Mar 31, 2023
Significant accounting policies
These consolidated financial statements have been prepared using the significant accounting policies and measurement
bases summarised below.
These accounting policies have been used throughout all periods presented in these consolidated financial statements.
b) Basis of preparation of financial statements
The financial statements have been prepared on going concern basis in accordance with accounting principles generally
accepted in India. Further, the financial statements have been prepared on historical cost basis except for certain
financial assets, financial liabilities, plan assets related to defined benefit obligation and share based payments which
are measured at fair values as explained in relevant accounting policies.
Further the management believes that it is appropriate to prepare these financial statements on a going concern basis
considering available resources, current level of operations of the Group, and those projected for foreseeable future.
c) Principles of consolidation
The consolidated financial statements have been prepared in accordance with Indian Accounting Standard (Ind AS)
as notified by Ministry of Corporate Affairs (''MCA'') under section 133 of the Companies Act 2013 (the Act'') read with
the Companies (Indian Accounting Standards) Rules 2015. The consolidated financial statements are prepared on the
following basis:
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an
entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the relevant activities of the entity. The Group can have power
over the investee even if it owns less than majority voting rights i.e. rights arising from other contractual arrangements.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated
from the date that control ceases. Statement of profit and loss (including other comprehensive income (''OCI'')) of
subsidiaries acquired or disposed of during the period are recognized from the effective date of acquisition, or up to the
effective date of disposal, as applicable.
The Group combines the financial statements of the Holding Company and its subsidiaries line by line adding together
like items of assets, liabilities, equity, income and expenses.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.
Non-controlling interests, presented as part of equity, represent the portion of a subsidiary''s statement of profit and loss
and net assets that is not held by the Group. Statement of profit and loss balance (including other comprehensive income
(''OCI'')) is attributed to the equity holders of the Holding Company and to the non-controlling interests on the basis the
respective ownership interests and such balance is attributed even if this results in controlling interests having a deficit
balance.
Joint ventures
Interest in joint venture are accounted for using the equity method, after initially being recognized at cost. The carrying
amount of the investment is adjusted thereafter for the post acquisition change in the share of net assets of the investee,
adjusted where necessary to ensure consistency with the accounting policies of the Group. The consolidated statement
of profit and loss (including the other comprehensive income) includes the Group''s share of the results of the operations
of the investee. Dividends received or receivable from joint ventures are recognized as a reduction in the carrying amount
of the investment.
d) Current versus non-current classification
All assets and liabilities have been classified as current or non-current, wherever applicable as per the operating cycle
of the Group and other criteria set out in the Act. Deferred tax assets and liabilities are classified as non-current assets
and non-current liabilities, as the case may be.
e) Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The consideration transferred by the Group to
obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities
incurred, the equity interests issued and fair value of contingent consideration issued. Acquisition-related costs are
expensed as and when incurred.
Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are
subsequently re-measured to fair value with changes in fair value recognised in profit or loss.
Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date.
Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of Ind AS
109 Financial Instruments, is measured at fair value with changes in fair value recognised either in profit or loss or as a
change to OCI. If the contingent consideration is not within the scope of Ind AS 109, it is measured in accordance with the
appropriate Ind AS. Contingent consideration that is classified as equity is not re-measured and subsequent settlement
is accounted for within equity.
If the contingent consideration is not within the scope of Ind AS 109, it is measured in accordance with the appropriate
Ind AS. Contingent consideration that is classified as equity is not re-measured and subsequent settlement is accounted
for within equity.
Goodwill is measured as excess of the aggregate of the consideration transferred and the amount recognised for non-controlling
interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the
net assets acquired is in excess of the aggregate consideration transferred, the resulting gain on bargain purchase is recognised
in OCI and accumulated in equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity
recognises the gain directly in equity as capital reserve, without routing the same through other comprehensive income.
f) Property, plant and equipment and capital work in progress
Property, plant and equipment
Recognition and initial measurement
Property, plant and equipment are recorded at the cost of acquisition. The cost comprises purchase price, borrowing cost if
capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use
upto the date when the assets are ready for use. Any trade discount, recoverable taxes and rebates are deducted in arriving at
the purchase price. All other repairs and maintenance are recognized in statement of profit and loss as incurred.
Consumer premises equipments (CPE) including viewing cards (VC) are treated as part of capital work in progress till the
time of activation thereof, post which the same gets depreciated. Capital work in progress is valued at cost.
Subsequent measurement (Depreciation and useful lives)
Property, plant and equipment are subsequently measured at cost less depreciation and impairment loss. Depreciation
on property, plant and equipment is provided on straight line method, computed on the basis of useful lives (as set out
below) prescribed in Schedule II, of the Act, as under:
De-recognition
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal
or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition
(calculated as the difference between the net disposal proceeds and its carrying amount) is included in the statement of
profit and loss when the respective asset is derecognised.
Goodwill represents the future economic benefits arising from a business combination that are not individually identified
and separately recognised. Goodwill is carried at cost less accumulated impairment losses.
h) Other intangible assets
Recognition and initial measurement
Intangible assets are recognised if it is probable that the future economic benefits that are attributable to the asset will
flow to the Group and the cost of the asset can be measured reliably. These assets are valued at cost which comprises the
purchase price and any directly attributable expenditure on making the asset ready for its intended use.
Fee paid for acquiring license to operate DTH services, is capitalized as intangible asset.
Customer and distributor relationships are recorded at the cost of acquisition. Cost of acquisition has been determined
as the fair market value assessed by independent valuer based on projected economic income attributable to the Group
as per valuation of merger scheme.
Brand is recorded at the cost of acquisition. Cost of acquisition has been determined as the fair market value assessed
by independent valuer based on projected economic income attributable to the Group as per valuation of merger scheme.
Cost of computer software includes license fees, cost of implementation and directly attributable system integration
expenses. These costs are capitalized as intangible assets in the year in which related software is implemented.
Subsequent measurement (amortisation]
i) Fees paid for acquiring licenses to operate DTH services is amortised over the period of license and other license
fees are amortized over the management estimate of useful life of five years.
ii) The economic life of customer and distributor relationship assets are usually determined by estimating future loyalty
of customers. Management has assessed that the economic useful life of the customer and distributor relationship
to be of ten years.
iii) The brands have been acquired for a perpetual period. Based on all the factors the Group has considered life of brand
till perpetuity.
iv) Software are amortised over an estimated life of one year to five years.
i) Impairment of non-financial assets
At each reporting date, the Group assesses whether there is any indication based on internal/external factors, that an
asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. If such
recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less
than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an
impairment loss and is recognised in the statement of profit and loss. If, at the reporting date there is an indication that
a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected
at the recoverable amount. Impairment losses previously recognized are accordingly reversed in the statement of profit
and loss.
j) Impairment of financial assets
In accordance with Ind AS 109, the Group applies expected credit loss (ECL) model for measurement and recognition of
impairment loss for financial assets. ECL is the difference between all contractual cash flows that are due to the Group
in accordance with the contract and all the cash flows that the Group expects to receive. When estimating the cash flows,
the Group is required to consider -
i) All contractual terms of the financial assets (including prepayment and extension) over the expected life of the
assets.
ii) Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
The Group applies simplified approach permitted by Ind AS 109 Financial Instruments, which requires lifetime expected
credit losses to be recognised from the date of initial recognition of receivables.
For recognition of impairment loss on other financial assets and risk exposure, the Group determines whether there
has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly,
impairment loss is provided.
i) Inventories of customer premises equipment (CPE) related accessories and spares are valued at the lower of cost
and net realisable value. Cost of inventories includes all costs incurred in bringing the inventories to their present
location and condition. Cost is determined on a weighted average basis. Net realisable value is the estimated selling
price in the ordinary course of business less any applicable selling expenses.
Digital content i.e. web series, film rights, music rights (completed (commissioned/acquired) and under production)
including content in digital form are stated at lower of cost/unamortised cost or realisable value. Cost comprises
acquisition/direct production cost. Where the realisable value of media content is less than its carrying amount, the
difference is expensed. Programmes, film rights, music rights are expensed/amortised as under
a) Web series are amortised over three financial years starting from the year of first telecast/upload, as per
management estimate of future revenue potential.
b) Film rights are amortised on a straight-line basis over the licensed period or sixty months from the
commencement of rights, whichever is shorter.
c) Music rights are amortised over three financial years starting from the year of commencement of rights, as per
management estimate of future revenue potential.
d) Reality shows, chat shows, events, game shows, etc. are fully expensed on telecast/upload.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is
net of variable consideration on account of various discounts and schemes offered by the Group as part of the contract.
The Group applies the revenue recognition criteria to each nature of the sales and services transaction as set out below,
pursuant to Indian Accounting Standard -115 "Revenue from contracts with customersâ (Ind AS 115) which establishes a
comprehensive framework for determining whether, how much and when revenue is to be recognised.
i) Revenue from rendering of services
- Revenue from subscription services is recognized over the subscription pack validity period. Revenue is
recognised net of taxes collected from the customer, collection charges and any discount given. Consideration
received in advance for subscription services is initially deferred and included in other liabilities.
- Lease rental is recognized as revenue as per the terms of the contract over the period of lease contract on a
straight line basis.
- Activation fee is recognised on an upfront basis considering the level of services rendered on activation, the
corresponding cost incurred and separate consideration charged for the subsequent continuing services.
- Revenue from other services (viz Bandwidth charges, teleport services, field repairs of CPE, advertisement
income) are recognized on rendering of the services.
- Infrastructure support fees is recognised on the basis of fixed rate agreement on the basis of active customers.
ii) Revenue from sale of goods
- Revenue from sale of stock-in-trade is recognised when the products are dispatched against orders to the
customers in accordance with the contract terms and the Group has transferred to the buyer the significant
risks and rewards.
- Sales are stated net of rebates, trade discounts, sales returns and taxes on sales.
iii) Interest income
- Income from deployment of surplus funds is recognised on accrual basis using the effective interest rate (EIR) method.
m) Foreign currency translation
Functional and presentation currency
The financial statements are presented in Indian Rupees (Rs.) which is also the functional and presentation currency of the Group.
Transactions and balances
Foreign currency transactions are recorded in the functional currency, by applying the exchange rate between the
functional currency and the foreign currency at the date of the transaction.
Non-monetary items denominated in a foreign currency are converted in functional currency at the rate prevailing on the
date of transactions and the same are carried at historical cost.
Foreign currency monetary items are converted to functional currency using the closing rate.
Exchange differences arising on such conversion and settlement at rates different from those at which they were initially
recorded, are recognized in the statement of profit and loss in the year in which they arise.
Borrowing costs include interest and other costs that the Group incurs in connection with the borrowing of funds.
In case of significant long-term loans, other costs incurred in connection with the borrowing of funds are amortised over
the period of respective loan.
Employee benefits include provident fund, pension fund, gratuity and compensated absences
Defined contribution plan
The Group deposits the contributions for provident fund and employees'' state insurance to the appropriate government
authorities and these contributions are recognised in the statement of profit and loss in the financial year to which they relate.
Defined benefit plan
The Group''s gratuity scheme is a defined benefit plan. The present value of the obligation under such defined benefit plan
is determined based on actuarial valuation carried out at the end of the year by an independent actuary, using the projected
unit credit method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement
and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the
estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit
plans is based on the market yields on Government Securities for relevant maturity. Actuarial gains and losses are recognised
immediately in the Statement of Other Comprehensive Income. The Group has done contribution to the Gratuity plan with LIC.
Other long term employee benefits
Benefits under the Group''s compensated absences constitute other long-term employee benefits. The liability in respect of
compensated absences is provided on the basis of an actuarial valuation done by an independent actuary using the projected
unit credit method at the year end. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss.
Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee
benefits. Benefits such as salaries, wages, and bonus, etc., are recognised in the statement of profit and loss in the
period in which the employee renders the related service.
p) Employee stock option scheme
The fair value of options granted under Employee Stock Option Plan of the Group is recognised as an employee benefits expense
with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to
be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on
the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in statement
of profit and loss, with a corresponding adjustment to equity. Upon exercise of share options, the proceeds received are allocated
to share capital up to the par value of the shares issued with any excess being recorded as share premium.
The Groups''s lease asset classes primarily consist of leases for land. The Group assesses whether a contract contains a
lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of
an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Group assesses whether: (1) the contract involves the use of an identified asset,
(2) the Group has substantially all of the economic benefits from the use of the asset through the period of the lease, and
(3) the Group has the right to direct the use of the asset.
At the date of commencement of the lease, the Group recognizes a Right of use (ROU) asset and a corresponding lease
liability for all lease arrangements under which it is a lessee, except for short-term leases and low value leases. For
short-term leases and low value leases, the Group recognizes the lease payments as an expense on a straight-line basis
over the term of the lease.
Certain lease arrangements include options to extend or terminate the lease before the end of the lease term. ROU
assets and lease liabilities include these options when it is reasonably certain that they will be exercised.
The ROU assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for
any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease
incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
ROU assets are depreciated from the date of commencement of the lease on a straight -line basis over the shorter of the
lease term and the useful life of the underlying asset
The lease liability is initially measured at amortized cost at the present value of the future lease payments. For leases
under which the rate implicit in the lease is not readily determinable, the Group uses its incremental borrowing rate
based on the information available at the date of commencement of the lease in determining the present value of lease
payments. Lease liabilities are re measured with a corresponding adjustment to the related ROU asset if the Group
changes its assessment as to whether it will exercise an extension or a termination option.
ROU assets has been disclosed under property plant and equipements and corresponding lease liability has been shown
under financial liability in the Balance sheet.
Company as a lessor
Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified
as operating leases. The respective leased assets are included in the balance sheet based on their nature. Rental income
is recognized on straight line basis over the lease term.
Basic earning 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 year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity
shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all
dilutive potential equity shares.
s) Equity, reserves and dividend payment
Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds. Retained earnings include current and prior period retained profits.
All transactions with owners of the Parent Company are recorded separately within equity.
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax except the ones
recognized in other comprehensive income or directly in equity.
