i.  Basis of Accounting
 
 The financial statements comply in all material aspects with all the
 applicable accounting principles in India, the applicable accounting
 standards notifed under Section 211(3C) of the Companies Act, 1956
 (The Act) and the relevant provisions of the Act. The financial
 statements are prepared under the historical cost convention on an
 accrual basis. The accounting policies have been consistently applied
 by the Company.
 
 ii.  Use of Estimates
 
 The preparation of financial statements in accordance with the generally
 accepted accounting principles requires the Management to make
 estimates and assumptions that affect the reported amounts of assets
 and liabilities and disclosure of contingent liabilities as at the date
 of financial statements and the reported amounts of revenues and
 expenses during the reporting period. Actual results could differ from
 these estimates. Any revision to such accounting estimates is
 recognised prospectively in the accounting period in which such
 revision takes place.
 
 iii.  Revenue Recognition
 
 Revenue from radio broadcasting is recognised on an accrual basis on
 the airing of client''s commercials. The revenue that is recognised is
 net of service tax.
 
 iv.  Fixed assets and Depreciation
 
 Cost of fixed assets comprises purchase price, duties, levies and any
 directly attributable cost of bringing the asset to its working
 condition and location for the intended use.
 
 Borrowing cost directly attributable to fixed assets which take
 substantial period of time to get ready for its intended use are
 capitalised to the extent they relate to the period till such assets
 are ready to be put to use.
 
 Advances paid towards the acquisition of fixed assets that are
 outstanding at each balance sheet date and cost of assets not ready for
 their intended use before such date are disclosed as Capital
 Work-in-Progress.
 
 a.  Tangible assets
 
 Tangible fixed assets are stated at cost less accumulated depreciation
 and impairment losses, if any.
 
 Depreciation on tangible fixed assets is provided on written down value
 method at the rates and in the manner specifed in Schedule XIV to the
 Act. The cost of leasehold improvements are amortised over the primary
 period of lease of the property.  Leasehold land is not amortised since
 the term of lease is perpetual in nature. Tangible assets individually
 costing less than Rupees 5,000 are depreciated fully in the year of
 purchase.
 
 b.  Intangible assets (other than Sofitware)
 
 Migration fees paid by the Company for existing licenses upon migration
 to Phase II of the Licensing policy and One Time Entry Fees paid by the
 Company for acquiring new licenses have been capitalised as an asset.
 
 The migration fee capitalised is being amortised, with effect from
 April 1, 2005, equally over a period of ten years, being the period of
 the license. One Time Entry Fees is amortised over a period of ten
 years, being the period of license, from the date of operationalisation
 of the respective stations.
 
 c.  Sofitware
 
 i. Sofitware obtained initially together with hardware is capitalised
 along with the cost of hardware and depreciated in the same manner as
 the hardware. All subsequent purchases of sofitware licenses are treated
 as revenue expenditure and charged in the year of purchase.
 
 ii. Expenditure on acquired Computer Sofitware (SAP) is recognised as
 Intangible Asset and amortised over a period of twenty five months.
 Expenditure on other sofitware where the economic benefit is excepted to
 be more than a year is amortised.
 
 v.  Foreign Currency Transactions
 
 Foreign currency transactions are recorded at the exchange rates
 prevailing on the date of the transaction. Gains and losses arising out
 of subsequent fuctuations are accounted for on actual payment or
 realisation. Monetary items denominated in foreign currency as at the
 balance sheet date are converted at the exchange rates prevailing on
 that day. Exchange differences are recognised in the Profit and Loss
 Account.
 
 vi.  Investments
 
 Investments that are intended to be held for not more than a year are
 classifed as Current investments. All other investments are termed as
 Long term investments.
 
