a. Basis for preparation of financial statements
The accompanying financial statements have been prepared under the
historical cost convention and comply in all material aspects with the
provisions of the Companies Act, 1956 and applicable accounting
standards and pronouncements issued by the Institute of Chartered
Accountants of India (ICAI).
b. Use of estimates
The presentation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made, that affect the reported amount of assets and liabilities and
disclosure of contingent liabilities on the date of the financial
statements and the reported amount of the revenues and expenses during
the reporting period. Actual results could differ from those estimates
and differences between actual results and estimates are recognized in
the periods in which they arise.
c. Fixed assets and depreciation
Fixed assets are stated at their original cost of acquisition or
construction less accumulated depreciation. Costs include all costs
incurred to bring the assets to their present condition and location.
d. Intangible Assets
The Company accounts for costs incurred in making of film as
Intangible Asset representing self generated Film Rights. Costs
comprise of all expenditure directly attributable for creating,
producing and making of the Film, but exclude all selling and
distribution costs. Such costs are amortized over the economic life
which is based on economic benefits flowing to the Company by way of
realized/expected revenues on exploitation of various rights. The value
of rights is re-assessed periodically to determine whether there is any
impairment and consequent write down in the value of intangible.
Investments are classified as current or long term in accordance with
Accounting Standard 13 on Accounting for Investments issued by the
ICAI. Current investments are stated at lower of cost and market value.
Any reduction in the carrying amount of investments and any reversals
of such reductions are charged or credited to the profit and loss
account. Long term investments are stated at cost. Provision is made to
recognize a decline, other than temporary, in the value of long term
Inventories representing restaurant supplies, consumables and
redemption items are valued at cost determined on weighted average
basis or market value whichever is lower.
g. Revenue recognition
The Company''s revenues from leisure and entertainment services
primarily include income from bowling, pool and video games, restaurant
services and sponsorship contracts. Revenues are recognized when the
services are rendered and when no significant uncertainty as to
measurement or collectibles exists.
Customers visiting the Company''s leisure and entertainment centre and
restaurants avail the facilities against payment in cash or by credit
card. The Company also enables corporate entities to host private
parties at its centre, for a negotiated price, which is billed to
customers on completion of the event.
Sponsorship income is recognized over the period of the sponsorship
Dividend income is accounted for when the right to receive dividend is
Interest income is recognized on time proportion basis taking into
account the amount outstanding and applicable rate.
h. Retirement and other employee benefits
Retirement benefits to employees comprise of provident fund
contributions, gratuity and leave encashment entitlements. Contribution
to provident fund is made in accordance with the statute and provided
on accrual basis. Gratuity and leave encashment liabilities are
provided for, according to the rules of these benefit schemes, on the
basis of actuarial valuation at year-end made by independent actuaries.
i. Taxes on income
Provision for tax is made for both current and deferred tax. Provision
for current tax is made, at the current rate of tax, based on
assessable income. Deferred tax resulting from timing differences
between taxable incomes and accounting income is accounted for, using
the tax rates and the tax laws enacted or substantially enacted as on
the balance sheet date. Deferred tax assets on unabsorbed tax
depreciation and unabsorbed tax losses are recognized only to the
extent that there is virtual certainty of their realization supported
by convincing evidence.
j. Foreign Currency Transactions
Transactions in foreign currencies are recognized at the prevailing
exchange rates on the transaction dates. Monetary foreign currency
assets and liabilities outstanding at the year end are translated at
the year end exchange rates. Resultant gains and losses on
settlement/restatement of foreign currency transactions are recognized
in the profit and loss account.
Premium or discount on forward exchange contracts is amortized and
recognized in profit and loss account over the period of the contract.
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets. Lease payments are apportioned between the finance
charges and reduction of the lease liability based on the implicit rate
of return. Finance charges are charged directly against income. Lease
management fees, legal charges and other initial direct costs are
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight-line basis over the lease
I. Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period are
adjusted for events of bonus issue; bonus element in a rights issue to
existing shareholders; share split and reverse share split
(consolidation of shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
m. Cash and Cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
A provision is recognised when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
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
p. Borrowing Power
The Board of Directors has exceeded the limit of borrowing set out
under Section293(l) (d) during the year. The Board will take the
consent of the Company in the ensuing Annual General Meeting.
Accordingly, the Board will ratify its decision relating to above
mentioned violation of Section 293 (1) (d).
q. Going Concern:
The Company is incurring losses for last few years, its accumulated
losses at the last date of the financial year exceed fifty percent of
the net worth of the Company and its networth has been substantially
eroded. The Company has restructured its business in the last 1 year
and is also considering viable expansion plans. The Company has
neither the intention nor the necessity of the liquidation or of
curtailing materially the scale of the operations. Therefore, these
accounts have been prepared on the going concern basis.