Current tax is determined as the tax payable in respect of taxable income for the year and is computed in accordance with
relevant tax regulations.
Deferred tax is recognised in respect of temporary differences between carrying amount of assets and liabilities for
financial reporting purposes and corresponding amount used for taxation purposes. Deferred tax assets on unrealised
tax loss are recognised to the extent that it is probable that the underlying tax loss will be utilised against future taxable
income. This is assessed based on the Group''s forecast of future operating results, adjusted for significant non-taxable
income and expenses and specific limits on the use of any unused tax loss. Unrecognised deferred tax assets are re¬
assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits
will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at
the reporting date. Deferred tax relating to items recognised outside statement of profit and loss is recognised either in
other comprehensive income or in equity.
Unused tax credit such as (Minimum alternate tax (''MAT'') credit entitlement) is recognized as an asset only when and to the extent
there is convincing evidence that the Group will pay normal income-tax during the specified period. In the year in which such
credit becomes eligible to be recognized as an asset, the said asset is created by way of a credit to the statement of profit and loss
and shown as unused tax credit. The Group reviews the same at each balance sheet date and writes down the carrying amount of
unused tax credit to the extent it is not reasonably certain that the Group will pay normal income-tax during the specified period.
All assets and liabilities have been classified as current or non-current as per the Group''s normal operating cycle and
other criteria as set out in the Division II of Schedule III to the Companies Act, 2013. The Group has ascertained its normal
operating cycle as twelve months. This is based on the nature of services and the time between the acquisition of assets
or inventories for processing and their realisation in cash and cash equivalents.
Operating expenses are recognised in statement of profit or loss upon utilisation of the service or as incurred.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker (CODM). Basis the review of operations being done by the CODM, the operations of the Group fall under
Direct to Home (''DTH'') and teleport services, which is considered to be the only reportable segment.
Mar 31, 2018
a) Overall considerations and first time adoption of Ind ASs
These standalone financial statements have been prepared using the significant accounting policies and measurement bases summarised below.
These accounting policies have been used throughout all periods presented in these standalone financial statements, except where the Company has applied certain accounting policies and exemptions upon transition to Ind AS as summarised in note no 63.
b) Basis of preparation of financial statements
The financial statements have been prepared on going concern basis in accordance with accounting principles generally accepted in India. Further, the financial statements have been prepared on historical cost basis except for certain financial assets, financial liabilities and share based payments which are measured at fair values as explained in relevant accounting policies.
Further to the condition mentioned under note 57 and 62, management believes that it is appropriate to prepare these financial statements on a going concern basis considering available resources, current level of operations of the Company, and those projected for foreseeable future.
c) Current versus non-current classification
All assets and liabilities have been classified as current or non-current, wherever applicable as per the operating cycle of the Company and other criteria set out in the Act. Deferred tax assets and liabilities are classified as non-current assets and non-current liabilities, as the case may be.
d) Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred, the equity interests issued and fair value of contingent consideration issued. Acquisition-related costs are expensed as and when incurred.
Assets acquired and liabilities assumed are measured at their acquisition-date fair values.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently re-measured to fair value with changes in fair value recognised in profit or loss.
Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of Ind AS 109 Financial Instruments, is measured at fair value with changes in fair value recognised either in profit or loss or as a change to Other Comrehensive Income (OCI).
If the contingent consideration is not within the scope of Ind AS 109, it is measured in accordance with the appropriate Ind AS. Contingent consideration that is classified as equity is not re-measured and subsequent settlement is accounted for within equity.
Goodwill is measured as excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the resulting gain on bargain purchase is recognised in OCI and accumulated in equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity recognises the gain directly in equity as capital reserve, without routing the same through other comprehensive income.
e) Property, Plant and Equipment and Capital Work in Progress Property, Plant and Equipment
Recognition and initial measurement
Property, plant and equipment are recorded at the cost of acquisition. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use upto the date when the assets are ready for use. Any trade discount, recoverable taxes and rebates are deducted in arriving at the purchase price. All other repairs and maintenance are recognised in statement of profit and loss as incurred.
Consumer premises equipment (CPE) are treated as part of capital work in progress till the time of activation thereof, post which the same gets depreciated. Capital work in progress is valued at cost.
Property, plant and equipment are subsequently measured at cost less depreciation and impairment loss. Depreciation on property, plant and equipment is provided on straight line method, computed on the basis of useful lives (as set out below) prescribed in Schedule II, of the Companies Act, 2013, as under:
In case of following category, life of the assets have been assessed as under based on technical advice taking into account the nature of assets, estimated usage of the assets, the operating conditions of assets, past history of replacement, anticipated technological changes etc.
i) Consumer premises equipment are depreciated over their useful life of five years, as estimated by the management.
ii) Aircraft is depreciated over the estimated useful life of ten years.
De-recognition
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition (calculated as the difference between the net disposal proceeds and its carrying amount) is included in the statement of profit and loss when the respective asset is derecognised.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognised as at 1 April 2016 measured as per the provisions of Previous GAAP and use that carrying value as the deemed cost of property, plant and equipment
f) Goodwill
Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. Goodwill is carried at cost less accumulated impairment losses.
g) Other Intangible assets Recognition and initial measurement
Intangible assets are recognised if it is probable that the future economic benefits that are attributable to the asset will flow to the Company and the cost of the asset can be measured reliably. These assets are valued at cost which comprises the purchase price and any directly attributable expenditure on making the asset ready for its intended use.
Fee paid for acquiring license to operate DTH services, is capitalised as intangible asset.
Customer & Distributor relationships are recorded at the fair market value assessed by independent valuer based on projected economic income attributable to the company taking into account various factors in the business combination.
Brand is recorded at the cost of acquisition. Cost of acquisition has been determined as the fair market value assessed by independent valuer based on projected economic income attributable to the company, taking in account various factors in the business combination.
Cost of computer software includes license fees, cost of implementation and directly attributable system integration expenses. These costs are capitalised as intangible assets in the year in which related software is implemented.
Subsequent measurement Iamortisation)
i) Fees paid for acquiring licenses to operate DTH services is amortised over the period of license and other license fees are amortised over the management estimate of useful life of five years.
ii) The economic life of Customer & Distributor relationship assets are usually determined by estimating future loyalty of customers. Management has assessed that the economic useful life of the Customer & Distributor relationship to be of ten years.
iii) The brands have been acquired for a perpetual period. Based on various factors the company has considered brand to be perpectual in nature. Accordingly, these are tested for impairment.
iv) Software are amortised over an estimated life ranging from one year to five years, as the case may be.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its intangible assets recognised as at 1 April 2016 measured as per the provisions of Previous GAAP and use that carrying value as the deemed cost of intangible assets.
h) Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on internal/ external factors, that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If, at the reporting date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. Impairment losses previously recognised are accordingly reversed in the statement of profit and loss.
i) Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets. ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive. When estimating the cash flows, the Company is required to consider -
i) All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
ii) Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables
The Company applies simplified approach permitted by Ind AS 109 Financial Instruments, which requires lifetime expected credit losses to be recognised from the date of initial recognition of receivables.
Other financial assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
j) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
Revenue is measured at the fair value of the consideration received/receivable net of rebates and applicable taxes. The Company applies the revenue recognition criteria to each nature of the sales and services transaction as set out below.
i) Revenue from rendering of services
- Revenue from subscription services is recognised prorata over the subscription pack period during the period when the services are rendered. Revenue is recognised net of taxes collected from the customer, collection charges and any discount given. Consideration received in advance for subscription services is initially deferred and included in other liabilities.
- Lease rental is recognised as revenue as per the terms of the contract over the period of lease contract on a straight line basis.
- Activation revenue is recognised on the date of activation and net of any discount given.
- Revenue from other services (viz Bandwidth charges, teleport services, field repairs of CPE, advertisement income) are recognized on rendering of the services.
ii) Revenue from sale of goods
- Revenue from sale of stock-in-trade is recognised when the products are dispatched against orders to the customers in accordance with the contract terms and the Company has transferred to the buyer the significant risks and rewards.
- Sales are stated net of rebates, trade discounts, sales returns and taxes on sales.
iii) Interest income
- Income from deployment of surplus funds is recognised on accrual basis using the effective interest rate (EIR) method.
k) Foreign currency translation
Functional and presentation currency
The financial statements are presented in Indian Rupees (?) which is also the functional and presentation currency of the Company.
Transactions and balances
Foreign currency transactions are recorded in the functional currency, by applying the exchange rate between the functional currency and the foreign currency at the date of the transaction.
Non-monetary items denominated in a foreign currency are converted in functional currency at the rate prevailing on the date of transactions and the same are carried at historical cost.
Foreign currency monetary items are converted to functional currency using the closing rate.
Exchange differences arising on such conversion and settlement at rates different from those at which they were initially recorded, are recognised in the statement of profit and loss in the year in which they arise.
l) Borrowing Costs
Borrowing costs include interest and other costs that the Company incurs in connection with the borrowing of funds.
In case of significant long-term loans, other costs incurred in connection with the borrowing of funds are amortised over the period of respective loan.
m) Post-employment, long term and short term employee benefits
i) Post-employment benefit Defined contribution plan
The Company deposits the contributions for provident fund and employeesâ state insurance to the appropriate government authorities and these contributions are recognised in the Statement of Profit and Loss in the financial year to which they relate.
Defined benefit plan
The Companyâs gratuity scheme is a defined benefit plan. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation carried out at the end of the year by an independent actuary, using the projected unit credit method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans is based on the market yields on Government Securities for relevant maturity. Actuarial gains and losses are recognised immediately in the Statement of other Comprehensive Income. The Company has done contrubution to the Gratuity plan with Life Insurance Corporation of India partially.
ii) Other long term employee benefits
Benefits under the Companyâs compensated absences constitute other long-term employee benefits. The liability in respect of compensated absences is provided on the basis of an actuarial valuation done by an independent actuary using the projected unit credit method at the year end. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss.
iii) Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages, and bonus, etc., are recognised in the Statement of Profit and Loss in the period in which the employee renders the related service.
n) Discontinued operations
A discontinued operation is a component of the entity that has been disposed of and that represent a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations. The results of discontinued opeartions are presented seperately in the statement of profit and loss.
o) Employee stock option scheme
The fair value of options granted under Employee Stock Option Plan of the Company is recognised as an employee benefits expense with a corresponding increase in other equity. The total amount to be expensed is determined by reference to the fair value of the options. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in statement of profit and loss, with a corresponding adjustment to other equity. Upon exercise of share options, the proceeds received are allocated to share capital up to the par value of the shares issued with any excess being recorded as share premium.
p) Leases
Company as a lessee
Assets acquired on leases where a significant portion of risk and rewards of ownership are retained by the lessor are classified as operating leases. Lease rental are charged to statement of profit and loss on straight line basis except where scheduled increase in rent compensate the lessor for expected inflationary costs.
Leases which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased items are classified as âFinance Leasesâ. Assets acquired on âFinance Leaseâ which transfer risk and rewards of the ownership to the Company are capitalised as the assets by the company.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The respective leased assets are included in the balance sheet based on their nature. Rental income is recognised on straight line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
q) Earnings/(loss) per share
Basic earning/loss 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 year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
r) Taxation
Tax expense recognised in statement of profit and loss comprises the sum of deferred tax and current tax except those recognised in other comprehensive income or directly in equity.
Current tax is determined as the tax payable in respect of taxable income for the year and is computed in accordance with relevant tax regulations.
Deferred tax is recognised in respect of temporary differences between carrying amount of assets and liabilities for financial reporting purposes and corresponding amount used for taxation purposes. Deferred tax assets on unrealised tax loss are recognised to the extent that it is probable that the underlying tax loss will be utilised against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit or loss (either in other comprehensive income or in equity).
Unused tax credit such as (Minimum alternate tax (âMATâ) credit entitlement) is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which such credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the statement of profit and loss and shown as unused tax credit. The Company reviews the same at each balance sheet date and writes down the carrying amount of unused tax credit to the extent it is not reasonably certain that the Company will pay normal income tax during the specified period.
s) Provisions, contingent liabilities, commitments and contingent assets
The Company recognises a provision when there is a present obligation as a result of a past event and it is more likely than not that there will be an outflow of resources embodying economic benefits to settle such obligations and the amount of such obligation can be reliably estimated. Provisions are discounted to their present value (where time value of money is material) and are determined based on the managementâs estimation of the outflow required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect current management estimates.
Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of future events, not wholly within the control of the Company. Contingent liabilities are also disclosed for the present obligations that have arisen from past events in respect of which it is not probable that there will be an outflow of resources or a reliable estimate of the amount of obligation cannot be made.
When there is an obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Contingent assets are neither recognised nor disclosed except when realisation of income is virtually certain, related asset is disclosed.
t) Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below.
Financial assets
Subsequent measurement
Financial asset at amortised cost-the financial instrument is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows; and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (âSPPIâ) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
Investments in equity instruments of subsidiaries, joint ventures and associates
Investments in equity instruments of subsidiaries, joint ventures and associates are accounted for at cost in accordance with Ind AS 27 Separate Financial Statements.
Investments in other equity instruments which are held for trading are classified as at fair value through profit or loss (FVTPL). For all other equity instruments, the Company makes an irrevocable choice upon initial recognition, on an instrument by instrument basis, to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL).
Investments in mutual funds
Investments in mutual funds are measured at fair value through profit and loss (FVTPL).
Derivative instruments - derivatives such as options and forwards are carried at fair value through profit and loss with fair gains/losses recognised in profit and loss.
De-recognition of financial assets
A financial asset is primarily de-recognised when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Financial liabilities
Subsequent measurement
Subsequent to initial recognition, all financial liabilities are measured at amortised cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
u) Cash and cash equivalents
Cash and cash equivalents comprises cash at bank and in hand, cheques in hand and short term investments that are readily convertible into known amount of cash and are subject to an insignificant risk of change in value.
v) Significant management judgement in applying accounting policies and estimation uncertainty
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 the disclosure of contingent liabilities on the date of the financial statements and the results of operations during the reporting periods. Although these estimates are based upon managementâs knowledge of current events and actions, actual results could differ from those estimates and revisions, if any, are recognised in the current and future periods.
