Mar 31, 2018
1. Company Background:
Tips Industries Limited is a Company limited by shares, incorporated and domiciled in India. The Company was incorporated on May 8, 1996 under Chapter IX of the Companies Act, 1956. The Company is engaged in the business of Production and Distribution of motion Pictures and acquisition and exploitation of Music Rights. The Equity Shares of the Company are listed on BSE Limited and National Stock Exchange of India Limited.
2. Summary of Significant Accounting Policies:
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
a) Basis of Preparation:
i) Compliance with Ind As:
In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (referred to as "Ind AS") notified under section 133 of the Companies Act, 2013, (" the Act") read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 with effect from April 1, 2016. Previous year numbers in the financial statements have been restated to Ind AS. In accordance with Ind AS 101 First-time Adoption of Indian Accounting Standard, the Company has presented a reconciliation from the presentation of financial statements under Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 ("Previous GAAP") to Ind AS of Shareholders'' equity as at March 31, 2017 and April 1, 2016 and of total comprehensive income for the year ended March 31, 2017. Reconciliations and descriptions of the effect of the transition has been summarized in Note 34(18).
The financial statements are presented in Indian Rupees (INR), except when otherwise indicated.
These financial statements are the first financial statements of the company under Ind AS.
ii) Historical cost convention:
The financial statements have been prepared on a historical cost basis, except for the following:
A) Certain financial assets and liabilities (including derivative instruments)
B) Defined benefit plans assets measured at fair value
iii) Current/ Non- Current Classification:
Any asset or liability is classified as current if it satisfies any of the following conditions:
a) it is expected to be realized or settled or is intended for sale or consumption in the Company''s normal operating cycle;
b) it is expected to be realized or settled within twelve months from the reporting date;
c) it is held primarily for the purposes of being traded;
d) the asset is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date;
e) in the case of a liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months from the reporting date.
All other assets and liabilities are classified as non- current.
For the purpose of current/ non-current classification of assets and liabilities, the Company has ascertained
ii) Recoverability of deferred income tax assets:
In determining the recoverability of deferred income tax assets, the Company primarily considers current and expected profitability of applicable operating business segments and their ability to utilize any recorded tax assets. The Company reviews its deferred income tax assets at every reporting period end, taking into consideration the availability of sufficient current and projected taxable profits, reversals of taxable temporary differences and tax planning strategies.
iii) Measurement of defined benefit obligations and other employee benefit obligations:
The Company''s net obligation in respect of gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the other long-term employment benefits.
The present value of the obligation is determined based on actuarial valuation at the balance sheet date by an Independent actuary using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures. 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 plan, are based on the market yields on Government securities as at the balance sheet date. 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 realization in cash and cash equivalents.
b) Use of accounting estimates and judgments:
Preparation of financial statements requires the Company to make assumptions and estimates about future events and apply significant judgments. The Company base its assumptions, estimates and judgments on historical experience, current trends and all available information that it believes is relevant at the time of preparation of the financial statements. However, future events and their effects cannot be determined with certainty. Accordingly, as confirming events occur, actual results could ultimately differ from our assumptions and estimates. Such differences could be material. The following require most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.
i) Estimated useful life of property, plant and equipment:
The Company estimates the useful life of property, plant and equipment based on the period over which the assets are expected to be available for use. The estimation of the useful life of property, plant and equipment is based on collective assessment of industry practice, internal technical evaluation and on the historical experience with similar assets. It is possible, however, that future results from operations could be materially affected by changes in estimates brought about by changes in factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. The estimated useful life are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the assets.
The cost of property, plant and equipment comprises its purchase price plus any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of decommissioning, restoration and similar liabilities, if any. Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
Items such as spare parts, stand-by equipment and servicing that meets the definition of property, plant and equipment are capitalized at cost and depreciated over the useful life. Cost of repairs and maintenance are recognized in the statement of profit and loss as and when incurred.
Depreciation:
Depreciation is provided on Straight Line Method, prorate to the period of use, in terms of Section 123(2) of the Companies Act, 2013 in the manner specified in Schedule II of the Companies Act, 2013 except for Improvements to Leasehold Premises.
Improvements to Leasehold Premises are amortized over the period of lease.
