capital Work
in progress/Capital Advance.
1.12 Government grants, subsidies and export incentives
No Government grants, subsidies and export incentives received during
the financial year 2011-12.
Current investments are stated at cost or fair value whichever is
lower. Long term investments are stated at cost. Provision for
diminution in value of long term investment is made, if the diminution
is other than temporary.
1.14 Employee Benefits
The Company has contributed to employee''s provident fund as per
provisions of the Employee''s Provident Fund Act, 1952 and is charged to
Profit and Loss Account.
The Company has contributed to employee''s state insurance fund as per
provisions of the ESI Act, 1948 and is charged to Profit and Loss
As per the Company''s policy, the gratuity is payable as per the
provisions of the Gratuity Act. Liability in respect of Gratuity is
provided for on the basis of an actuarial valuation as at the date of
Bonus is paid and charged to Profit and Loss Account as per the
provisions of The Payment of Bonus Act, 1965.
1.15 Borrowing Cost
Borrowing cost that is attributable to the acquisition or construction
of a qualifying asset is capitalized as part of the cost of that asset
when first put to use. Other borrowing costs are recognized as an
expense in the period in which they are incurred.
1.16 Segmental Reporting
Primary segments: The company has three primary reportable business
segments i.e. audio-video production, movies and leasing of property
and broadcasting equipments.
Secondary segments: The Company caters to the needs of Indian market
representing singular economic environments with similar risks and
rewards and hence there are no reportable geographical segments.
Identifiable expenses are accounted for directly in respective
segments. Overheads are apportioned pro- rata on revenues.
1.17 Operating Lease
The Company has. given broadcasting equipments under operating leases.
These lease agreements are normally renewable on expiry. The rental
income on operating leases is credited to profit and losses account
1.18 Earnings Per Share (EPS)
The Company reports basic earning per equity share in accordance with
tfie Accounting Standard-20 issued by the Institute of Chartered
Accountants of India. Basic Earnings per equity share has been computed
by dividing the net profit after tax by the weighted average number of
equity shares outstanding during the year.
The number of shares used in computing the diluted earning per shue
comprises of the weighted average shares considered for deriving basic
earnings per share, and also the weighted average number of equity
shares that could have been issued on the conversion of all dilutive
potential equity shares.
Tax expenses for the period comprises of both, current tax and deferred
tax at the applicable enacted or substantively enacted rates. Current
tax represents the amount of income tax payable in respect of the
taxable income for the reporting period. Deferred tax resulting from
timing difference between taxable and accounting income is accounted
for using the tax rates and laws that are enacted or substantively
enacted as on the balance sheet date. The deferred tax asset is
recognized and carried forward only to the extent that there is a
virtual certainty that the asset will be realized in future.
1.20 Impairment of Assets
The Company assesses at each balance sheet date whether there is any
indication of impairment of carrying amount of the company''s assets.
The recoverable amount of such assets are estimated, if any, indication
exists, and impairment loss is recognized wherever the carrying amount
of the assets exceeds its recoverable amount.
1.21 Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes. Contingent assets are neither recognized nor disclosed in the
1.22 Service Tax Input Credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilizing the credits.
1.23 Miscellaneous Expenditure
A. Preliminary Expenses
Preliminary expenses are amortized over a period of ten years from the
year of commencement of commercial operations.
B. Deferred Revenue Expenditure Deferred Revenue Expenditures are
those expenditures which have been incurred in an accounting period and
they do not create any assets but their benefit is spread in more than
one accounting period.
Deferred Employee Compensation : 5 Years from the grant of the option
Expenditure incurred up to the date of commencement of commercial
operations, not directly attributable to fixed assets are charged to
the profit and loss account during the year as per Accounting
Standard-26 issued by the Institute of Chartered Accountants of India.
1.24 Employees Stock Option Scheme (ESOS)
The Company calculates the employee stock compensation expense based on
the intrinsic value method wherein the excess of market price of
underlying equity shares as on the date of the grant of options over
the exercise price of the options given to employees under the BAG
ESOP Scheme of the Company, is recognized as Deferred Employee
Compensation expense and is amortized over the vesting period on the
basis of generally accepting accounting principles in accordance with
the guidelines of Securities and Exchange Board of India and guidance
note issued by the Institute of Chartered Accountants of India.
Accordingly, the excess of market price over the issue price of shares
is recognized as employee compensation and is charged to the profit and