a. Basis of preparation
The fnancial statements are prepared and presented under the historical
cost convention on the accrual basis of accounting and in accordance
with the Accounting Standards (‘AS'') as prescribed under the Companies
(Accounting Standards) Rules, 2006, and the relevant provisions of the
Companies Act, 1956 (‘the Act''), to the extent applicable.
b. Use of estimates
The preparation of fnancial statements in conformity with generally
accepted accounting principles (‘GAAP'') in India requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosures of contingent liabilities on
the date of the fnancial statements. Actual results could differ from
those estimates. Any revision to accounting estimates is recognised
prospectively in current and future periods.
c. Fixed assets and depreciation/ amortisation
i Tangible assets
Tangible fxed assets are stated at cost less accumulated depreciation
and any provision for impairment. Cost includes freight, duties, taxes
(other than those recoverable from tax authorities) and other expenses
related directly/indirectly to the acquisition / construction and
installation of the fxed assets for bringing the asset to its working
condition for its intended use.
Depreciation on fxed assets is provided on the straight line method, at
following rates which, in management''s opinion, refects the estimated
useful lives of those fxed assets:
Leasehold improvements are depreciated over the lower of the useful
life of the asset and the lease term, on a straight line basis.
Bus Queue Shelters under BOT Schemes are depreciated over the useful
life being the contract period on uniform basis.
Individual assets costing up to Rs. 5,000 are depreciated fully in the
year of acquisition.
ii Intangible assets
Intangible assets, all of which have been acquired and are controlled
through custody or legal rights, are capitalised at cost, where they
can be reliably measured. Where capitalised, intangible assets are
regarded as having a limited useful economic life and the cost is
amortised over the lower of useful life and 10 years. Application
software purchased, which is not an integral part of the related
hardware, is shown as intangible assets and amortised on a straight
line basis over its useful life, not exceeding ten years, as determined
One Time Entry Fees paid for acquiring FM radio broadcasting licenses
has been capitalised as an asset and is amortised over a period of ten
years, being the period of the license, from the date of
operationalisation of the station.
Purchased goodwill is recognised by the Company on the basis of excess
of purchase consideration paid over the value of the assets acquired at
the time of acquisition and is amortised over its estimated useful life
not exceeding fve years.
In accordance with AS 28 – ‘Impairment of Assets'', where there is an
indication of impairment of the Company''s asset, the carrying amounts
of the Company''s assets are reviewed at each balance sheet date to
determine whether there is any impairment. The recoverable amount of
the asset (or where applicable, that of the cash generating unit to
which the asset belongs) is estimated as the higher of its net selling
price and its value in use. An impairment loss is recognised whenever
the carrying amount of an asset or a cash generating unit exceeds its
recoverable amount. Impairment loss is recognised in the statement of
proft and loss.
Value in use is present value of estimated future cash fows expected to
arise from the continuing use of the asset and from its disposal at the
end of its useful life.
Investments are classifed as long term or current based on intention of
the management at the time of purchase. Current investments are
valued, scrip wise, at cost or fair value , whichever is lower.
Long-term investments are carried at carrying cost less diminution in
value which is other than temporary, determined separately for each
Inventories are stated at lower of cost and net realisable value.
Cost of Event / Content which does not create any rights are charged to
the statement of proft and loss on exploitation.
Event / Content cost covers the cost of acquisition/ execution of the
award, function / concerts, cost of content like sports events, video
Cost of television programmes comprises of material, cost of services
and other expenses.
Pilot episodes are stated at cost. Pilots are written off after the end
of one year from the year of production of respective pilot in case the
same is not developed into a serial.
Amortisation Policy for Event / Content Cost:
In case rights are available in perpe tuity
Costs of Annual Award/Concerts are amortised at 80% in the year of
event execution and 20% in the subsequent year.
Costs of Other Content are amortised at 60% in the year of commercial
exploitation and 40% over the subsequent two years equally.
g. Share / Debenture Issue Expenses
Share / Debenture Issue expenses are adjusted against securities
h. Employee benefts
Short-term employee benefts are recognised as an expense at the
undiscounted amount in the statement of proft and loss of the year in
which the related service is rendered.
The Company''s contribution to provident fund, which is a defned
contribution scheme, is charged to the statement of proft and loss as
Post employment and other long term employee benefts are recognised as
an expense in the statement of proft and loss for the year in which the
employee has rendered services.