Capital work in progress and Capital advances
Assets under Capital Work in Progress includes the cost of property, plant and equipment that are not ready to use at the balance sheet date. Advances paid to acquire property, plant and equipment before the balance sheet date are disclosed under Other Non-Current Assets. Assets under Capital Work in Progress are not depreciated as these assets are not yet available for use.
Derecognition
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on
c) Segment Reporting:
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker is responsible for allocating resources and assessing performance of the operating segments and has been identified as the Chief Financial Officer of the Group.
The Group''s Chief Operating Decision Maker (''CODM'') examines the performance and has identified two reportable segments of its business.
- Music (Audio/ Video)
- Film Production/ distribution
The segment performance is evaluated based on profit or loss. Also the Company''s borrowings (including finance costs and interest income), income taxes and investments are managed at head office and are not allocated to operating segments.
Segment Revenue is measured in the same way as in the Statement of Profit and Loss. Segment assets and liabilities are measured in the same way as in the financial statements. These assets are allocated based on the operations of the segment.
d) Property, Plant and equipment:
Measurement at recognition
The cost of an item of property, plant and equipment is recognized as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably and is measured at cost. Subsequent to recognition, all items of property, plant and equipment (except for freehold land) are stated at cost less accumulated depreciation and accumulated impairment losses, if any.
Improvements to the leasehold premises are amortized over the period of lease.
g) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
i) Non-derivative financial assets:
Initial recognition and measurement
The Company recognizes a financial asset in its balance sheet when it became party to the contractual provisions of the instrument. All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial asset.
Where the fair value of a financial asset at initial recognition is different from its transaction price, the difference between the fair value and the transaction price is recognized as a gain or loss in the statement of profit and loss at initial recognition if the fair value is determined through quoted market price in an active market for an identical asset (i.e level 1 input) or through a valuation technique that uses data from observable markets (i.e level 2 input).
However, trade receivables that do not contain a significant financing component are measured at transaction price irrespective of the fair value on initial recognition.
Subsequent measurement:
For subsequent measurement, the Company classifies a financial asset in accordance with the below criteria:
i) The Company''s business model for managing the financial asset and
DE recognition of an item of property, plant and equipment is measured as the difference between the net disposal proceeds and the carrying amount of the item and is recognized in the statement of profit or loss in the period the asset is derecognized.
e) Intangible assets:
Measurement at recognition:
Intangible assets comprise primarily of computer software. Intangible assets are initially recorded at cost and subsequent to recognition, intangible assets are stated at cost less accumulated amortization and accumulated impairment losses, if any.
Amortization:
The Computer Software is amortized over a period of 3 years
Derecognition:
An item of intangible asset is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of an item of intangible asset is measured as the difference between the net disposal proceeds and the carrying amount of the item and is recognized in the statement of profit or loss in the period the asset is derecognized.
f) Investment properties
Properties that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalized to the asset''s carrying amount only when it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost of item can be measured reliably. All other repairs and maintenance costs are expensed out when incurred. Investment properties are depreciated using the straight-line method over their estimated useful life. share based payments and other investments of the Company excluding investment in subsidiary. Such financial assets are subsequently measured at fair value at each reporting date. Fair value changes are recognized in the statement of profit and loss.
Derecognition:
A financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. On derecognition of a financial asset, the difference between the carrying amount and the consideration received is recognized in the statement of profit and loss.
Presentation:
Financial assets and liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
ii) Non-derivative financial liabilities Initial recognition and measurement
Financial liabilities are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. All financial liabilities are recognized initially at fair value minus, in the case of financial liabilities not recorded at fair value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial liabilities.
Borrowings are recognized initially at fair value, net of transaction costs incurred, and subsequently carried at amortized cost; any difference between the initial carrying value and the redemption value is recognized
ii) The contractual cash flow characteristics of the financial asset.
Based on the above criteria, the Company classifies its financial assets into the following categories:
i) Financial assets measured at amortized cost.
ii) Financial assets measured at fair value through profit and loss (FVTPL).
1) Financial assets measured at amortized cost:
A financial asset is measured at the amortized cost if both the conditions are met:
a) The Company''s business model objective for managing the financial asset is to hold financial assets in order to collect contractual cash flows.
b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
This category applies to cash and bank balances, trade receivables, loans, deposits and other financial assets of the Company. Such financial assets are subsequently measured at amortized cost using the effective interest method.