Significant management judgements
The following are significant management judgements in applying the accounting policies of the Company that have the most significant effect on the financial statements.
Recognition of deferred tax assets: The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilised.
Evaluation of indicators for impairment of assets: The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Classification of leases: The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lesseeâs option to purchase and estimated certainty of exercise of such option, proportion of lease term to the assetâs economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialised nature of the leased asset. The Company has also factored in overall time period of rent agreements to arrive at lease period to recognise rental income on straight line basis.
Contingent liabilities: At each balance sheet date basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However, the actual future outcome may be different from this judgement.
Significant estimates
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be different.
Impairment of financial assets: At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables.
Impairment of goodwill: At each balance sheet date, goodwill is tested for impairment. The recoverable amount of cash generating unit (CGU) is determined based on the higher of value-in-use and fair value less cost to sell. Key assumptions on which the management has based its determination of recoverable amount include estimated long-term growth rates, weighted average cost of capital and estimated operating margins. The cash flow projections take into account past experience and represent the managementâs best estimate about future developments. Cash flow projections based on financial budgets are approved by management.
Defined benefit obligation (DBO): Managementâs estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Fair value measurements: Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument.
Useful lives of depreciable/amortisable assets: Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, customer relationships, IT equipment and other plant and equipment.
Mar 31, 2017
a) Basis of preparation of financial statements
The financial statements have been prepared to comply in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended). The financial statements have been prepared on a going concern basis under the historical cost convention on accrual basis in accordance with the generally accepted accounting principles in India. 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, wherever applicable as per the operating cycle of the Company and as per the guidance as set out in Schedule III to the Companies Act, 2013.
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 the disclosure of contingent liabilities on the date of the financial statements and the results of operations during the reporting periods. Although these estimates are based upon managementâs knowledge of current events and actions, actual results could differ from those estimates and revisions, if any, are recognised in the current and future periods.
c) Fixed assets and capital work in progress Tangible assets
Fixed assets are recorded at the cost of acquisition, net of cenvat credit including all incidental expenses attributable to the acquisition and installation of assets, upto the date when the assets are ready for use.
Viewing cards (VC) are capitalized on activation of the same.
Capital work in progressis valued at cost.
Intangible assets
Intangible assets are recognised if it is probable that the future economic benefits that are attributable to the asset will flow to the Company and the cost of the asset can be measured reliably. These assets are valued at cost which comprises the purchase price and any directly attributable expenditure on making the asset ready for its intended use.
Fee paid for acquiring license to operate DTH services, is capitalized as intangible asset.
Cost of computer software includes license fees, cost of implementation and appropriate system integration expenses. These costs are capitalized as intangible assets in the year in which related software is implemented.
d) Depreciation and amortisation
1) Tangible assets
Depreciation on tangible fixed assets, is provided on straight line method as per the useful life prescribed in Schedule II, of the Companies Act, 2013, except in case of following category where life of the assets have been assessed as under based on technical advice taking into account the nature of assets, estimated usage of the assets, the operating conditions of assets, past history of replacement, anticipated technological changes etc.
i) Viewing cards (VC) are depreciated over their useful life of five years, as estimated by the management.
ii) Aircraft is depreciated over the estimated useful life of ten years.
2) Intangible assets
i) Fees paid for acquiring licenses to operate DTH services is amortised over the period of license and other license fees are amortized over the management estimate of useful life of five years.
ii) Software are amortised on straight line method over an estimated life of one year to five years.
3) Leasehold improvements are amortised over the period of lease or their useful lives, whichever is shorter.
e) Impairment
The carrying amounts of the Companyâs assets (including goodwill) are reviewed at each balance sheet date in accordance with Accounting Standard 28 âImpairment of Assetsâ, to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of asset is estimated as higher of its net selling price and value in use. Value in use is arrived at by disclosing the estimated future cash flow to their present cash flow based on appropriate discounting rate. An impairment loss is recognized, whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation, had no impairment loss been recognised.
f) Inventories
Inventories of VC are valued at the lower of cost and net realisable value. Cost of inventories includes all costs incurred in bringing the inventories to their present location and condition. Cost is determined on a weighted average basis.
g) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
i) Service revenue
Revenue from subscription services is recognised Prorata over the subscription pack period during which the services are rendered and is net of taxes collected from the customer, collection charges and any discount given.
ii) Sale of goods
- Revenue from sale of stock-in-trade is recognised when the products are dispatched against orders to the customers in accordance with the contract terms, which coincides with the transfer of risks and rewards and there is no significant uncertainty exists regarding amount of consideration that will be received.
- Sales are stated net of rebates, trade discounts, sales tax and sales returns.
iii) Interest income
Income from deployment of surplus funds is recognised using the time proportion method, based on interest rates implicit in the transaction.
h) Foreign currency transactions
Foreign currency transactions
i) Foreign currency transactions are accounted for at the exchange rate prevailing on the date of the transaction. All monetary foreign currency assets and liabilities are converted at the exchange rates prevailing at the date of the balance sheet. All exchange differences, other than in relation to acquisition of fixed assets and other long term foreign currency monetary liabilities are dealt with in the Statement of Profit and Loss.
i) Investments
Long-term investments, including their current portion, are carried at cost less diminution, other than temporary in value. Current investments are carried at the lower of cost and fair value which is computed category wise.
j) Employee benefits
i) Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages, and bonus, etc., are recognised in the Statement of Profit and Loss in the period in which the employee renders the related service.
ii) Post-employment benefit
Defined contribution plan
The Company deposits the contributions for provident fund and employeesâ state insurance to the appropriate government authorities and these contributions are recognised in the Statement of Profit and Loss in the financial year to which they relate.
Defined benefit plan
The Companyâs gratuity scheme is a defined benefit plan. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation carried out at the end of the year by an independent actuary, using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans is based on the market yields on Government Securities for relevant maturity. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.
iii) Other long term employee benefits
Benefits under the Companyâs compensated absences constitute other long-term employee benefits. The liability in respect of compensated absences is provided on the basis of an actuarial valuation done by an independent actuary using the projected unit credit method at the year end. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss.
k) Employee stock option scheme
The Company calculates the compensation cost based on the intrinsic value method wherein the excess of value of underlying equity shares as on the date of the grant of options over the exercise price of the options given to employees under the employee stock option schemes of the Company, is recognised as deferred stock compensation cost and amortised over the vesting period on a graded vesting basis.
l) Leases
Operating lease
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Operating lease charges are recognised as an expense in the Statement of Profit and Loss on a straight line basis.
m) Earnings/(loss) per share
Basic earnings/ (loss) 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 year.
For the purpose of calculating diluted earnings/(loss) per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
n) Taxation
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 applicable tax laws. 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 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 realized. However deferred tax arising from brought forward losses is recognised only when there is virtual certainty supported by convincing evidence that such asset will be realized.
Minimum alternative tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax in future years. In the year in which MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss 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 the Company will pay normal income tax during the specified year.
o) Provisions and contingent liabilities
The Company recognises a provision when there is a present obligation as a result of a past event and it is more likely than not that there will be an outflow of resources embodying economic benefits to settle such obligations and the amount of such obligation can be reliably estimated. Provisions are not discounted to their present value and are determined based on the managementâs estimation of the outflow required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect current management estimates.
Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of future events, not wholly within the control of the Company. Contingent liabilities are also disclosed for the present obligations that have arisen from past events in respect of which it is not probable that there will be an outflow of resources or a reliable estimate of the amount of obligation cannot be made.
When there is an obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
p) Cash and cash equivalents
Cash and cash equivalents in the Cash Flow Statement comprise cash at bank and in hand, cheques in hand and short term investments with an original maturity of three months or less.
Mar 31, 2016
1. Background
Dish TV India Limited (''Dish TV''or ''the Company'') was incorporated on
10 August 1988. The Company is engaged in the business of Direct to
Home (''DTH'') and Teleport services.
a) Basis of preparation of financial statements
The financial statements have been prepared to comply in accordance
with the accounting principles generally accepted in India, including
the Accounting Standards specified under Section 133 of the Companies
Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 (as
amended). The financial statements have been prepared on a going
concern basis under the historical cost convention on accrual basis in
accordance with the generally accepted accounting principles in India.
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, wherever applicable as per the operating cycle of the
Company and as per the guidance as set out in Schedule III to the
Companies Act, 2013.
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 the disclosure of contingent liabilities on the date of
the financial statements and the results of operations during the
reporting periods. Although these estimates are based upon management''s
knowledge of current events and actions, actual results could differ
from those estimates and revisions, if any, are recognised in the
current and future periods.
c) Fixed assets and capital work in progress
Tangible assets
Fixed assets are recorded at the cost of acquisition, net of cenvat
credit including all incidental expenses attributable to the
acquisition and installation of assets, upto the date when the assets
are ready for use.
Viewing cards (VC) are capitalized on activation of the same.
Capital work in progressis valued at cost.
Intangible assets
Intangible assets are recognised if it is probable that the future
economic benefits that are attributable to the asset will flow to the
Company and the cost of the asset can be measured reliably. These
assets are valued at cost which comprises the purchase price and any
directly attributable expenditure on making the asset ready for its
intended use.
Fee paid for acquiring license to operate DTH services, is capitalized
as intangible asset.
Cost of computer software includes license fees, cost of implementation
and appropriate system integration expenses. These costs are
capitalized as intangible assets in the year in which related software
is implemented.
d) Depreciation and amortisation
1) Tangible assets
Depreciation on tangible fixed assets, is provided on straight line
method as per the useful life prescribed in Schedule II, of the
Companies Act, 2013, except in case of following category where life of
the assets have been assessed as under based on technical advice taking
into account the nature of assets, estimated usage of the assets, the
operating conditions of assets, past history of replacement,
anticipated technological changes etc.
i) VCs are depreciated over their useful life of five years, as
estimated by the management.
ii) Aircraft is depreciated over the estimated useful life of ten
years.
2) Intangible assets
i) Fees paid for acquiring licenses to operate DTH services is
amortised over the period of license and other license fees are
amortized over the management estimate of useful life of five years.
ii) Software are amortised on straight line method over an estimated
life of one year to five years.
3) Leasehold improvements are amortised over the period of lease or
their useful lives, whichever is shorter.
e) Impairment
The carrying amounts of the Company''s assets (including goodwill) are
reviewed at each balance sheet date in accordance with Accounting
Standard 28 ''Impairment of Assets'', to determine whether there is any
indication of impairment. If any such indication exists, the
recoverable amount of asset is estimated as higher of its net selling
price and value in use. Value in use is arrived at by disclosing the
estimated future cash flow to their present cash flow based on
appropriate discounting rate. An impairment loss is recognized,
whenever the carrying amount of an asset or its cash generating unit
exceeds its recoverable amount. Impairment losses are recognised in the
Statement of Profit and Loss.
An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset''s carrying amount does
not exceed the carrying amount that would have been determined net of
depreciation or amortisation, had no impairment loss been recognised.
f) Inventories
Inventories of VC are valued at the lower of cost and net realisable
value. Cost of inventories includes all costs incurred in bringing the
inventories to their present location and condition. Cost is determined
on a weighted average basis.
g) Revenue recognition
i) Service revenue
Revenue from subscription services is recognised pro-rata over the
subscription pack period during which the services are rendered and is
net of service tax, collection charges and any discount given. Revenue
from other services are recognised on accrual basis on rendering of the
services.
ii) Sale of goods
- Revenue from sale of stock-in-trade is recognised when the products
are dispatched against orders to the customers in accordance with the
contract terms, which coincides with the transfer of risks and rewards
and there is no significant uncertainty exists regarding amount of
consideration that will be received.
- Sales are stated net of rebates, trade discounts, sales tax and sales
returns.
iii) Interest income
Income from deployment of surplus funds is recognised using the time
proportion method, based on interest rates implicit in the transaction.
h) Foreign currency transactions
Foreign currency transactions
i) Foreign currency transactions are accounted for at the exchange rate
prevailing on the date of the transaction. All monetary foreign
currency assets and liabilities are converted at the exchange rates
prevailing at the date of the balance sheet. All exchange differences,
other than in relation to acquisition of fixed assets and other long
term foreign currency monetary liabilities are dealt with in the
Statement of Profit and Loss.
i) Investments
Long-term investments, including their current portion, are carried at
cost less diminution, other than temporary in value. Current
investments are carried at the lower of cost and fair value which is
computed category wise.
j) Employee benefits
i) Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. Benefits
such as salaries, wages, and bonus, etc., are recognised in the
Statement of Profit and Loss in the period in which the employee
renders the related service.
ii) Post-employment benefit
Defined contribution plan
The Company deposits the contributions for provident fund and
employees''state insurance to the appropriate government authorities and
these contributions are recognised in the Statement of Profit and Loss
in the financial year to which they relate.
Defined benefit plan
The Company''s gratuity scheme is a defined benefit plan. The present
value of the obligation under such defined benefit plan is determined
based on actuarial valuation carried out at the end of the year by an
independent actuary, using the Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation is measured at the present
value of the estimated future cash flows. The discount rates used for
determining the present value of the obligation under defined benefit
plans is based on the market yields on Government Securities for
relevant maturity. Actuarial gains and losses are recognized
immediately in the Statement of Profit and Loss.
iii) Other long term employee benefits
Benefits under the Company''s compensated absences constitute other
long-term employee benefits. The liability in respect of compensated
absences is provided on the basis of an actuarial valuation done by an
independent actuary using the projected unit credit method at the year
end. Actuarial gains and losses are recognised immediately in the
Statement of Profit and Loss.
k) Employee stock option scheme
The Company calculates the compensation cost based on the intrinsic
value method wherein the excess of value of underlying equity shares as
on the date of the grant of options over the exercise price of the
options given to employees under the employee stock option schemes of
the Company, is recognised as deferred stock compensation cost and
amortised over the vesting period on a graded vesting basis.
l) Leases
Operating lease
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Operating lease charges are recognised as an expense
in the Statement of Profit and Loss on a straight line basis.
m) Earnings/(loss) per share
Basic earning/(loss) 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
year.