The expense is recognised at the present value of the amount payable
determined using actuarial valuation carried out by an independent
actuary at the balance sheet date using Projected Unit Credit Method.
i. Employee Stock Option Scheme (ESOS)
The Employees Stock Option Scheme (the Scheme) provides for grant of
equity shares of the Company to Directors (including whole time) and
employees of the Company and its subsidiaries. The Scheme provides that
employees are granted an option to acquire equity shares of the Company
that vests in a graded manner. The options may be exercised within a
specifed period. The Company follows the intrinsic value method to
account for its stock – based employee compensation plans. Compensation
cost is measured as the excess, if any, of the fair market price of the
underlying stock over the exercise price on the grant date and is
amortised over the vesting period of the option on a Straight Line
The fair market price is the latest closing price, immediately prior to
the date of the Board of Directors meeting in which the options are
granted, on the stock exchange on which the shares of the Company are
listed. If the shares are listed on more than one stock exchange, then
the stock exchange where there is highest trading volume on the said
date is considered.
j. Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefts will fow to the Company and the revenue can be
reliably measured. The amount recognised as revenue is net of trade
discounts and service tax.
Revenue from sale of airtime
Revenue from Radio broadcasting is recognised on an accrual basis on
the airing of the customers commercials, net of agency commission.
Revenue from sale of telecast rights
Revenue from sale of telecast rights of event and content is recognized
on the date when the rights are made available to the assignee for
Revenue from television programme
Revenue from commissioned programmes are recognised as and when the
relevant episodes of the programmes are delivered to the channels.
Out of Home Media
Advertising space revenue, net of taxes, rebate and discount is
recognised on the display of advertisements over the period of the
Revenue from Experiential Marketing
Revenue from experiential marketing which includes event management and
activations are recognised on the completion of the event and on the
basis of related services performed, as per the contracted terms.
Revenue from short code, short messaging service (‘SMS'') is recognised
on acceptance of the hits by telecom operators.
Management fee is recognised as revenue on time proportion basis as per
Interest income is recognised on a time proportion basis.
k. License Fees
As per the new Frequency Module (FM) broadcasting policy, effective 1
April 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 without
deduction of taxes and agency commission and net of discounts to
advertisers. 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.
l. Foreign currency transactions
Transactions denominated in foreign currency are recorded at the
exchange rate prevailing on the date of the transactions. Exchange
differences arising on foreign exchange transactions settled during the
year are recognised in the statement of proft and loss of the year.
Monetary items are restated at the period ended rates. The exchange
differences between the rate prevailing on the date of transaction and
on settlement/restatement (other than those relating to acquisition of
fxed assets) is recognised as income or expense, as the case may be.
Non-monetary items which are carried at historical costs denominated in
foreign currently are reported using the exchange rate at the date of
In respect of integral foreign operations of the company, fxed assets
are translated at the rates on the date of acquisition, monetary assets
and monetary liabilities are translated at the rate on the date of the
balance sheet and income and expenditure are translated at the average
of weekly average rates during the year.
m. Earning Per Share
In determining earning per share, the company considers the net result
after tax and includes the post tax effect of any extraordinary /
exceptional item. The number of shares used in computing basic earning
per share is the weighted average number of shares outstanding during
the year. The number of shares used in computing diluted earning per
share comprises the weighted average shares considered for deriving
basic earnings per share and also the weighted average number of shares
that could have been issued on the conversion of all dilutive potential
equity shares unless the results would be anti-dilutive. Dilutive
potential equity shares are deemed converted as of the beginning of the
year, unless issued at a later date.
Tax expense comprises current tax expense computed in accordance with
the relevant provisions of the Income Tax Act, 1961 and deferred tax
charge or credit.
Current tax provision is made based on the tax liability computed after
considering tax allowances and exemptions, in accordance with the
Income Tax Act, 1961. Deferred tax charge or credit and the
corresponding deferred tax liability or asset is recognised for timing
differences between the profts/ losses offered for income taxes and
profts/ losses as per the fnancial statements. Deferred tax assets and
liabilities are measured using the tax rates and tax laws that have
been enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognised only to the extent there is
reasonable certainty that the assets can be realized in future.
However, where there is unabsorbed depreciation or carried forward loss
under taxation laws, deferred tax assets are recognised only if there
is a virtual certainty of realisation of such assets. Deferred tax
assets are reviewed as at each balance sheet date and written down/up
to refect the amount that is reasonably/virtually certain (as the case
may be) to be realized.
o. Provisions and contingencies
Provisions comprise liabilities of uncertain timing or amount.
Provisions are recognised when the Company recognizes it has a present
obligation as a result of past events, it is more likely than not that
an outfow of resources will be required to settle the obligation and
the amount can be reasonably estimated.
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. When there is a possible obligation
or a present obligation in respect of which the likelihood of outfow of
resources is remote, no provision or disclosure is made.
Loss contingencies arising from claims, litigation, assessment, fnes,
penalties, etc. are recorded when it is probable that a liability has
been incurred and the amount can be reasonably estimated.
The Company has various operating leases, principally for radio
stations, offce space and equipments with various renewal options.
Substantially all operating leases are cancelable as well as renewable
on expiry of lease term. Rental expense in agreements with scheduled
rent increases is recorded on a straight-line basis as applicable over
the lease term.
q. Borrowing costs
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.