1 Method Of Accounting
These financial statements are prepared on accrual basis of accounting,
following historical cost convention, in accordance with the provisions
of the Companies Act, 1956 (''the Act''), accounting principles
generally accepted in India and comply with the accounting standards
prescribed in the Companies (Accounting Standards) Rules, 2006 issued
by the Central Government, in consultation with the National Advisory
Committee on Accounting Standards, to the extent applicable. The
accounting policies have been consistently applied by the Company and
are consistent with those used in the previous year.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Revised Schedule VI to the Companies Act, 1956
notified by MCA vide its notification no. 447(E) dated February 28,
2011. Based on the nature of services rendered by the Company and
realization of consideration in cash and cash equivalents, the Company
has ascertained its Operating Cycle as less than 12 months for the
purpose of current - non-current classification of assets and
The accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year.
2 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of financial statements and
reported amounts of revenue and expenses during the reported period.
Such estimates are on a reasonable and prudent basis taking into
account all available information; actual results could differ from
estimates. Differences on account of revision of estimates actual
outcome and existing estimates are recognised prospectively once such
results are known / materialized in accordance with the requirements of
the respective accounting standard, as may be applicable.
3 Fixed assets and intangible assets Intangible Assets
- Intangible assets are recognized only if they are separately
identifiable and the Company expects to receive future economic
benefits arising out of them. Such assets are stated at cost less
accumulated amortisation and impairment, if any. Internally Generated
assets are not recognised in the books of accounts.
- Intangible assets comprises of Cable Television Franchise, Goodwill
- The aggregate consideration paid to acquire CATV/ ISP Subscribers
connected to a network along with Network assets and all the rights
attached thereto are disclosed under the head Cable Television
Franchise. In cases where value for assets acquired along with
Subscribers connected to the network is separately ascertained, the
assets are capitalised under the relevant heads. The consideration paid
for non-compete as per the underlying agreements is included in
- The fixed assets are stated at cost less accumulated depreciation
and impairment, if any. Cost comprises of purchase price, non
refundable taxes and all expenses incurred in bringing the assets to
its present location and condition for its intended use and includes
installation and commissioning expenses. The indirect expenditure
incurred during the pre- commencement period is allocated
proportionately over the cost of the relevant assets.
- Cable Modems and Routers lying on hands at the year-end are
included in capital Work in Progress. On installation, such devices are
capitalized or treated as sale based on scheme opted by customers.
- Nature of some of the items included in Capital Work in Progress is
such that the same may be used for repairs and maintenance.
4 Depreciation and amortisation
a) The intangible assets are amortised on a straight line basis over
their expected useful lives as follows:
(i) Cable Television Franchise is amortised over a period of twenty
(ii) Non Compete Fees included in Goodwill is amortised over the
non-compete period stated in the underline agreement and in absence of
the same, over five years.
(iii) Goodwill arising on transfer of business of subsidiaries is fully
amortised in the same year.
(iv) Goodwill other than mentioned above is amortised over the specific
tenor in the relevant agreement or ten years in the event of specific
tenor in the relevant agreement.
b) Depreciation on fixed assets is computed on written down value
method, at the rates and manner prescribed in Schedule XIV to the
Companies Act, 1956,other than Structural Fitting which have been
depreciated according to the rental agreement for the period of three
Long-term investments in shares are stated at cost. The provision for
diminution in value of such investments is made if such diminution is
considered other than temporary.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are recorded at lower of cost or fair value.
Inventories comprise of spares and maintenance items and STB (Set Top
Boxes), which are valued at lower of cost (net of taxes recoverable)
and net realizable value.
7 Borrowings cost
Borrowing Costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of such
assets. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other Borrowing costs are recognized as an expense in the period in
which they are incurred.
8 Provisions, contingent liabilities and contingent assets
a) A Provision is recognized when the Company has a present obligation
as a result of past event and it is probabie that an outflow of
resources would be required to settle the obligation, and in respect of
which a reliable estimate can be made. Provisions are reviewed on each
balance sheet date and are adjusted to effect the current best
b) Contingent liabilities are disclosed separately by way of note to
financial statements after careful evaluation by the management of the
facts and legal aspects of the matter involved in case of
- a present obligation arising from the past event, when it is not
probable that an outflow of resources will be required to settle the
- a possible obligation, unless the probability of outflow of
resources is remote.
c) Contingent Assets are neither recognised, nor disclosed.