For the purpose of calculating diluted earnings/(loss) per share, the
net profit or loss for the period attributable to equity shareholders
and the weighted average number of shares outstanding during the year
are adjusted for the effects of all dilutive potential equity shares.
n) Taxation
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 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 realized. However
deferred tax arising from brought forward losses is recognised only
when there is virtual certainty supported by convincing evidence that
such asset will be realized.
Minimum alternative tax (MAT) paid in accordance with the tax laws,
which gives rise to future economic benefits in the form of adjustment
of future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax in
future years. In the year in which MAT credit becomes eligible to be
recognised as an asset in accordance with the recommendations contained
in guidance note issued by the Institute of Chartered Accountants of
India, the said asset is created by way of a credit to the statement of
profit and loss 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 the Company will pay
normal income tax during the specified year.
o) Provisions and contingent liabilities
The Company recognises a provision when there is a present obligation
as a result of a past event and it is more likely than not that there
will be an outflow of resources embodying economic benefits to settle
such obligations and the amount of such obligation can be reliably
estimated. Provisions are not discounted to their present value and are
determined based on the management''s estimation of the outflow required
to settle the obligation at the balance sheet date. These are reviewed
at each balance sheet date and adjusted to reflect current management
estimates.
Contingent liabilities are disclosed in respect of possible obligations
that have arisen from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of future events,
not wholly within the control of the Company. Contingent liabilities
are also disclosed for the present obligations that have arisen from
past events in respect of which it is not probable that there will be
an outflow of resources or a reliable estimate of the amount of
obligation cannot be made.
When there is an obligation in respect of which the likelihood of
outflow of resources is remote, no provision or disclosure is made.
p) Cash and cash equivalents
Cash and cash equivalents in the Cash Flow Statement comprise cash at
bank and in hand, cheques in hand and short term investments with an
original maturity of three months or less.
Mar 31, 2015
1. Background
Dish TV India Limited ('Dish TV' or 'the Company') was incorporated on
10 August 1988. The Company is engaged in the business of Direct to
Home ('DTH') and Teleport services.
a) Basis of preparation of financial statements
The financial statements have been prepared to comply in accordance
with the accounting principles generally accepted in India, including
the Accounting Standards specified under Section 133 of the Companies
Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 (as
amended). The financial statements have been prepared on a going
concern basis under the historical cost convention on accrual basis in
accordance with the generally accepted accounting principles in India.
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, wherever applicable as per the operating cycle of the
Company and as per the guidance as set out in Schedule III to the
Companies Act, 2013.
b) Going concern
The management believes that it is appropriate to prepare these
financial statements on a 'going concern' basis, for the following
reasons:- i) The Company's DTH license was valid upto 30 September
2013. Since the DTH license was expiring on said date, company has
requested to MIB for renewal of the aforementioned DTH license. On
recommendation TRAI, MIB has extended the validity for an interim
period of one year (i.e. with validity till 30 September 2014) on
existing terms and condition subjected to certain prescribed condition
related to renewal of bank guarantee and undertaking to honoured the
financial obligation arising from change in policy. The Company has
further written for the extension and same is pending with MIB.
According to us, no significant financial adjustment is expected in
this regard.
ii) The DTH business necessitates long gestation period. Being first
mover, the Company has incurred huge cost on establishment and on
awareness of the product, brand building on a pan India basis, the
benefits of which will accrue in the future years.
iii) The management is fully seized of the matter and is of the view
that going concern assumption holds true and that the Company will be
able to discharge its liabilities in the normal course of business
since the Company holds sanctioned loan facilities from banks and would
meet the debt obligations on due dates.
iv) The Company has positive operating cash flows.
Accordingly, the financial statements do not require any adjustment as
to the balances carried in the balance sheet.
c) 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 the disclosure of contingent liabilities on the date of
the financial statements and the results of operations during the
reporting periods. Although these estimates are based upon management's
knowledge of current events and actions, actual results could differ
from those estimates and revisions, if any, are recognised in the
current and future periods.
d) Fixed assets and capital work in progress
Tangible assets;
Fixed assets are recorded at the cost of acquisition, net of cenvat
credit including all incidental expenses attributable to the
acquisition and installation of assets, upto the date when the assets
are ready for use.
Consumer Premise Equipments (CPE) are capitalized on activation of the
same.
Capital work in progress comprises of CPE items and is valued at cost.
Intangible assets;
Intangible assets are recognised if it is probable that the future
economic benefits that are attributable to the asset will flow to the
Company and the cost of the asset can be measured reliably. These
assets are valued at cost which comprises the purchase price and any
directly attributable expenditure on making the asset ready for its
intended use.
License fees paid, including fee paid for acquiring license to operate
DTH services, is capitalized as intangible asset.
Cost of computer software includes license fees, cost of implementation
and appropriate system integration expenses. These costs are
capitalized as intangible assets in the year in which related software
is implemented.
e) depreciation and amortisation
1) tangible assets
Depreciation on fixed assets for the year ended 31 March 2014 is
provided on straight line method at rates which are either greater than
or equal to the corresponding rates in Schedule XIV of the Companies
Act, 1956.
Pursuant to the notification of Schedule II of the Companies Act, 2013,
by the Ministry of Corporate Affairs effective 1 April 2014, management
has provided the depreciation on the tangible assets on straight line
method as per the useful life prescribed in Schedule II, except in case
of following category where life of the assets have been assessed as
under based on technical advice taking into account the nature of
assets, estimated usage of the assets, the operating conditions of
assets, past history of replacement, anticipated technological changes
etc.
i) CPEs are depreciated over their useful life of five years, as
estimated by the management. CPEs that remain inactive for a specific
period of time (five hundred days from the date of inactivation)
determined based on past experience, are depreciated on accelerated
basis. Corresponding lease advances in such cases are recognised as
income.
ii) Aircraft is depreciated over the estimated useful life of ten
years.
2) Intangible assets
i) DTH license fee is amortized over the period of license and other
license fees are amortized over the management estimate of useful life
of five years.
ii) Software are amortised on straight line method over an estimated
life of one year to five years.
3) Leasehold improvements are amortised over the period of lease or
their useful lives, whichever is shorter.
f) Impairment
The carrying amounts of the Company's assets (including goodwill) are
reviewed at each balance sheet date in accordance with Accounting
Standard 28 'Impairment of Assets', to determine whether there is any
indication of impairment. If any such indication exists, the
recoverable amount of asset is estimated as higher of its net selling
price and value in use. Value in use is arrived at by disclosing the
estimated future cash flow to their present cash flow based on
appropriate discounting rate. An impairment loss is recognized,
whenever the carrying amount of an asset or its cash generating unit
exceeds its recoverable amount. Impairment losses are recognised in the
Statement of Profit and Loss.
An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset's carrying amount does
not exceed the carrying amount that would have been determined net of
depreciation or amortisation, had no impairment loss been recognised.
g) Inventories
Inventories of CPE related accessories and spares are valued at the
lower of cost and net realisable value. Cost of inventories includes
all costs incurred in bringing the inventories to their present
location and condition. Cost is determined on a weighted average basis.
h) revenue recognition
i) Service revenue
- Subscription and other service revenues are recognized on an accrual
basis on rendering of the services.
- Lease rental is recognized as revenue as per the terms of the
contract of operating lease over the period of lease on a straight line
basis.
- Activation fee is recognised on an upfront basis considering the
level of services rendered on activation, the corresponding cost
incurred and separate consideration charged for the subsequent
continuing services.
ii) Sale of goods
- Revenue from sale of stock-in-trade is recognised when the products
are dispatched against orders to the customers in accordance with the
contract terms, which coincides with the transfer of risks and rewards.
- Sales are stated net of rebates, trade discounts, sales tax and sales
returns.
iii) Interest income
Income from deployment of surplus funds is recognised using the time
proportion method, based on interest rates implicit in the transaction.
i) Foreign currency transactions and forward contracts
Foreign currency transactions
i) Foreign currency transactions are accounted for at the exchange rate
prevailing on the date of the transaction. All monetary foreign
currency assets and liabilities are converted at the exchange rates
prevailing at the date of the balance sheet. All exchange differences,
other than in relation to acquisition of fixed assets and other long
term foreign currency monetary liabilities are dealt with in the
Statement of Profit and Loss.
ii) In accordance with Accounting Standard-11, "Accounting for the
Effects of Changes in Foreign Exchange Rates", exchange differences
arising in respect of long term foreign currency monetary items used
for acquisition of depreciable capital asset, are added to or deducted
from the cost of asset and are depreciated over the balance useful life
of asset.
iii) The premium or discount arising on entering into a forward
exchange contract for hedging underlying assets and liabilities is
measured by the difference between the exchange rate at the date of the
inception of the forward exchange contract and the forward rate
specified in the contract and is amortised as expense or income over
the life of the contract. Exchange difference on a forward exchange
contract is the difference between:
- the foreign currency amount of the contract translated at the
exchange rate at the reporting date, or the settlement date where the
transaction is settled during the reporting period, and;
- the same foreign currency amount translated at the latter of the date
of inception of the forward exchange contract and the last reporting
date.
These exchange differences are recognised in the Statement of Profit
and Loss in the reporting period in which the exchange rates change.
iv) Derivatives
Apart from forward exchange contracts taken to hedge existing assets or
liabilities, the Company also uses derivatives to hedge its foreign
currency risk exposure relating to firm commitments and highly probable
transactions. In accordance with the relevant announcement of the
Institute of Chartered Accountants of India, the company provides for
losses in respect of such outstanding derivative contracts at the
balance sheet date by marking them to market. Net gain, if any, is not
recognised. The contracts are aggregated category-wise, to determine
the net gain/loss.
j) Investments
Long-term investments, including their current portion, are carried at
cost less diminution, other than temporary in value. Current
investments are carried at the lower of cost and fair value which is
computed category wise.
k) employee benefits
i) Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. Benefits
such as salaries, wages, and bonus, etc., are recognised in the
Statement of Profit and Loss in the period in which the employee
renders the related service.
ii) Post-employment benefit
Defined contribution plan
The Company deposits the contributions for provident fund and
employees' state insurance to the appropriate government authorities
and these contributions are recognised in the Statement of Profit and
Loss in the financial year to which they relate.
Defined benefit plan
The Company's gratuity scheme is a defined benefit plan. The present
value of the obligation under such defined benefit plan is determined
based on actuarial valuation carried out at the end of the year by an
independent actuary, using the Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation is measured at the present
value of the estimated future cash flows. The discount rates used for
determining the present value of the obligation under defined benefit
plans is based on the market yields on Government Securities for
relevant maturity. Actuarial gains and losses are recognized
immediately in the Statement of Profit and Loss.
iii) Other long term employee benefits
Benefits under the Company's compensated absences constitute other
long-term employee benefits. The liability in respect of compensated
absences is provided on the basis of an actuarial valuation done by an
independent actuary at the year end. Actuarial gains and losses are
recognised immediately in the Statement of Profit and Loss.
l) employee stock option scheme
The Company calculates the compensation cost based on the intrinsic
value method wherein the excess of value of underlying equity shares as
on the date of the grant of options over the exercise price of the
options given to employees under the employee stock option schemes of
the Company, is recognised as deferred stock compensation cost and
amortised over the vesting period on a graded vesting basis.
m) Leases
Operating lease
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Operating lease charges are recognised as an expense
in the Statement of Profit and Loss on a straight line basis.
n) earnings per share
Basic earning/loss 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 year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
o) taxation
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 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 realized. However
deferred tax arising from brought forward losses is recognised only
when there is virtual certainty supported by convincing evidence that
such asset will be realized.
Minimum alternative tax (MAT) paid in accordance with the tax laws,
which gives rise to future economic benefits in the form of adjustment
of future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax in
future years. In the year in which MAT credit becomes eligible to be
recognised as an asset in accordance with the recommendations contained
in guidance note issued by the Institute of Chartered Accountants of
India, the said asset is created by way of a credit to the statement of
profit and loss 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 the Company will pay
normal income tax during the specified year.
p) provisions and contingent liabilities
The Company recognises a provision when there is a present obligation
as a result of a past event and it is more likely than not that there
will be an outflow of resources embodying economic benefits to settle
such obligations and the amount of such obligation can be reliably
estimated. Provisions are not discounted to their present value and are
determined based on the management's estimation of the outflow required
to settle the obligation at the balance sheet date. These are reviewed
at each balance sheet date and adjusted to reflect current management
estimates.
Contingent liabilities are disclosed in respect of possible obligations
that have arisen from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of future events,
not wholly within the control of the Company. Contingent liabilities
are also disclosed for the present obligations that have arisen from
past events in respect of which it is not probable that there will be
an outflow of resources or a reliable estimate of the amount of
obligation cannot be made.
When there is an obligation in respect of which the likelihood of
outflow of resources is remote, no provision or disclosure is made.
q) Cash and cash equivalents
Cash and cash equivalents in the Cash Flow Statement comprise cash at
bank and in hand, cheques in hand and short term investments with an
original maturity of three months or less
Mar 31, 2014
A) Basis of preparation of financial statements
The financial statements are prepared under the historical cost
convention, on accrual basis of accounting, in accordance with the
applicable Accounting Standards (''AS'') notifed under the Companies Act,
1956, read with the General Circular 15/2013 dated 13th September 2013
of the Ministry of Corporate Affairs in respect of section 133 of the
Companies Act, 2013 and presentational requirements of the Companies
Act, 1956 and/or the Companies Act, 2013 as appropriate.
b) Current/Non-current classification
All assets and liabilities are classified as current and non-current.
Assets
An asset is classified as current when it satisfes any of the following
criteria:
i) it is expected to be realized in, or is intended for sale or
consumption in, the Company''s normal operating cycle;
ii) it is held primarily for the purpose of being traded;
iii) it is expected to be realized within 12 months after the reporting
date; or
iv) it is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non-current financial
assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfes any of the
following criteria:
i) it is expected to be settled in the Company''s normal operating
cycle;
ii) it is held primarily for the purpose of being traded;
iii) it is due to be settled within 12 months after the reporting date;
or
iv) the Company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date.
