a) Change in accounting policy
Presentation and disclosure of financial statements During the year
ended 31 March 2012, the revised Schedule VI notified under the
Companies Act 1956, has become applicable to the Company, for
preparation and presentation of its financial statements. Except
accounting for dividend on investments in subsidiary companies the
adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the Previous year figures in accordance with the
requirements applicable in the current year.
b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, 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 of the result of operations during the reporting period
end. Although these estimates are based upon management''s best
knowledge of current events and actions, uncertainty about these
assumptions and estimates could result in the outcomes requiring a
material adjustment to the carrying amounts of assets or liabilities in
c) Tangible assets
Value for individual Fixed Assets acquired from ''The Hindustan Times
Limited'' (the holding company) in an earlier year is allocated based on
the valuation carried out by independent experts.
Other Fixed Assets are stated at cost less accumulated depreciation and
accumulated impairment losses, if any. Cost comprises the purchase
price, borrowing costs if capitalization criteria are met and any
directly attributable cost of bringing the asset to its working
condition for the intended use. Any trade discounts and rebates are
deducted in arriving at the purchase price.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day-to- day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
From accounting periods commencing on or after 7 December 2006, the
Company adjusts exchange differences arising on translation/settlement
of long- term foreign currency monetary items pertaining to the
acquisition of a depreciable asset to the cost of the asset and
depreciates the same over the remaining life of the asset.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
Leasehold improvements represent expenses incurred towards civil works,
interior furnishings, etc on the leased premises at various locations.
Depreciation on fixed assets (other than those acquired from the
holding company in earlier years) are provided on a Straight Line
Method at the rates computed based on estimated useful life of the
assets which are greater than or equal to the corresponding rates
prescribed in Schedule XIV to the Companies Act, 1956.
In respect of fixed assets acquired in an earlier year from the holding
company, which are estimated to have lower residual lives than
envisaged as per the rates provided in Schedule XIV to the Companies
Act, 1956, depreciation is provided based on such estimated lower
In respect of fixed assets (Plant & Machinery- printing press) acquired
during the year 2004-05 from the holding company, depreciation is
provided on straight line method over estimated useful life of 5 years
as technically assessed by an independent expert.
Assets costing below Rs.5,000 each are fully depreciated in the year of
Leasehold Land is amortized on a straight line basis over the period of
Leasehold Improvements are amortized on a straight line basis over the
useful life not exceeding 10 years or over the life of lease, whichever
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any. Internally generated intangible assets,
excluding capitalized development costs, are not capitalized and
expenditure is reflected in the statement of profit and loss in the
year in which the expenditure is incurred.
Value for individual software license acquired from the holding company
in an earlier year is allocated based on the valuation carried out by
an independent expert.
Intangible assets are amortized on a straight line basis over the
estimated useful economic life. The Company uses a rebuttable
presumption that the useful life of an intangible asset will not exceed
ten years from the date when the asset is available for use. If the
persuasive evidence exists to the affect that useful life of an
intangible asset exceeds ten years, the Company amortizes the
intangible asset over the best estimate of its useful life. Such
intangible assets and intangible assets not yet available for use are
tested for impairment annually, either individually or at the
cash-generating unit level. All other intangible assets are assessed
for impairment whenever there is an indication that the intangible
asset may be impaired.
The amortization period and the amortization method of the intangible
assets are reviewed at each financial year end for its expected useful
life and the expected pattern of economic benefits. If there is a
significant change in expected useful life or the expected pattern of
economic benefits, the amortization period/method is adjusted to
reflect the change. Such changes are accounted for in accordance with
AS 5 Net Profit or Loss for the Period, Prior Period Items and Changes
in Accounting Policies.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
License fees are charged to statement of Profit and Loss at the rate of
4% of gross revenue for the reporting period or 10% of Reserve One Time
Entry fee (ROTEF) for the concerned city, whichever is higher. Gross
Revenue for this purpose is revenue derived 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
ROTEF means 25% of highest valid bid in the city.
Software licenses acquired from the holding company, which are
estimated to have lower residual lives than that envisaged above, are
amortised over such estimated lower residual lives.
Software licenses costing below Rs.5,000 each are fully depreciated in
the year of acquisition.
f) Expenditure on new projects and substantial expansion
Expenditure directly relating to construction activity is capitalized.
Indirect expenditure incurred during construction year is capitalized
as part of the indirect construction cost to the extent the expenditure
is related to construction or is incidental thereto and represents the
marginal increase in such expenditure as a result of the capital
expansion. Other indirect expenditure (including borrowing costs)
incurred during the construction year, which is not related to the
construction activity nor is incidental thereto, are charged to the
statement of Profit & Loss. Related income earned during construction
period is adjusted against the total of the indirect expenditure.