9 Employee benefits
a) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
b) Post employment and other long term employee benefits viz.,
gratuity, leave encashment, etc., are covered under Defined Benefit
Plan. The cost of providing benefits are recognized as an expense in
the statement of profit and loss for the year in which the employee has
rendered services. The amount of expense is determined on the basis
actuarial valuation at each year- end by Projected Unit Credit Method.
Actuarial gains and losses in respect of post employment and other long
term benefits are charged to the statement of profit and loss in the
period in which they occur. The Company presents the entire liability
pertaining to leave encashment as a short term provision in the balance
sheet, since it does not have an unconditional right to defer its
settlement for 12 months after the reporting date.
Lease rentals in respect of assets taken on ''Operating Lease'' are
charged to statement of Profit and Loss over the lease term on
systematic basis which is more representative of the time pattern of
the Company''s benefit.
11 Revenue recognition INCOME FROM SERVICES
Income from Operations is recognized on accrual basis based on
agreements / arrangements with the concerned parties.
Revenue from sale of prepaid Internet Service plans, which are active
at the year end, is recognized on time proportion basis. In other cases
of sale of prepaid Internet Service plans, entire revenue is recognized
in the year of sale.
Subscription Income from Cable TV Operators is accrued monthly based on
number of connections declared by the said operators to the Company. In
cases where revision of number of connections and rate is under
negotiations at the time of recognition of revenue, the Company
recognises revenue as per invoice raised. Adjustments for the year, if
any, arising on settlement is adjusted against the Revenue. Other cases
are reviewed at the year-end and provision for doubtful debts is made
wherever ultimate realization is considered uncertain.
Interest income is recognized on accrual basis.
SALE OF GOODS
Revenue from sale of Access Devices is recognized when all the
significant risks and rewards of ownership of the goods have been
passed to the buyer, usually on delivery of the goods. The Company
collects sales taxes and value added taxes (VAT) on behalf of the
Government and, therefore, these are not economic benefits flowing to
the Company. Hence, they are excluded from revenue.
12 Taxes on income
a) Provision for Current Tax is made on the basis of taxable profits
computed for the current accounting period (reporting period) in
accordance with the Income Tax Act, 1961.
b) Deferred Tax is calculated at the tax rates and laws that have been
enacted or substantively enacted as of the Balance Sheet date and is
recognized on timing difference that originate in one period and are
capable of reversal in one or more subsequent periods.
Deferred Tax assets are recognised on carry forward of unabsorbed
depreciation and tax losses only if there is virtual certainty that
such deferred tax assets can be realized against future taxable income.
Other deferred tax assets are recognised only to the extent that there
is a reasonable certainty of realisation in future.
c) ''Minimum Alternate Tax (MAT) credit is recognized as an asset in
accordance with the recommendations contained in guidance note issued
by the Institute of Chartered Accountants of India, only when and to
the extent there is convincing evidence that the company will pay
normal income tax during the specified period. The said asset is
created byway 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
period. Tax on distributed profits payable in accordance with the
provisions of section 115 Oof the Income Tax Act, 1961 is, in
accordance with the Guidance Note on Accounting for Corporate Dividend
Tax, regarded as a tax on
- distribution of profits and is not considered in determination of
the profits for the year.''
The Company assesses at each balance sheet whether there is any
indication that assets may be impaired. If any such indications exist,
the Company estimates the recoverable amount of the assets or the
cash-generating unit and if the same 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
if a previously assessed impairment loss no longer exists, the
recoverable amount is reassessed and the assets are reflected at the
14 Cash & Cash Equivalent
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank, cash in hand, demand deposits with banks and
other short-term investments with an original maturity of three months
15 Earning Per Share
a) 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 are 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 is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
b) 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.
16 Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. The company
measures EBITDA on the basis of profit/ (loss) from continuing
operations. In its measurement, the company does not include
depreciation and amortization expense, finance costs and tax expense.