Current liabilities include current portion of non-current financial
liabilities.
All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for
processing and their realization in cash or cash equivalents. The
Company considers its operating cycle to be within a period of 12
months
c) Going concern
The management believes that it is appropriate to prepare these
financial statements on a ''going concern'' basis, for the following
reasons:-
i) The Company''s DTH license was valid upto 30 September 2013. The
Company has, before the expiry of the license, approached the relevant
authorities, who have extended the validity for an interim period till
the time final policy with regard to the terms and conditions for
renewal of DTH license are laid down by the Government. The Company has
given an understanding that they shall comply with that policy during
the interim period and any financial obligations arising from the change
in policy shall be honoured by the Company, though no significant
adverse financial adjustment is expected in this regard.
ii) The DTH business necessitates long gestation period. Being frst
mover, the Company has incurred huge cost on establishment and on
awareness of the product, brand building on a pan India basis, the
benefits of which will accrue in the future years.
iii) The management is fully seized of the matter and is of the view
that going concern assumption holds true and that the Company will be
able to discharge its liabilities in the normal course of business
since the Company holds sanctioned loan facilities from banks and would
meet the debt obligations on due dates.
iv) The Company has positive operating cash flows.
Accordingly, the financial statements do not require any adjustment as
to the balances carried in the balance sheet.
d) Use of estimates
The preparation of financial statements in conformity with the GAAP in
India requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of the financial statements. Actual
results could differ from those estimates. Examples of such estimates
include estimated useful life of fixed assets, classification of
assets/liabilities as current or non-current in certain circumstances,
estimate of future obligations under employee retirement benefits, etc.
Differences between the actual results and estimates are recognised in
the year in which such results are known/ materialized. Any revision to
accounting estimates is recognised in accordance with the requirements
of the respective Accounting Standards, generally prospectively, in the
current and future periods.
e) Fixed assets
Tangible assets;
Fixed assets are recorded at the cost of acquisition, net of cenvat
credit including all incidental expenses attributable to the
acquisition and installation of assets, upto the date when the assets
are ready for use.
Consumer Premise Equipments (CPE) are capitalized on activation of the
same.
Intangible assets;
Intangible assets are recognised if it is probable that the future
economic benefits that are attributable to the asset will fow to the
Company and the cost of the asset can be measured reliably. These
assets are valued at cost which comprises the purchase price and any
directly attributable expenditure on making the asset ready for its
intended use.
License fees paid, including fee paid for acquiring license to operate
DTH services, is capitalized as intangible asset.
Cost of computer software includes license fees, cost of implementation
and appropriate system integration expenses. These costs are
capitalized as intangible assets in the year in which related software
is implemented.
f) Depreciation/amortisation
Tangible assets
Depreciation on tangible fixed assets, except CPEs, is provided on the
straight-line method at the rates specified in Schedule XIV of the
Companies Act, 1956. CPEs are depreciated over their useful life of five
years, as estimated by the management [also refer to note 50]. CPEs
that remain inactive for a specified long period of time, determined
based on past experience, are depreciated on accelerated basis.
Corresponding lease advances in such cases are recognised as income.
Leasehold improvements are amortised over the period of lease or their
useful lives, whichever is shorter.
Aircraft is depreciated over the estimated useful life of ten years.
Assets individually costing upto Rs. 5,000 are fully depreciated in the
year of purchase, wherever necessary in terms of Schedule XIV to the
Companies Act, 1956.
Intangible assets
Goodwill on acquisition is amortised over a period of five years.
DTH license fee is amortized over the period of license and other
license fees are amortized over the management estimate of useful life
of five years.
Software are amortised on straight line method over an estimated life.
g) Impairment
The carrying amounts of the Company''s assets (including goodwill) are
reviewed at each balance sheet date in accordance with Accounting
Standard 28 ''Impairment of Assets'', to determine whether there is any
indication of impairment. If any such indication exists, the asset''s
recoverable amount is estimated as higher of its net selling price and
value in use. An impairment loss is recognized whenever the carrying
amount of an asset or its cash generating unit exceeds its recoverable
amount. Impairment losses are recognised in the Statement of profit and
Loss.
An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset''s carrying amount does
not exceed the carrying amount that would have been determined net of
depreciation or amortisation, had no impairment loss been recognised.
h) Inventories
Inventories of CPE related accessories and spares are valued at the
lower of cost and net realisable value. Cost of inventories includes
all costs incurred in bringing the inventories to their present
location and condition. Cost is determined on a weighted average basis.
i) Revenue recognition
i) Service income
- Subscription and other service revenues are recognized on an accrual
basis on rendering of the service.
- Lease rental is recognized as revenue as per the terms of the
contract of operating lease over the period of lease on a straight line
basis.
- Activation fee is recognised on an upfront basis considering the
level of services rendered on activation, the corresponding cost
incurred and separate consideration charged for the subsequent
continuing services (refer to note 51).
ii) Sale of goods
- Revenue from sale of stock-in-trade is recognised when the products
are dispatched against orders to the customers in accordance with the
contract terms, which coincides with the transfer of risks and rewards.
- Sales are stated net of rebates, trade discounts, sales tax and sales
returns.
iii) Interest income
Income from deployment of surplus funds is recognised using the time
proportion method, based on interest rates implicit in the transaction.
j) Foreign currency transactions and forward contracts
Foreign currency transactions
i) Foreign currency transactions are accounted for at the exchange rate
prevailing on the date of the transaction. All monetary foreign
currency assets and liabilities are converted at the exchange rates
prevailing at the date of the balance sheet. All exchange differences,
other than in relation to acquisition of fixed assets and other long
term foreign currency monetary liabilities are dealt with in the
Statement of profit and Loss.
ii) In accordance with Accounting Standard-11, "Accounting for the
Effects of Changes in Foreign Exchange Rates", exchange differences
arising in respect of long term foreign currency monetary items used
for acquisition of depreciable capital asset, are added to or deducted
from the cost of asset and are depreciated over the balance useful life
of asset.
iii) The premium or discount arising on entering into a forward
exchange contract for hedging underlying assets and liabilities is
measured by the difference between the exchange rate at the date of the
inception of the forward exchange contract and the forward rate
specified in the contract and is amortised as expense or income over the
life of the contract. Exchange difference on a forward exchange
contract is the difference between:
- the foreign currency amount of the contract translated at the
exchange rate at the reporting date, or the settlement date where the
transaction is settled during the reporting period, and;
- the same foreign currency amount translated at the latter of the date
of inception of the forward exchange contract and the last reporting
date.
These exchange differences are recognised in the Statement of profit and
Loss in the reporting period in which the exchange rates change.
iv) Derivatives
Apart from forward exchange contracts taken to hedge existing assets or
liabilities, the Company also uses derivatives to hedge its foreign
currency risk exposure relating to firm commitments and highly probable
transactions. In accordance with the relevant announcement of the
Institute of Chartered Accountants of India, the company provides for
losses in respect of such outstanding derivative contracts at the
balance sheet date by marking them to market. Net gain, if any, is not
recognised. The contracts are aggregated category-wise, to determine
the net gain/loss.
k) Investments
Long-term investments, including their current portion, are carried at
cost less diminution, other than temporary in value. Current
investments are carried at the lower of cost and fair value which is
computed category wise.
l) Employee benefits
i) Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. benefits such
as salaries, wages, and bonus, etc., are recognised in the Statement of
profit and Loss in the period in which the employee renders the related
service.
ii) Post employment benefit
Defined contribution plan
The Company deposits the contributions for provident fund to the
appropriate government authorities and these contributions are
recognised in the Statement of profit and Loss in the financial year to
which they relate.
Defined benefit plan
The Company''s gratuity scheme is a Defined benefit plan. The present
value of the obligation under such Defined benefit plan is determined
based on actuarial valuation carried out at the end of the year by an
independent actuary, using the Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation is measured at the present value
of the estimated future cash flows. The discount rates used for
determining the present value of the obligation under Defined benefit
plans is based on the market yields on Government Securities for
relevant maturity. Actuarial gains and losses are recognized
immediately in the Statement of profit and Loss.
iii) Other long term employee benefits
benefits under the Company''s leave encashment constitute other long-term
employee benefits. The liability in respect of vacation pay is provided
on the basis of an actuarial valuation done by an independent actuary
at the year end. Actuarial gains and losses are recognised immediately
in the Statement of profit and Loss.
m) Employee stock option scheme
The Company calculates the compensation cost based on the intrinsic
value method wherein the excess of value of underlying equity shares as
on the date of the grant of options over the exercise price of the
options given to employees under the employee stock option schemes of
the Company, is recognised as deferred stock compensation cost and
amortised over the vesting period on a graded vesting basis.
n) Leases
Operating lease
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as operating
leases. Operating lease charges are recognised as an expense in the
Statement of profit and Loss on a straight line basis.
o) Earnings per share
Basic earning/loss 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 year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
p) Taxation
Income tax expense comprises current tax and deferred tax charge or
credit. Current tax provision is made based on the tax liability
computed after considering tax allowances and exemptions under the
Income tax Act, 1961. The deferred tax charge or credit and the
corresponding deferred tax liability and assets are recognised using
the tax rates that have been enacted or substantively enacted on the
balance sheet date.
In case of unabsorbed depreciation or carry forward losses, deferred
tax assets are recognised only if there is virtual certainty of
realisation of such amounts. In other cases, other deferred tax assets
are recognised only to the extent there is reasonable certainty of
realisation in future. Deferred tax assets are reviewed at each balance
sheet date to reassess their realisability and are written down or
written up to refect the amount that is reasonably/ virtually certain,
as the case may be.
q) Provisions and contingent liabilities
The Company recognises a provision when there is a present obligation
as a result of a past event and it is more likely than not that there
will be an outflow of resources embodying economic benefits to settle
such obligations and the amount of such obligation can be reliably
estimated. Provisions are not discounted to their present value and are
determined based on the management''s estimation of the outflow required
to settle the obligation at the balance sheet date. These are reviewed
at each balance sheet date and adjusted to refect current management
estimates.
Contingent liabilities are disclosed in respect of possible obligations
that have arisen from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of future events, not
wholly within the control of the Company. Contingent liabilities are
also disclosed for the present obligations that have arisen from past
events in respect of which it is not probable that there will be an
outflow of resources or a reliable estimate of the amount of obligation
cannot be made.
When there is an obligation in respect of which the likelihood of
outflow of resources is remote, no provision or disclosure is made.
33. a) On 1 April 2013, shareholding in Digital Network Distribution
Pte Limited, Company''s wholly owned subsidiary in Singapore, was
transferred to another party at an agreed price of Singapore Dollar
12,000 pursuant to Share Purchase Agreement dated 19 March 2013 and
accordingly, as at 31 March 2013, the investment was shown under
current maturities of long term investment.
b) Dish T V Lanka (Private) Limited, a Joint Venture (''JV'') Company,
was incorporated on 25 April 2012 under the laws of Sri Lanka. Dish TV
India Ltd holds 70% share capital (and, thus, considered as a
subsidiary company) in the JV Company with Satnet (Private) Limited, a
company duly incorporated and having a DTH License in Sri Lanka,
holding 30% of the share capital. The said JV Company shall engage in
providing DTH related services in Sri Lanka.
c) Xingmedia Distribution Private Limited (Xingmedia) was incorporated
on 13 February 2014 under the Companies Act, 1956. Consequent upon the
approval of the Board of Directors and Shareholders of the Company, the
entire share capital of Xingmedia, comprising of 10,000 equity shares
having face value of Rs. 10 each, was acquired by the Company at Rs.
100,000. Accordingly, Xingmedia became the wholly owned subsidiary of
the Company on 24 March 2014. Subsequently, upon the approval of the
Board of Directors, the Company has subscribed to additional
118,000,000 equity shares of Xingmedia at Rs. 10 per equity share.
Xingmedia shall undertake activities which would include providing
support services for satellite based communication services,
broadcasting content services, management of hard assets like CPEs and
their installation, value added services, etc. to achieve its
objectives.
Mar 31, 2013
A) Basis of preparation of financial statements
The financial statements are prepared under the historical cost
convention, on accrual basis of accounting, in accordance with the
Generally Accepted Accounting Principles (''GAAP'') in India and comply
with the mandatory Accounting Standards as notified by the Companies
(Accounting Standards) Rules, 2006, to the extent applicable, and the
presentational requirements of the Companies Act, 1956
b) Current/ Non-current classification
All assets and liabilities are classified as current and non-current.
Assets
An asset is classified as current when it satisfies any of the
following criteria:
i) it is expected to be realized in, or is intended for sale or
consumption in, the Company''s normal operating cycle;
ii) it is held primarily for the purpose of being traded;
iii) it is expected to be realized within 12 months after the reporting
date; or
iv) it is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non-current financial
assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
i) it is expected to be settled in the Company''s normal operating
cycle;
ii) it is held primarily for the purpose of being traded;
iii) it is due to be settled within 12 months after the reporting date;
or
iv) the Company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date.
Current liabilities include current portion of non-current financial
liabilities.
All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for
processing and their realization in cash or cash equivalents.
c) Going concern
The management believes that it is appropriate to prepare these
financial statements on a ''going concern'' basis, for the following
reasons:-
i) The Company holds a DTH license from Government of India which is
valid till 30 September 2013 and the process of renewal of the same has
been initiated. The Company is of the view that the license would
certainly be renewed considering the involvement of interest of public
at large.
ii) The DTH business necessitates long gestation period. Being first
mover, the Company has incurred huge cost on establishment and on
awareness of the product, brand building on a pan India basis, the
benefits of which will accrue in the future years.
iii) The management is fully seized of the matter and is of the view
that going concern assumption holds true and that the Company will be
able to discharge its liabilities in the normal course of business
since the Company holds sanctioned loan facilities from banks and would
meet the debt obligations on due dates.
iv) The Company has positive operating cash flows.