Where the Company is lessee
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 inception of the lease term at the lower of the
fair value of the leased property and present value of the minimum
lease payments. Lease payments are apportioned between the finance
charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability.
Finance charges are recognized as finance costs in the statement of
Profit and Loss. Lease management fees, legal charges and other
initial direct costs of lease are capitalised.
A leased asset is depreciated on a straight-line basis over the useful
life of the asset or the useful life envisaged in Schedule XIV to the
Companies Act, 1956, whichever is lower. However, if there is no
reasonable certainty that the Company will obtain the ownership by the
end of the lease term, the capitalized leased assets are depreciated on
a straight-line basis over the shorter of the estimated useful life of
the asset, the lease term or the useful life envisaged in Schedule XIV
to the Companies Act, 1956.
Lease 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/receipts are recognized as
an expense/ income in the statement of Profit and Loss on a
straight-line basis over the lease term.
h) Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
i) Impairment of tangible and intangible assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the assets recoverable amount. An assets recoverable amount
is higher of an assets or its cash-generating units (CGU) net selling
price and its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. In determining net
selling price, recent market transactions are taken into account, if
available. If no such transactions can be identified, an appropriate
valuation model is used.
The Company bases its impairment calculation on detailed budgets and
forecast calculations which are prepared separately for each of the
Company''s cash- generating units to which the individual assets are
allocated. These budgets and forecast calculations are generally
covering a period of five years. For longer periods, a long term growth
rate is calculated and applied to project future cash flows after the
Impairment losses of continuing operations, including impairment on
inventories, are recognized in the statement of Profit and Loss.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
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. If an investment is acquired, or
partly acquired, by the issue of shares or other securities, the
acquisition cost is the fair value of the securities issued.
Current investments are carried in the financial statements 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 recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of Profit and Loss.
An investment in land or buildings, which is not intended to be
occupied substantially for use by, or in the operations of, the
company, is classified as investment property. Investment properties
are stated at cost, net of accumulated depreciation & accumulated
impairment losses, if any.
The cost comprises purchase price, borrowing costs if capitalization
criteria are met and directly attributable cost of bringing the
investment property to its working condition for the intended use. Any
trade discounts and rebates are deducted in arriving at the purchase
Depreciation on building component of investment property is calculated
on a straight-line basis using the rate arrived at based on useful life
estimated by the management, or that prescribed under the Schedule XIV
to the Companies Act, 1956, whichever is higher. The Company has used
depreciation rate of 3.34%.
On disposal of an investment property, the difference between it''s
carrying amount and net disposal proceeds is charged or credited to the
statement of Profit and Loss.
Inventories are valued as follows:
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
l) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. Specifically, the following basis is adopted:
Revenue is recognized as and when advertisement is published/displayed
and is disclosed net of discounts.
Sale of News & Publications, Waste Paper and Scrap Revenue is
recognized when the significant risks and rewards of ownership have
passed on to the buyer and is disclosed net of sales return and
Printing Job Work
Revenue from printing job work is recognized on the completion of job
work as per terms of the agreement.
Revenue from radio broadcasting is recognized on an accrual basis on
the airing of client''s commercials.
Interest/Income from Investments Revenue is recognized on a time
proportion basis taking into account the amount outstanding and the
rate applicable. Income on investment made in the units of mutual funds
is recognized based on the yield earned and to the extent of its
Dividend Income is recognized when the Company''s right to receive the
dividend is established by the reporting date.
Commission income from sourcing of advertisement orders on behalf of
other entities'' publications is recognised on printing of the
advertisement in those publications.
m) Foreign currency transactions
Foreign currency transactions are recorded in the reporting currency by
applying to the foreign currency amount, the exchange rate between the
reporting currency and the foreign currency prevailing at the date of
Foreign currency monetary items are reported using the exchange rate
prevailing at the reporting date. Non-monetary items, which are
carried in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the
exchange rates that existed when the values were determined.
i. Exchange differences, in respect of accounting years commencing on
or after 7th December, 2006, arising on reporting of long-term foreign
currency monetary items at rates different from those at which they
were initially recorded during the year, or reported in previous
financial statements, in so far as they relate to the acquisition of a
depreciable capital asset, are added to or deducted from the cost of
the asset and are depreciated over the balance life of the asset. For
this purpose, the Company treats a foreign monetary item as
long-term foreign currency monetary items, if it has a term of 12
months or more at the date of origination. Exchange differences in
other long term foreign currency monetary items, are accumulated in a
Foreign Currency Monetary Item Translation Difference Account in
the Company''s financial statements and amortized over the remaining
life of such monetary item.
