(a) Basis of preparation
The financial statements have been prepared to comply in all material
respects with the notified Accounting Standards by Companies
(Accounting Standard) 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 an accrual basis
except in case of assets for which provision of impairment is made. The
accounting policies have been consistently applied by the Company.
(b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
(c) Fixed assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses if any. Cost comprises cost of acquisition or
construction including any attributable cost of bringing the asset to
its working condition for its intended use, net of cenvat credit.
Borrowing costs relating to acquisition of fixed assets which takes
substantial period of time to get ready for its intended use are also
included to the extent they relate to the period till such assets are
ready to be put to use. No borrowing costs were eligible for
capitalization during the year.
Depreciation is provided on the original cost, pro-rata to period of
use on the straight line method at the rates specified in Schedule XIV
to the Companies Act, 1956, or estimated useful life, whichever is
life (in years)
On freehold land 58
Leased improvements 30
Plant & Machinery 20
Furniture & Fixtures 6
Assets costing below Rs. 5,000 are fully depreciated on installation.
(e) Intangible Assets
Costs relating to rights and licenses, which are acquired, are
capitalized and amortized on a straight-line basis over their useful
Film rights 5
Computer software 6
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital. After
impairment, depreciation is provided on the revised carrying amount of
the assets over its remaining useful life.
A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However the carrying value after
reversal is not increased beyond the carrying value that would have
prevailed by charging usual depreciation if there was no impairment.
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term 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.
(h) Employee benefits
Retirement benefits in the form of provident fund and superannuation
fund are defined contribution schemes and the Company has no further
obligation beyond the contributions made to the respective funds.
Contributions are charged to Profit and Loss Account in the period in
which they accrue.
Employees are entitled to benefits under the Payment of Gratuity Act,
1972, a defined benefit plan. The plan provides for a lump-sum payment
to eligible employees at retirement, death, incapacitation or on
termination of employment, of an amount based on the respective
employee''s salary and tenure of employment. The gratuity liability and
net periodic gratuity cost is actuarially determined at the year end
based on the projected unit credit method after considering discount
rates, expected long term return on plan assets and increase in
compensation levels. All actuarial gains/losses are immediately
recorded to the Profit and Loss Account and are not deferred. The
Company makes contributions to a fund administered and managed by Life
Insurance Corporation of India (''LIC'') to fund the gratuity liability.
Under this scheme, the obligation to pay gratuity remains with the
Company, although LIC administers the scheme.
Liability for long term compensated absences are provided for based on
actuarial valuation done as per projected unit credit method at the
(i) Revenue recognition
Royalty income is recognised on an accrual basis in accordance with the
terms of the relevant agreement.
Interest income on loans and deposits is recognised on a time
proportion basis taking into account the amount outstanding and the
rate applicable. Income from investments is accrued when the right to
receive payment is established.
Revenue from licensing of motion film/Advertising projects (Event
management) is recognised in accordance with the licensing agreement or
physical delivery of the motion film/ Advertising projects (Event
management), whichever is later.
Interest on income tax refund is recognised on receipt of the refund
Income from services is recognised on proportionate basis as and when
the services are rendered, in accordance with the arrangement entered
into as per contracted rates.
(j) Foreign currency transactions
Foreign currency transactions during the year are recorded at rates of
exchange prevailing on the date of the transaction. Monetary foreign
currency assets and liabilities are translated into rupees at the rates
of exchange prevailing on the date of the balance sheet. Non-monetary
items which are carried in terms of historical cost denominated in
foreign currency and reported using exchange rate at the date of
transaction. All exchange differences are dealt with in the Profit and
Loss Account. The financial statements of integral foreign operations
are translated as if the transactions of foreign operation have been
those of the Company itself.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
Operating lease payments are recognised as an expense in the Profit and
Loss Account on a straight line basis over the lease term.
Assets subject to operating leases are included in fixed assets. Lease
income is recognised in the Profit and Loss Account immediately on a
straight-line basis over the lease term. Costs, including depreciation
and other initial direct costs like brokerage etc are recognised as an
expense in the Profit and Loss Account.
(l) Income taxes
Tax expense comprises of current, and deferred tax . Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961 enacted in India. Deferred
income taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognised only to the extent
that there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
realised. In situations where the Company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are recognised
only if there is virtual certainty supported by convincing evidence
that they can be realised against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period. In the year in
which MAT credit becomes eligible to be recognised as an asset in
accordance with the recommendations contained in guidance Note issued
by the Institute of Chartered Accountants of India, the said asset is
created by way of a credit to the Profit and Loss Account and shown as
MAT Credit Entitlement. The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
(m) Provisions, contingent liabilities and contingent assets
A provision is recognised when the Company has a present obligation as
a result of past events, it is probable that an outflow of resources
will be required to settle the obligation, and a reliable estimate can
be made of the amount of the obligation. Provisions are not discounted
to their present value and are determined based on best estimate
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
best estimates. Contingent assets are not recognized in the books of
account of the Company. Contingent liabilities are disclosed by way of
notes to accounts.
(n) Earnings per share
Basic earnings per share are calculated by dividing the net profit for
the period attributable to equity shareholders by the weighted average
number of equity shares outstanding during the period. The Company has
not issued any potential equity shares, and accordingly, the basic
earnings per share and diluted earnings per share are the same.
(o) Cash and cash equivalents
Cash and cash equivalents for the purpose of cash flow statement
comprise cash at bank including fixed deposit (having maturity of less
than 3 months), cheques in hand and cash in hand.
(p) Segment Reporting
Identification of segments :
The Company''s operating businesses are organized and managed separately
according to the nature of services provided, with each segment
representing a strategic business unit that offers different services.
Allocation of common costs :
Common allocable costs are allocated to each segment on reasonable
Unallocated items :
Includes general corporate income and expense items which are not
allocated to any business segment.
Segment Policies :
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.