Accordingly, the financial statements do not require any adjustment as
to the balances carried in the balance sheet.
d) Use of estimates
The preparation of financial statements in conformity with the GAAP in
India requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of the financial statements. Actual
results could differ from those estimates. Examples of such estimates
include estimated useful life of fixed assets, classification of
assets/liabilities as current or non-current in certain circumstances,
estimate of future obligations under employee retirement benefits, etc.
Differences between the actual results and estimates are recognised in
the year in which such results are known/ materialized. Any revision to
accounting estimates is recognised in accordance with the requirements
of the respective Accounting Standards, generally prospectively, in the
current and future periods.
e) Fixed assets Tangible assets;
Fixed assets are recorded at the cost of acquisition, net of cenvat
credit including all incidental expenses attributable to the
acquisition and installation of assets, upto the date when the assets
are ready for use.
Consumer Premise Equipments (CPE) are capitalized on activation of the
same.
Intangible assets;
Intangible assets are recognised if it is probable that the future
economic benefits that are attributable to the asset will flow to the
Company and the cost of the asset can be measured reliably. These
assets are valued at cost which comprises the purchase price and any
directly attributable expenditure on making the asset ready for its
intended use.
License fees paid, including fee paid for acquiring license to operate
DTH services, is capitalized as intangible asset.
Cost of computer software includes license fees, cost of implementation
and appropriate system integration expenses. These costs are
capitalized as intangible assets in the year in which related software
is implemented.
f) Depreciation/ amortisation
Tangible assets
Depreciation on tangible fixed assets, except CPEs, is provided on the
straight-line method at the rates specified in Schedule XIV of the
Companies Act, 1956. CPEs are depreciated over their useful life of
five years, as estimated by the management [also refer to note 50].
CPEs that remain inactive for a specified long period of time,
determined based on past experience, are depreciated on accelerated
basis. Corresponding lease advances in such cases are recognised as
income.
Leasehold improvements are amortised over the period of lease or their
useful lives, whichever is shorter.
Aircraft is depreciated over the estimated useful life of ten years.
Assets individually costing upto Rs. 5,000 are fully depreciated in the
year of purchase, wherever necessary in terms of Schedule XIV to the
Companies Act, 1956.
Intangible assets
Goodwill on acquisition is amortised over a period of five years.
DTH license fee is amortized over the period of license and other
license fees are amortized over the management estimate of useful life
of five years.
Software are amortised on straight line method over an estimated life.
g) Impairment
The carrying amounts of the Company''s assets (including goodwill) are
reviewed at each balance sheet date in accordance with Accounting
Standard 28 ''Impairment of Assets'', to determine whether there is any
indication of impairment. If any such indication exists, the asset''s
recoverable amount is estimated as higher of its net selling price and
value in use. An impairment loss is recognized whenever the carrying
amount of an asset or its cash generating unit exceeds its recoverable
amount. Impairment losses are recognised in the Statement of Profit
and Loss.
An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset''s carrying amount does
not exceed the carrying amount that would have been determined net of
depreciation or amortisation, had no impairment loss been recognised.
h) Inventories
Inventories of CPE related accessories and spares are valued at the
lower of cost and net realisable value. Cost of inventories includes
all costs incurred in bringing the inventories to their present
location and condition. Cost is determined on a weighted average basis.
i) Revenue recognition
i) Service income
- Subscription and other service revenues are recognized on an accrual
basis on rendering of the service.
- Lease rental is recognized as revenue as per the terms of the
contract of operating lease over the period of lease on a straight line
basis.
ii) Sale of goods
- Revenue from sale of stock-in-trade is recognised when the products
are dispatched against orders to the customers in accordance with the
contract terms, which coincides with the transfer of risks and rewards.
- Sales are stated net of rebates, trade discounts, sales tax and sales
returns.
iii) Interest income
Income from deployment of surplus funds is recognised using the time
proportion method, based on interest rates implicit in the transaction.
j) Foreign currency transactions and forward contracts
Foreign currency transactions
i) Foreign currency transactions are accounted for at the exchange rate
prevailing on the date of the transaction. All monetary foreign
currency assets and liabilities are converted at the exchange rates
prevailing at the date of the balance sheet. All exchange differences,
other than in relation to acquisition of fixed assets and other long
term foreign currency monetary liabilities are dealt with in the
Statement of Profit and Loss.
ii) In accordance with Accounting Standard-11, "Accounting for the
Effects of Changes in Foreign Exchange Rates", exchange differences
arising in respect of long term foreign currency monetary items used
for acquisition of depreciable capital asset, are added to or deducted
from the cost of asset and are depreciated over the balance useful life
of asset.
iii) The premium or discount arising on entering into a forward
exchange contract for hedging underlying assets and liabilities is
measured by the difference between the exchange rate at the date of the
inception of the forward exchange contract and the forward rate
specified in the contract and is amortised as expense or income over
the life of the contract. Exchange difference on a forward exchange
contract is the difference between:
- the foreign currency amount of the contract translated at the
exchange rate at the reporting date, or the settlement date where the
transaction is settled during the reporting period, and;
- the same foreign currency amount translated at the latter of the date
of inception of the forward exchange contract and the last reporting
date.
These exchange differences are recognised in the Statement of Profit
and Loss in the reporting period in which the exchange rates change.
iv) Derivatives
The Company enters into derivative transactions for hedging purposes.
In respect of interest rate swaps, which are not covered by Accounting
Standard 11 ''The Effects of Changes in Foreign Exchange Rates'', such
contracts are marked to market and provision for net loss, if any, is
recognised in the Statement of Profit and Loss. Resultant gains, if
any, on account of mark to market are ignored. The Company does not
hold or issue derivative financial instruments for trading or
speculative purposes.
k) Investments
Long-term investments, including their current portion, are carried at
cost less diminution, other than temporary in value. Current
investments are carried at the lower of cost and fair value which is
computed category wise.
l) Employee benefits
i) Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. Benefits
such as salaries, wages, and bonus, etc., are recognised in the
Statement of Profit and Loss in the period in which the employee
renders the related service.
ii) Post employment benefit Defined contribution plan
The Company deposits the contributions for provident fund to the
appropriate government authorities and these contributions are
recognised in the Statement of Profit and Loss in the financial year to
which they relate.
Defined benefit plan
The Company''s gratuity scheme is a defined benefit plan. The present
value of the obligation under such defined benefit plan is determined
based on actuarial valuation carried out at the end of the year by an
independent actuary, using the Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation is measured at the present
value of the estimated future cash flows. The discount rates used for
determining the present value of the obligation under defined benefit
plans is based on the market yields on Government Securities for
relevant maturity. Actuarial gains and losses are recognized
immediately in the Statement of Profit and Loss.
iii) Other long term employee benefits
Benefits under the Company''s leave encashment constitute other
long-term employee benefits. The liability in respect of vacation pay
is provided on the basis of an actuarial valuation done by an
independent actuary at the year end. Actuarial gains and losses are
recognised immediately in the Statement of Profit and Loss.
m) Employee stock option scheme
The Company calculates the compensation cost based on the intrinsic
value method wherein the excess of value of underlying equity shares as
on the date of the grant of options over the exercise price of the
options given to employees under the employee stock option schemes of
the Company, is recognised as deferred stock compensation cost and
amortised over the vesting period on a graded vesting basis.
n) Leases
Operating lease
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Operating lease charges are recognised as an expense
in the Statement of Profit and Loss on a straight line basis.
o) Earnings per share
Basic earning/loss 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 year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
p) Taxation
Income tax expense comprises current tax and deferred tax charge or
credit. Current tax provision is made based on the tax liability
computed after considering tax allowances and exemptions under the
Income tax Act, 1961. The deferred tax charge or credit and the
corresponding deferred tax liability and assets are recognised using
the tax rates that have been enacted or substantively enacted on the
balance sheet date.
In case of unabsorbed depreciation or carry forward losses, deferred
tax assets are recognised only if there is virtual certainty of
realisation of such amounts. In other cases, other deferred tax assets
are recognised only to the extent there is reasonable certainty of
realisation in future. Deferred tax assets are reviewed at each balance
sheet date to reassess their realisability and are written down or
written up to reflect the amount that is reasonably/ virtually certain,
as the case may be.
q) Provisions and contingent liabilities
The Company recognises a provision when there is a present obligation
as a result of a past event and it is more likely than not that there
will be an outflow of resources embodying economic benefits to settle
such obligations and the amount of such obligation can be reliably
estimated. Provisions are not discounted to their present value and are
determined based on the management''s estimation of the outflow required
to settle the obligation at the balance sheet date. These are reviewed
at each balance sheet date and adjusted to reflect current management
estimates.
Contingent liabilities are disclosed in respect of possible obligations
that have arisen from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of future events,
not wholly within the control of the Company. Contingent liabilities
are also disclosed for the present obligations that have arisen from
past events in respect of which it is not probable that there will be
an outflow of resources or a reliable estimate of the amount of
obligation cannot be made. When there is an obligation in respect of
which the likelihood of outflow of resources is remote, no provision or
disclosure is made.
Mar 31, 2012
A) Basis of preparation of financial statements
The financial statements are prepared under the historical cost
convention, on accrual basis of accounting, in accordance with the
Generally Accepted Accounting Principles ('GAAP') in India and comply
with the mandatory Accounting Standards as notified by the Companies
(Accounting Standards) Rules, 2006, to the extent applicable, and the
presentational requirements of the Companies Act, 1956. 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. Based on the nature of
products/services and the time between the acquisition of assets for
processing and their realisation in cash and cash equivalents, the
Company has ascertained its operating cycle being a period within 12
months for the purposes of classification of assets and liabilities as
current and non-current.
b) Going concern
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The management believes that
it is appropriate to prepare these financial statements on a 'going
concern' basis, for following reasons:-
i) The Company holds the valid DTH license from Government of India.
ii) The DTH business necessitates long gestation period. Being first
mover, the Company has incurred huge cost on establishment and on
awareness of the product, brand building on a PAN India basis, the
benefits of which will accrue in the future years.
iii) The management is fully seized of the matter and is of the view
that going concern assumption holds true and that the Company will be
able to discharge its liabilities in the normal course of business
since the Company holds sanctioned loan facilities from banks and would
meet the debt obligations on due dates.
iv) The Company has reasonable operating cash flows.
Accordingly, the financial statements do not require any adjustment as
to the balances carried in the balance sheet.
c) Use of estimates
The preparation of financial statements in conformity with the GAAP in
India requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of the financial statements. Actual
results could differ from those estimates. Examples of such estimates
include estimated useful life of fixed assets, classification of
assets/liabilities as current or non-current in certain circumstances,
estimate of future obligations under employee retirement benefits, etc.
Differences between the actual results and estimates are recognised in
the year in which such results are known/ materialized. Any revision
to accounting estimates is recognised in accordance with the
requirements of the respective Accounting Standards, generally
prospectively, in current and future periods.
d) Fixed assets
Tangible assets
Fixed assets are recorded at the cost of acquisition, net of cenvat
credit, including all incidental expenses attributable to the
acquisition and installation of assets, upto the date when the assets
are ready for use.
CPEs are capitalized on activation of the same.
Intangible assets
Intangible assets are recognised if it is probable that the future
economic benefits that are attributable to the asset will flow to the
Company and the cost of the asset can be measured reliably. These
assets are valued at cost which comprises the purchase price and any
directly attributable expenditure on making the asset ready for its
intended use.
License fees paid, including fee paid for acquiring license to operate
DTH services, is capitalized as intangible asset.
Cost of computer software includes license fees, cost of implementation
and appropriate system integration expenses. These costs are
capitalized as intangible assets in the year in which related software
is implemented.
e) Depreciation/ amortisation
Tangible assets
Depreciation on tangible fixed assets, except CPEs, is provided on the
straight-line method at the rates specified in Schedule XIV of the
Companies Act, 1956. CPEs are depreciated over their useful life of
five years, as estimated by the management, (also refer to note 39
(b)). CPEs that remain inactive for a specified long period of time,
determined based on past experience, are depreciated on accelerated
basis.
Corresponding lease advances in such cases are recognised as income.
Leasehold improvements are amortised over the period of lease or their
useful lives, whichever is shorter.
Assets individually costing upto Rs. 5,000 are fully depreciated in the
year of purchase.
Intangible assets
Goodwill on acquisition is amortised over a period of five years.
DTH license fee is amortized over the period of license and other
license fees are amortized over the management estimate of useful life
of five years.
Software are amortised on straight line method over an estimated life.
f) Impairment
The carrying amounts of the Company's assets (including goodwill) are
reviewed at each balance sheet date in accordance with Accounting
Standard 28 'Impairment of Assets', to determine whether there is any
indication of impairment. If any such indication exists, the asset's
recoverable amount is estimated as higher of its net selling price and
value in use. An impairment loss is recognized whenever the carrying
amount of an asset or its cash generating unit exceeds its recoverable
amount. Impairment losses are recognised in the Statement of Profit and
Loss.
An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset's carrying amount does
not exceed the carrying amount that would have been determined net of
depreciation or amortisation, had no impairment loss been recognised.
g) Borrowing costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets to the extent that they relate to the period till such
assets are ready to be put to use. A qualifying asset is one that
necessarily takes substantial period of time to get ready for its
intended use. All other borrowing costs are charged to Statement of
Profit and Loss.
h) Inventories
Inventories of CPEs and related accessories are valued at the lower of
cost and net realisable value. Cost of inventories includes all costs
incurred in bringing the inventories to their present location and
condition. Cost is determined on a weighted average basis.
i) Revenue recognition
i) Service income
- Subscription and other service revenues are recognized on an accrual
basis on rendering of the service.
- Lease rental is recognized as revenue as per the terms of the
contract of operating lease over the period of lease on a straight line
basis.
ii) Sale of goods
- Revenue from sale of stock -in- trade is recognised when the products
are dispatched against orders to the customers in accordance with the
contract terms, which coincides with the transfer of risks and rewards.
