(a) Basis of preparation
The financial statements have been prepared to comply in all material
respects with the accounting standards notified by Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956, The financial statements have
been prepared under the historical cost convention on an accrual basis
except in case of assets for which provision for impairment is made and
revaluation is carried out. The accounting policies have been
consistently applied by the Company and are consistent with those used
in the previous year.
(b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make 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 the results of operations during the reporting
period. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
(c) Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing costs relating to acquisition of fixed
assets which takes substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use.
i. The carrying amounts of assets are reviewed at each balance sheet
date if there is any indication of impairment based on
internal/external factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset''s net selling price and
value in use. 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 risks specific to the asset.
ii. After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
Where the Company is the lessee
Leases where the lesser 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
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried 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 recognise a
decline, other than temporary, in the value of the investments.
Inventories comprise television programs and films held for sale.
Inventories are valued at lower of cost or net realisable value.
Management allocates the cost of 90% of the television program and
films with perpetual rights to domestic market and 10% to the other
Cost of Satellite rights of motion picture movies, television
programmes and events are amortised over a period of four years based
on their pattern of utilisation.
Inventory of film raw stock are valued at lower of cost or estimated
net realizable value. Cost is taken on First in First out (FIFO) basis.
(i) 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
i. Sale of Goods
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer i.e. when the
television program and film are delivered to the customers.
Revenue from sale of satellite/television broadcasting, music and home
video rights are recognized in accordance with the contract/arrangement
upon delivery of content to the customers.
Theatrical revenue is recognized in accordance with the terms of the
contract after release of the film.
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Revenue is recognized when the shareholders'' right to receive payment
is established by the balance sheet date.
(j) Foreign Currency Transactions
i. Initial Recognition
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 at the date of the
Foreign currency monetary items are reported using the closing rate.
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.
iii. Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting such monetary items of the 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.
(k) Retirement benefits
i. Retirement benefits in the form of Provident Fund contributed to
Trust set up by the employer is a defined benefit scheme and the
payments are charged to the Profit and Loss Account of the year when
the payments to the respective funds are due. Shortfall in the funds,
if any, is adequately provided for by the Company. At the year-end,
there are no other obligations other than the contribution payable to
the respective trusts.
ii. Gratuity liability is a defined benefit obligation and is provided
for on the basis of an actuarial valuation projected unit credit (PUC)
method made at the end of each financial year.
iii. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is performed as per
projected unit credit method at the end of every year.
iv. Actuarial gains / losses are immediately taken to profit and loss
account and are not deferred.
(I) Income Taxes
Tax expense comprises of 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. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. 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 taxes on income levied by same governing
taxation laws. 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. In situations where the company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are recognised
only if there is virtual certainty supported by convincing evidence
that they can be realised against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised 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
realised. 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.
(m) Segmental 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.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Includes general corporate income and expense items which are neither
attributable nor allocable to any business segment.
Segment Revenue and Expenses:
Revenue directly attributable to the segments is considered as Segment
Revenue. Expenses directly attributable to the segments and common
expenses allocated on a reasonable basis are considered as Segment
Segment Assets and Liabilities:
Segment assets include all operating assets in respective segments
comprising of net fixed assets and current assets, loans and advances.
Segment liabilities include operating liabilities and provisions.
(n) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. 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.
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) 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.