ii. Exchange differences arising on the settlement of monetary items
not covered above, or on reporting such monetary items of Company at
rates different from those at which they were initially recorded during
the year, or reported in previous financial statements, are recognized
as income or as expenses in the year in which they arise. Any gain/
loss arising on forward contracts which are long- term foreign currency
monetary items is recognized in accordance with para i) above
iii. Forward Exchange Contracts not intended for trading or speculation
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of Profit and Loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
n) Retirement and other employee benefits
i. Retirement benefits in the form of Provident Fund and Pension
Schemes are defined contribution schemes and the contributions are
charged to the statement of Profit and Loss for the year when the
contributions to the respective funds are due. There are no other
obligations other than the contribution payable to the respective
ii. Gratuity is a defined benefit plan. The cost of providing benefits
under the plan is determined on the basis of actuarial valuation at
each year- end using the projected unit credit method and is
contributed to Gratuity Fund created by the Company. Actuarial gains
and losses are recognized in full in the period in which they occur in
the statement of Profit and Loss.
iii. Accumulated leave, which is expected to be utilized within the
next 12 months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long- term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based
on the actuarial valuation using the projected unit credit method at
the year-end. Actuarial gains/ losses are immediately taken to the
statement of Profit and Loss and are not deferred. The Company presents
the entire leave as current liability in the balance sheet, since it
does not have as unconditional right to defer its settlement for 12
months after the reporting date.
A provision is recognized when the Company has a present obligation as
a result of past event and 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 their
present value and are determined based on best estimate required to
settle the obligation at the repoting date. These are reviewed at each
reporting date and are adjusted to reflect the current best estimates.
Provision for expenditure relating to voluntary retirement is made when
the employee accepts the offer of early retirement and such provision
amount is charged to the statement of Profit and Loss in the year of
p) Income Taxes
Tax expense comprises 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 and tax laws
prevailing in the respective tax jurisdictions, where the company
operates. The tax rates and the tax laws used to compute the amount are
those that are enacted or substantively enacted at the reporting date.
Current income-tax relating to items recognized directly in equity is
recognized in equity and not in the statement of Profit and Loss.
Deferred income-taxes reflects the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred income-tax
relating to items recognized directly in equity is recognized in equity
and not in the statement of Profit and Loss.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences 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 realized. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
At each reporting date the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized 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
realized. 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.
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 to the same taxable entity and the same
Minimum Alternate Tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognises MAT credit
available as an asset only to the extent there is convincing evidence
that the Company will pay normal income-tax during the specified future
period. In the year in which the Company recognises MAT credit as an
asset in accordance with the Guidance Note on Accounting for Credit
Available in respect of Minimum Alternative Tax under the Income- tax
Act, 1961, the said asset is created by way of credit to the statement
of Profit and Loss and shown as ''MAT Credit Entitlement''. The Company
reviews the ''MAT Credit Entitlement'' asset at each reporting date and
writes down the asset to the extent the Company does not have
convincing evidence that it will pay normal tax during the specified
q) Earnings Per Share
Basic earnings per share are calculated by dividing the net Profit or
Loss for the reporting period attributable to Equity Shareholders by
the weighted average number of equity shares outstanding during the
reporting period. The weighted average numbers of equity shares
outstanding during the reporting 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) that have
changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the reporting period attributable to equity
shareholders and the weighted average number of shares outstanding
during the reporting period are adjusted for the effects of all
dilutive potential equity shares.
r) Employee Stock Compensation Cost
Measurement and disclosure of the employee share- based payment plans
is done in accordance with SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note
on Accounting for Employee Share- based Payments, issued by the
Institute of Chartered Accountants of India. The Company measures
compensation cost relating to employee stock options using the
intrinsic value method. The cumulative expense recognized for
equity-settled transactions at each reporting date until the vesting
date reflects the extent to which the vesting period has expired and
the Company''s best estimate of the number of equity instruments that
will ultimately vest. The expense or credit recognized in the statement
of Profit and Loss for a period represents the movement in cumulative
expense recognized as at the beginning and end of that period and is
recognized in employee benefit scheme. Compensation cost is amortized
over the vesting period of the option on a straight line basis.
s) Cash and Cash equivalents
Cash and Cash equivalents in the cash flow statement comprise cash at
bank and in hand and short term investments with an original maturity
of three months or less.
t) Segment Reporting Policies Identification of segments:
The Company''s operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Inter segment Transfers:
The Company generally accounts for intersegment sales and transfers as
if the sales or transfers were to third parties at current market
Allocation of Common Costs:
Common allocable costs are allocated to each segment on a rational
basis based on nature of each such common cost.
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
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.
u) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
v) 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.