- Sales are stated net of rebates, trade discounts, sales tax and sales
returns.
iii) Interest income
Income from deployment of surplus funds is recognised using the time
proportion method, based on interest rates implicit in the transaction.
j) Foreign currency transactions and forward contracts
Foreign currency transactions i) Foreign currency transactions are
accounted for at the exchange rate prevailing on the date of the
transaction. All monetary foreign currency assets and liabilities are
converted at the exchange rates prevailing at the date of the balance
sheet. All exchange differences, other than in relation to acquisition
of fixed assets and other long term foreign currency monetary
liabilities are dealt with in the Statement of Profit and Loss.
ii) In accordance with Accounting Standard-11, "Accounting for the
Effects of Changes in Foreign Ex change Rates", exchange differences
arising in respect of long term foreign currency monetary items used
for acquisition of depreciable capital asset, are added to or deducted
from the cost of asset and are depreciated over the balance life of
asset.
iii) The premium or discount arising on entering into a forward
exchange contract for hedging underlying assets and liabilities is
measured by the difference between the exchange rate at the date of the
inception of the forward exchange contract and the forward rate
specified in the contract and is amortised as expense or income over
the life of the contract. Exchange difference on a forward exchange
contract is the difference between: the foreign currency amount of the
contract translated at the exchange rate at the reporting date, or the
settlement date where the transaction is settled during the reporting
period, and;
the same foreign currency amount translated at the latter of the date
of inception of the forward exchange contract and the last reporting
date.
These exchange differences are recognised in the Statement of Profit
and Loss in the reporting period in which the exchange rates change.
iv) Derivatives
The Company enters into derivative transactions for hedging purposes.
In respect of interest rate swaps, which are not covered by Accounting
Standard 11 'The Effects of Changes in Foreign Exchange Rates', such
contracts are marked to market and provision for net loss, if any, is
recognised in the Statement of Profit and Loss. Resultant gains, if
any, on account of mark to market are ignored. The Company does not
hold or issue derivative financial instruments for trading or
speculative purposes.
k) Investments
Investments are classified as long term or current based on the intent
of the management at the time of acquisition.
Long term investments are carried at cost. The carrying value of such
investments is adjusted for other than temporary diminution in value,
where necessary. Current investments are valued at the lower of cost
and fair value.
i) Employee benefits
i) Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. Benefits
such as salaries, wages, and bonus, etc., are recognised in the
Statement of Profit and Loss in the period in which the employee
renders the related service.
ii) Post employment benefit
Defined contribution plan
The Company deposits the contributions for provident fund to the
appropriate government authorities and these contributions are
recognised in the Statement of Profit and Loss in the financial year to
which they relate.
Defined benefit plan
The Company's gratuity scheme is a defined benefit plan. The present
value of the obligation under such defined benefit plan is determined
based on actuarial valuation carried out at the end of the year by an
independent actuary, using the Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation is measured at the present
value of the estimated future cash flows.
The discount rates used for determining the present value of the
obligation under defined benefit plans is based on the market yields on
Government Securities for relevant maturity. Actuarial gains and losses
are recognized immediately in the Statement of Profit and Loss.
iii) Other long term employee benefits
Benefits under the Company's leave encashment constitute other
long-term employee benefits. The liability in respect of vacation pay
is provided on the basis of an actuarial valuation done by an
independent actuary at the year end. Actuarial gains and losses are
recognised immediately in the Statement of Profit and Loss.
m) Employee stock option scheme
The Company calculates the compensation cost based on the intrinsic
value method wherein the excess of value of underlying equity shares as
on the date of the grant of options over the exercise price of the
options given to employees under the employee stock option schemes of
the Company, is recognised as deferred stock compensation cost and
amortised over the vesting period on a graded vesting basis.
n) Leases
Operating lease
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Operating lease charges are recognised as an expense
in the Statement of Profit and Loss on a straight line basis.
o) Earnings per share
Basic earnings/loss 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 year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
p) Taxation
Income tax expense comprises current tax and deferred tax charge or
credit. Current tax provision is made based on the tax liability
computed after considering tax allowances and exemptions under the
Income tax Act, 1961. The deferred tax charge or credit and the
corresponding deferred tax liability and assets are recognised using
the tax rates that have been enacted or substantively enacted on the
balance sheet date. Deferred tax assets arising from unabsorbed
depreciation or carry forward losses are recognised only if there is
virtual certainty of realisation of such amounts. Other deferred tax
assets are recognised only to the extent there is reasonable certainty
of realisation in future. Deferred tax assets are reviewed at each
balance sheet date to reassess their readability and are written down
or written up to reflect the amount that is reasonably/ virtually
certain, as the case may be.
q) Provisions and contingent liabilities
The Company recognises a provision when there is a present obligation
as a result of a past event and it is more likely than not that there
will be an outflow of resources embodying economic benefits to settle
such obligations and the amount of such obligation can be reliably
estimated. Provisions are not discounted to their present value and are
determined based on the management's estimation of the outflow required
to settle the obligation at the balance sheet date. These are reviewed
at each balance sheet date and adjusted to reflect current management
estimates.
Contingent liabilities are disclosed in respect of possible obligations
that have arisen from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of future events,
not wholly within the control of the Company. Contingent liabilities
are also disclosed for the present obligations in respect of which it
is not possible that there will be an outflow of resources or a
reliable estimate of the amount of obligation cannot be made.
When there is an obligation in respect of which the likelihood of
outflow of resources is remote, no provision or disclosure is made.
a) Term loans
i) Term loans of Rs. 22,669 lacs (previous year Rs. 25,907 lacs) are under
syndicate Rupee Loan Facility and are secured by the creation of a
first ranking charge by way of mortgage in favor of a security trustee
over all the immoveable assets, present and future, a charge by way of
hypothecation over (i) all the moveable assets, present and future;
(ii) the balances lying in and to the credit of certain accounts and
the proceeds of any investments made out of the said balances; and
(iii) all the rights, title and interest in various contracts,
authorizations, approvals and licenses, including the DTH license (to
the extent that it is capable of being charged or assigned) and
insurance policies. Further, an amount equal to three months payment
of principal and interest on the outstanding facility is guaranteed by
Zee Entertainment Enterprises Limited, a related party [refer to note
38 e)].
ii) Term loan from a bank of Rs. 1,250 lacs (previous year Rs. 6,250 lacs)
is secured by subservient charge on all assets (both present and
future). Further, unconditional and irrevocable Corporate Guarantee of
Zee Entertainment Enterprises Limited, a related party [refer to note
38 e)].
iii) Term loan of nil (previous year Rs. 21,000 lacs) is secured by
second pari passu charge on entire fixed assets of the Company and is
guaranteed by two directors and also collaterally secured by immovable
property and corporate guarantee provided by Rama Associates Limited
and Essel Infra Projects Limited, related parties [refer to note 38
e)].
b) Buyer's credits
i) Buyer's credit of Rs. 33,280 lacs (previous year Rs. 7,628 lacs) is
secured by pari passu first charge on the movable and immovable fixed
assets and current assets of the Company. Further, a corporate
guarantee is given by Dhaka Vferriors Sports Private Limited in
respect of this loan.
ii) Buyer's credit of Rs. 20,033 lacs (previous year Rs. 16,994 lacs) is
secured by first ranking pari passu charge on all present and future
tangible movable/ immovable and current assets of the Company including
proceeds account; exclusive charge on reserve account; assignment of
rights, titles and interest of the Company in all the contracts,
authorisations, approvals, and licenses (to the extent the same are
capable of being assigned); and assignment of all insurance policies.
iii) Buyer's credit ofRs. 36,857 lacs (previous yearRs. 10,689 lacs) is
secured by first pari passu charge on all present and future movable
and immovable assets, including but not limited to inventory of
set-top-boxes and accessories etc., book debts, operating cash flows,
receivables, commissions, revenue of whatever nature and wherever
arising, present and future, and on all intangibles assets including
but not limited to goodwill and uncalled capital, present and future,
of the Company. Further, a corporate guarantee is given by Churu
Trading Company Private Limited and Jayneer Capital Private Limited and
a personal guarantee by key managerial personnel in respect of this
loan.
iv) Buyer's credit of Rs. nil (previous year Rs. 7,578 lacs ) is secured by
first charge on current assets, movable properties, receivables and
equipment that rank pari passu with the charge of certain other
lenders, both present and future. Further, a corporate guarantee is
given by Zee Entertainment Enterprises Limited in respect of these
loans, under which, a default by the Company would give ICICI the right
to accelerate the loan, Zee Entertainment Enterprises Limited has
covenanted that it will not provide any guarantee for repayment of any
facility in excess of Rs. 20,000 lacs.
Terms of repayment
Repayable in quarterly installments
i) Loan amounting to Rs. 3,351 lacs as on reporting date is payable in 14
quarterly installments alongwith monthly interest at bank rate plus
3.25% p.a. ii) Loan amounting to f 6,563 lacs as on reporting date is
payable in 14 quarterly installments alongwith monthly interest at bank
rate plus 2.25% p.a. iii) Loan amounting to f 8,380 lacs as on
reporting date is payable in 14 quarterly installments alongwith
monthly interest at bank rate plus 1.75% p.a. iv) Loan amounting to Rs.
4,375 lacs as on reporting date is payable in 14 quarterly installments
alongwith monthly interest at bank rate plus 0.50% plus 1.80% p.a.
Loan amounting to Rs. 1250 lacs as on reporting date is payable in one
quarterly installment alongwith monthly interest at Prime Lending Rate
(PLR) minus 4.5% p.a.
The loan has been repaid during the year.
Buyer's credit comprises of several loan transactions ranging between 2
to 3 years of maturities. Each transaction is repayable in full on
maturity dates falling between November' 2014 (being farthest) and
September' 2013 (being closest). Interest on all Buyer's Credit is
payable in half yearly installments ranging from Libor plus 135 bps to
Libor plus 240 bps
Buyer's credit comprises of several loan transactions ranging between
2.5 to 3 years of maturities. Each transaction is repayable in full on
maturity dates falling between April' 2014 (being farthest) and June'
2013 (being closest). Interest on all Buyer's Credit is payable in
half yearly installments at Libor plus 200 bps
Buyer's Credit comprises of several loan transactions ranging between
2.5 to 3 years of maturities. Each transaction is repayable in full on
maturity dates, falling between October' 2014 (being farthest) and
November' 2012 (being closest). Interest on all Buyer's Credit is
payable in half yearly installments ranging from Libor plus 185 bps to
Libor plus 350 bps
Buyer's credit has been repaid during the year.
v) Buyer's credit of Rs. 6,432 lacs (previous year f 11,564 lacs) is
secured by an exclusive charge on Consumer Premises Equipment (CPE)
imported under this facility, a charge on Reserves Account, which shall
have minimum balance equal to Minimum Reserve Amount, the assignment of
insurance policies pertaining to the CPE charged, if any, and
completion support undertaking from Zee Entertainment Enterprises
Limited, a related party (refer to note 38e).
c) Vehicle loans
Vehicle loans from banks and others are secured by way of hypothecation
of vehicles.
d) The Company did not have any continuing defaults as on the balance
sheet date in repayment of loans and interests.
Buyer's credit comprises of several loan transactions ranging between
2.5 to 3 years of maturities. Whole amount is repayable in the period
by June' 2012. Interest on all Buyer's Credit is payable in half
yearly installments and is based on six months Libor plus 2% p.a.
i) Balance aggregating Rs. 2.20 lacs as at reporting date is repayable in
15 equated monthly installments
ii) Balance aggregating 7 0.48 lac as at reporting date is repayable in
4 equated monthly installments
iii) Balance aggregating f 4.84 lacs as at reporting date is repayable
in 19 equated monthly installments
iv) Balance aggregating Rs. 0.27 lac as at reporting date is repayable in
3 equated monthly installments
Mar 31, 2011
A) Basis of preparation of financial statements
The financial statements are prepared under the historical cost
convention, on accrual basis of accounting, in accordance with the
Generally Accepted Accounting Principles ('GAAP') in India and comply
with the mandatory Accounting Standards as notified by the Companies
(Accounting Standards) Rules, 2006, to the extent applicable and the
presentational requirements of the Companies Act, 1956.
b) Use of estimates
The preparation of financial statements in conformity with the GAAP in
India requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of the financial statements. Actual
results could differ from those estimates. Examples of such estimates
include estimated useful life of fixed assets, estimate of future
obligations under employee retirement benefits, etc. Differences
between the actual results and estimates are recognised in the year in
which such results are known/ materialized. Any revision to accounting
estimates is recognised in accordance with the requirements of the
respective Accounting Standards, generally prospectively, in current
and future periods.
c) Fixed assets
Intangible assets
Intangible assets are recognised if it is probable that the future
economic benefits that are attributable to the asset will flow to the
Company and the cost of the asset can be measured reliably. These
assets are valued at cost which comprises the purchase price and any
directly attributable expenditure on making the asset ready for its
intended use.
License fees paid, including fee paid for acquiring license to operate
DTH services, is capitalized as intangible asset.
Cost of computer software includes license fees, cost of implementation
and appropriate system integration expenses. These costs are
capitalized as intangible assets in the year in which related software
is implemented.
Tangible assets
Fixed assets are recorded at the cost of acquisition, net of Cenvat
credit, including all incidental expenses attributable to the
acquisition and installation of assets, upto the date when the assets
are ready for use.
CPEs are capitalized on activation of the same.
d) Depreciation/amortisation Intangible assets
Goodwill on acquisition is amortised over a period of five years.
DTH license fee is amortized over the period of license and other
license fees are amortized over the management estimate of useful life
of five years.
Softwares are amortised on straight line method over an estimated life.
Tangible assets
Depreciation on tangible fixed assets, except CPEs, is provided on the
straight-line method at the rates specified in Schedule XIV of the
Companies Act, 1956. CPEs are depreciated over their useful life of
five years, as estimated by the management. (also refer to Note 16 (b)
of this schedule)
Leasehold land and cost of leasehold improvements are amortised over
the period of lease or their useful lives, whichever is shorter.