 Current investments are stated at lower of cost and fair value. Long
 term investments are stated at cost. However, provision for diminution
 in value is made to recognise a decline other than temporary in the
 value of the long term investments.
 
 vii.  Retirement Benefits
 
 a.  Short Term Employee Benefits :
 
 The employees of the Company are entitled to leave encashment as per
 the leave policy of the Company. The liability in respect of leave
 encashment which is expected to be encashed / utilised within twelve
 months afiter the balance sheet date is considered to be of short term
 nature.
 
 b.  Long Term Employee Benefits :
 
 Defined Contribution Plans:
 
 The Company has Defined Contribution plans for post employment benefits
 such as Provident Fund and Employee''s Pension Scheme, 1995. Under the
 Provident Fund Plan, the Company contributes to a Government
 administered Provident Fund on behalf of its employees and has no
 further obligation beyond making its contribution.
 
 The Company contributes to a State Plan namely Employee''s Pension
 Scheme, 1995 and has no further obligation beyond making its
 contribution.
 
 The Company''s contributions to the above funds are charged to revenue
 every year.
 
 Defined Benefit Plans:
 
 The Company has a Defined Benefit Plan namely Gratuity and Leave
 Encashment for all its employees. The liabilities in respect of Leave
 Encashment which is expected to be encashed / utilised afiter twelve
 months from the balance sheet date is considered to be long term in
 nature.
 
 Liability for Defined Benefit Plan is provided on the basis of
 valuations, as at the balance sheet date, carried out by an independent
 actuary. The actuarial valuation method used by the independent actuary
 for measuring the liability is the Projected Unit Credit Method.
 
 c.  Termination benefits are recognised as an expense as and when
 incurred.
 
 viii. Income Taxes
 
 Tax expense comprises of Current and Deferred tax. Current income tax
 and deferred tax are measured based on the amount expected to be paid
 to the tax authorities in accordance with the Income Tax Act, 1961.
 
 Minimum Alternative Tax (MAT) paid in accordance with tax laws which
 give rise to future economic benefits in the form of adjustment to
 future income tax liability is considered as an asset if there is
 convincing evidence that the company will pay normal tax in future.
 Accordingly, MAT is recognised as an asset in the balance sheet when it
 is probable that the future economic benefit associated with it will fow
 to the company and the asset can be measured reliably.
 
 Deferred tax is recognised, subject to the consideration of prudence,
 on timing differences, being the difference between taxable income and
 accounting income that originate in one period and are capable of
 reversal in one or more subsequent periods.  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.
 
 ix.  Impairment of Assets
 
 The Company assesses at each balance sheet date whether there is any
 indication that asset may be impaired. If any such indication exists,
 the Company estimates the recoverable amount of the asset. If such
 recoverable amount of the asset or the recoverable amount of the cash
 generating unit to which the asset belongs is less than its carrying
 amount, the carrying amount is reduced to its recoverable amount. The
 reduction is treated as an impairment loss and is recognised in the
 Profit and Loss Account. If at the balance sheet date, there is an
 indication that a previously assessed impairment loss no longer exists,
 the recoverable amount is reassessed and the asset is refected at the
 recoverable amount.
 
 x.  Provisions and Contingent Liabilities
 
 The Company recognises a provision when there is a present obligation
 as a result of a past event that probably requires an outfow of
 resources and a reliable estimate can be made of the amount of the
 obligation. Provisions are not discounted to its present date value and
 are determined based on best estimates of the amount required to settle
 the obligation at the balance sheet date. These are reviewed at each
 balance sheet date and adjusted to refect the current best estimates.
 
 A disclosure for a contingent liability is made when there is a
 possible obligation or a present obligation that may, but probably will
 not, require an outfow of resources. Where there is a possible
 obligation or a present obligation that the likelihood of outfow of
 resources is remote, no provision or disclosure is made.
 
 xi.  License Fees
 
 As per the Frequency Module (FM) broadcasting policy, effective April
 1, 2005 license fees are charged to revenue at the rate of 4% of gross
 revenue for the period or 10% of Reserve One Time Entry Fee (ROTEF) for
 the concerned city, whichever is higher. Gross Revenue for this purpose
 shall mean revenue on the basis of billing rates inclusive of any taxes
 and without deduction of any discount given to the advertiser and any
 commission paid to advertising agencies. Barter advertising contracts
 shall also be included in the gross revenue on the basis of relevant
 billing rates. ROTEF means 25% of highest valid bid in the city.