Assets individually costing upto Rs. 5,000 are fully depreciated in the
year of purchase.
e) Impairment
The carrying amounts of the Company's assets (including goodwill) are
reviewed at each balance sheet date in accordance with Accounting
Standard 28 'Impairment of Assets', to determine whether there is any
indication of impairment. If any such indication exists, the asset's
recoverable amount is estimated as higher of its net selling price and
value in use. An impairment loss is recognized whenever the carrying
amount of an asset or its cash generating unit exceeds its recoverable
amount. Impairment losses are recognised in the profit and loss
account.
An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset's carrying amount does
not exceed the carrying amount that would have been determined net of
depreciation or amortisation, had no impairment loss been recognised.
f) Borrowing costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets to the extent that they relate to the period till such
assets are ready to be put to use. A qualifying asset is one that
necessarily takes substantial period of time to get ready for its
intended use. All other borrowing costs are charged to profit and loss
account.
g) Inventories
Inventories of CPEs and related accessories are valued at the lower of
cost and net realisable value. Cost of inventories includes all costs
incurred in bringing the inventories to their present location and
condition. Cost is determined on a weighted average basis.
h) Revenue recognition
i) Service income
- Subscription and other service revenues are recognized on an accrual
basis on rendering of the service.
- Lease rental is recognized as revenue as per the terms of the
contract of operating lease over the period of lease on a straight line
basis.
ii) Sale of goods
- Revenue from sale of products is recognised when the products are
dispatched against orders to the customers in accordance with the
contract terms, which coincides with the transfer of risks and rewards.
- Sales are stated inclusive of excise duty and net of rebates, trade
discounts, sales tax and sales returns.
iii) Interest income
Income from deployment of surplus funds is recognised using the time
proportion method, based on interest rates implicit in the transaction.
i) Foreign currency transactions and forward contracts
Foreign currency transactions
i) Foreign currency transactions are accounted for at the exchange rate
prevailing on the date of the transaction. All monetary foreign
currency assets and liabilities are converted at the exchange rates
prevailing at the date of the balance sheet. All exchange differences,
other than in relation to acquisition of fixed assets and other long
term foreign currency monetary liabilities are dealt with in the profit
and loss account.
ii) In accordance with the notification No. GSR 225 (E) dated 31 March
2009 of the Ministry of Corporate Affairs, exchange differences arising
in respect of long-term foreign currency monetary items used for
acquisition of depreciable capital asset, are added to or deducted from
the cost of asset and are depreciated over the balance life of asset.
iii) The premium or discount arising on entering into a forward
exchange contract for hedging underlying assets and liabilities is
measured by the difference between the exchange rate at the date of the
inception of the forward exchange contract and the forward rate
specified in the contract and is amortised as expense or income over
the life of the contract. Exchange difference on a forward exchange
contract is the difference between:
- the foreign currency amount of the contract translated at the
exchange rate at the reporting date, or the settlement date where the
transaction is settled during the reporting period, and;
- the same foreign currency amount translated at the latter of the date
of inception of the forward exchange contract and the last reporting
date.
These exchange differences are recognised in the Profit and Loss
Account in the reporting period in which the exchange rates change.
iv) Derivatives
The Company enters into derivative transactions for hedging purposes.
In respect of interest rate swaps, which are not covered by Accounting
Standard 11 'the effects of changes in foreign exchange rates', such
contracts are marked to market and provision for net loss, if any, is
recognised in the profit and loss account. Resultant gains, if any, on
account of mark to market are ignored. The Company does not hold or
issue derivative financial instruments for trading or speculative
purposes.
j) Investments
Investments are classified as long-term or current based on the intent
of the management at the time of acquisition.
Long-term investments are carried at cost. The carrying value of such
investments is adjusted for other than temporary diminution in value,
where necessary. Current investments are valued at the lower of cost
and fair value.
k) Employee benefits
i) Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. Benefits
such as salaries, wages, and bonus, etc., are recognised in the profit
and loss account in the period in which the employee renders the
related service.
ii) Post employment benefit
Defined contribution plan
The Company deposits the contributions for provident fund to the
appropriate government authorities and these contributions are
recognised in the profit and loss account in the financial year to
which they relate.
Defined benefit plan
The Company's gratuity scheme is a defined benefit plan. The present
value of the obligation under such defined benefit plan is determined
based on actuarial valuation carried out at the end of the year by an
independent actuary, using the Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation is measured at the present
value of the estimated future cash flows. The discount rates used for
determining the present value of the obligation under defined benefit
plans, is based on the market yields on Government Securities for
relevant maturity. Actuarial gains and losses are recognized
immediately in the profit and loss account.
iii) Other long-term employee benefits
Benefits under the Company's leave encashment constitute other
long-term employee benefits. The liability in respect of leave
encashment is provided on the basis of an actuarial valuation done by
an independent actuary at the year end. Actuarial gains and losses are
recognised immediately in the profit and loss account.
l) Employee stock option scheme
The Company calculates the compensation cost based on the intrinsic
value method wherein the excess of value of underlying equity shares as
on the date of the grant of options over the exercise price of the
options given to employees under the employee stock option schemes of
the Company, is recognised as deferred stock compensation cost and
amortised over the vesting period on a graded vesting basis.
m) Leases
Operating lease
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Operating lease charges are recognised as an expense
in the profit and loss account on a straight line basis.
Finance lease
Assets and liabilities acquired under finance leases are recognised at
the fair value of leased asset at inception of the lease. However, in
cases where the fair value of the leased asset from the standpoint of
the lessee exceeds the present value of minimum lease payments, the
asset is recognised at the present value of the minimum lease payments.
Lease payments are apportioned between the finance charges and the
reduction of the outstanding liability. The finance charge is allocated
to periods during the lease term at a constant periodic rate of
interest on the remaining balance of the liability.
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 year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
o) Taxation
Income tax expense comprises current tax and deferred tax charge or
credit. Current tax provision is made based on the tax liability
computed after considering tax allowances and exemptions under the
Income tax Act, 1961. The deferred tax charge or credit and the
corresponding deferred tax liability and assets are recognised using
the tax rates that have been enacted or substantively enacted on the
balance sheet date.
Deferred tax assets arising from unabsorbed depreciation or carry
forward losses are recognised only if there is virtual certainty of
realisation of such amounts. Other deferred tax assets are recognised
only to the extent there is reasonable certainty of realisation in
future. Deferred tax assets are reviewed at each balance sheet date to
reassess their realisability and are written down or written up to
reflect the amount that is reasonably/virtually certain, as the case
may be.
p) Provisions and contingent liabilities
The Company recognises a provision when there is a present obligation
as a result of a past event and it is more likely than not that there
will be an outflow of resources embodying economic benefits to settle
such obligations and the amount of such obligation can be reliably
estimated. Provisions are not discounted to their present value and are
determined based on the management's estimation of the outflow required
to settle the obligation at the balance sheet date. These are reviewed
at each balance sheet date and adjusted to reflect current management
estimates.
Contingent liabilities are disclosed in respect of possible obligations
that have arisen from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of future events,
not wholly within the control of the Company. Contingent liabilities
are also disclosed for the present obligations in respect of which it
is not possible that there will be an outflow of resources or a
reliable estimate of the amount of obligation cannot be made.
When there is an obligation in respect of which the likelihood of
outflow of resources is remote, no provision or disclosure is made.
Mar 31, 2010
(a) Accounting Convention:
i. The Company generally follows mercantile system of accounting and
recognizes income and expenditure on accrual basis except those with
significant uncertainties.
ii. The financial statements have been prepared under the historical
cost convention and in accordance with the accounting standards
referred to in Section 211 (3C) of the Companies Act, 1956.
(b) Fixed Assets:
I. Intangible fixed assets
i. Cost of computer software includes license fees, cost of
implementation and system integration expenses. These costs are
capitalized as intangible assets in the year in which related software
is implemented.
ii. License fees paid, including for acquiring license to operate
Direct to Home (DTH) services, are capitalized as intangible asset.
II. Tangible fixed assets
i. Tangible fixed assets are stated at cost less accumulated
depreciation. Cost includes capital cost, freight, installation cost,
duties and taxes, borrowing cost and other incidental expenses incurred
during the construction/ installation stage attributable to bringing
the assets to working condition for its intended use.
ii. All capital costs and incidental expenditure incurred during the
pre operational period and advances paid for capital expenditure are
shown as Capital work-in-progress.
iii. Customer premises equipments are capitalized on activation.
(c) Depreciation/Amortization:
i. Depreciation on tangible fixed assets is provided on straight line
method at the rates and in the manner prescribed in Schedule XIV to the
Companies Act 1956, except customer premises equipments on which
depreciation is provided @ 20% based on useful life estimated by the
Management.
ii. Leasehold improvements are amortized over the period of primary
lease.
iii. Computer Software is amortized from the date of implementation on
straight line method over a period of five years based on the
management estimate of useful life or license period, whichever is
shorter.
iv. Goodwill on acquisition is amortised over a period of five years.
v. License fee for DTH License is amortized over the period of license
and other license fees are amortized over the management estimate of
useful life of five years.
(d) Revenue Recognition:
i. Subscription and other services revenues are recognized on the
completion of the service.
ii. Lease Rental is recognized as revenue as per the terms of the
contract of operating lease.
iii. Sale of goods is recognized when risk and rewards of ownership are
passed on to the customer, which is generally on dispatch of goods.
(e) Investments:
Investments intended to be held for more than one year from the date of
acquisition are classified as long term investments and are carried at
cost. Provision for diminution in value of investments is made to
recognize a decline other than temporary. Current investments are
stated at cost or fair value, whichever is lower.
(f) Inventories:
Inventories of Customer Premises Equipments (CPE) and related
accessories are valued at lower of cost or net realizable value. Cost
is determined on weighted average basis.
(g) Retirement Benefits:
i. Defined Contribution Plan
The retirement benefits in the form of provident fund, the contribution
payable by the Company is charged to Profit and Loss account of the
year.
ii. Defined Benefit Plan
The Present value of defined benefit obligations and the related
current service cost are measured using the projected unit credit
method with actuarial valuation being carried out at each balance sheet
date. The defined benefit obligations are not funded.
Leave encashment:
Liability for leave encashment is provided on the basis of actuarial
valuation at the balance sheet date.
Gratuity:
Liability for gratuity for the year is provided on the basis of
actuarial valuation, as per defined benefit retirement plan covering
eligible employees. The plan provides payment to vested employees on
retirement, death or termination of employment of an amount based on
the respective employeeÃs salary and the terms of employment with the
Company.
(h) employees Stock option Scheme:
In respect of stock option granted pursuant to the CompanyÃs Stock
Options Scheme, the intrinsic value of the option is treated as
discount and accounted as employee compensation cost over the vesting
period.
(i) Foreign Currency Transactions:
i. Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of transaction. Current monetary assets and
liabilities denominated in foreign currency are translated at the
exchange rate prevailing at the balance sheet date and gains or losses
on translation are recognized in Profit and Loss account. Non monetary
foreign currency items are carried at cost.
Subsequent to adoption of revised accounting standard AS-11 as notified
on 31.03.2009 long term foreign currency monetary items are translated
at the exchange rate prevailing at the balance sheet date and gains or
losses on translation, in so far as its relates to the acquisition of a
depreciable capital asset is added to or deducted from the cost of the
asset and in respect to others, the difference is taken to Foreign
Currency Monetary Item Difference Account.
ii. In respect of forward exchange contracts assigned to the foreign
currency assets/liabilities, the difference due to change in exchange
rate between the inception of forward contract and date of the Balance
Sheet and the proportionate premium/discount for the period upto the
date of Balance Sheet is recognized in the Profit and Loss Account. Any
profit or loss arising on settlement/cancellation of forward contract
is recognized as income or expense for the year in which they arise.
(j) Borrowing Costs:
Borrowing costs attributable to the acquisition or construction of
qualifying assets are capitalized as a part of such assets. All other
borrowing costs are charged to revenue.
(k) Taxes on Income:
Tax expense comprise of current, deferred, wealth and fringe benefit
tax. Current income tax, wealth tax and fringe benefit tax is measured
as the amount expected to be paid to the tax authorities in accordance
with Indian Income Tax Act for the period. Deferred Tax is recognized,
subject to consideration of prudence, on timing difference, being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods and measured using relevant enacted tax rates. At the balance
sheet date the company assesses unrealized deferred tax assets to the
extent they become reasonably certain or virtually certain of
realization, as the case may be.
(l) Rights/ Global Depository Receipts (GDR) Issue expenses:
Rights Issue and GDR Issue expenses are adjusted against Securities
Premium in accordance with Section 78 of the Companies Act, 1956.
(m) Leases:
operating Lease
Lease of the assets where all the risk and rewards of ownership are
effectively retained by the lessor are classified as operating lease.
Lease payments/revenue under operating lease are recognized as an
expense/income on accrual basis in accordance with respective lease
agreement.
Finance Lease
Assets acquired under finance lease and lease under which the Company
assumes substantially all the risks and rewards of ownership are
classified as finance leases. Such assets acquired are capitalized at
fair value of the asset or present value of the minimum lease payments
at the inception of the lease, whichever is lower. Initial cost
incurred in connection with the specific leasing activities directly
attributable to activities performed by the Company is included as part
of the amount recognized as an asset under the lease. Finance charges
are recognized as an expense in the Profit and Loss account.
(n) earning Per Share:
Basic earnings per share is computed and disclosed using the weighted
average number of common shares outstanding during the period. The
weighted average numbers of shares are calculated after adjusting for
bonus element in a right issue to the existing shareholders. 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 year. Diluted earnings per share
is computed and disclosed using the weighted average number of common
and dilutive common equivalent share outstanding during the period
except where the result would be anti dilutive.
(o) Impairment:
At each Balance Sheet date, the Company reviews the carrying amount of
fixed assets to determine whether there is an indication that those
assets have suffered impairment loss. If any such indication exists,
the recoverable amount of assets is estimated in order to determine the
extent of impairment loss. The recoverable amount is higher of the net
selling price and value in use, determined by discounting the estimated
future cash flows expected from the continuing use of the asset to
their present value.
(p) Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes to accounts. Contingent Assets are neither recognized nor
disclosed in the financial statements.