The amortized cost of a financial asset is also adjusted for loss allowance, if any.
2) Financial assets measured at fair value through profit and loss (FVTPL):
A financial asset is measured at FVTPL unless it is measured at amortized cost or at Fair Value through Other Comprehensive Income (FVTOCI). This is a residual category applies to inventories,
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy that categorizes into three levels, as described as follows, the inputs to valuation techniques used to measure value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (level 3 inputs).
Level 1: quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3: inputs that are unobservable for the asset or liability
For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.
i) Inventories:
Items of inventory are valued on the basis as given below:
i) Cost of Feature Films:
- The Company amortizes 60% of the cost of movie rights acquired or produced by it, on first theatrical release of the movie. The said amortization is made proportionately based on Management''s estimates of revenues pertaining to Domestic Theatrical Rights, International Theatrical Rights, Television Rights, Video Rights and others over a period of 12 months from the date of theatrical release of the movie.
- Balance 40% of COP is amortized as per the management estimate / review of future revenues
in the statement of profit or loss over the period of the borrowings using the effective interest rate method. Other financial liabilities are recognized initially at fair value plus any directly attributable transaction costs.
Non-derivative financial liabilities of the Company comprise long-term borrowings, short-term borrowings, bank overdrafts and trade and other payables.
Subsequent measurement:
Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method.
Derecognition:
The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expired. When an existing financial liability is replaced from the same lender on substantially different terms, or terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid is recognized in the statement of profit and loss.
h) Fair Value
The Company measures financial instruments at fair value in accordance with the accounting policies mentioned above. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
i) in the principal market for the asset or liability or
ii) in the absence of a principal market, in the most advantageous market for the asset or liability.
approximates the actual rate of the transaction. Exchange differences arising on foreign exchange transactions settled during the period/ year are recognized in the statement of profit and loss.
Measurement of foreign current items at reporting date:
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rate of exchange at the reporting date. Non-monetary items measured based on historical cost in a foreign currency are not translated. Non-monetary items measured at fair value in a foreign currency are translated to the functional currency using the exchange rates at the date when the fair value was determined.
Exchange differences arising out of these translations are recognized in the statement of profit and loss.
l) Revenue recognition: i) Turnover:
Audio Rights Receipts
Revenue from sale of Audio Rights is recognized on transfer / Assignment / Delivery of the masters as per the terms of the Contracts / Agreements with the parties.
Royalty from Music Rights:
Royalty is recognized only when it is reasonably certain that the ultimate collection will be made and / or is also recognized on consideration due as per the term of agreement with respect to parties.
Revenue from films:
Income from production of films is recognized in the statement of Profit and Loss on release of films as per the contracts / arrangements with distributors. Revenue from distribution of motion pictures is recognized based on ticket sales on exhibition of motion pictures at exhibition theatres. Recoveries but not exceeding nine years and subject to a minimum of 4.4% in any year.
ii) Cost of under Production Films:
Expenses of under production films incurred till the films are ready for release are inventoried.
The production of films requires various types of materials in different qualities and quantities. Considering the peculiar nature of those items including their multiplicity and complexity, it is not practicable to maintain quantitative records of those items. Further, in the absence of certainty of reusability of such items, the same are not valued.
iii) The Company reassesses the realizable value and / or revenue potential of inventory based on market condition and future demand and appropriate write down is made in cases where accelerated write down is warranted.
j) Statement of cash flows:
The Company''s statement of cash flows are prepared using the Indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature if any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
Cash and cash equivalents comprise cash and bank balances.
k) Foreign Currency Transactions Initial Recognition:
All transactions that are not denominated in the Company''s functional currency are foreign currency transactions. These transactions are initially recorded in the functional currency by applying the appropriate daily rate which best are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
ii) Other long term employee benefit obligations: Gratuity obligations:
The liability or asset recognized in the balance sheet in respect of defined benefits pension and gratuity plans is the present value of the defined benefits obligations at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost
Defined Contribution plans:
The company pays provident fund contributions to publicly administered provident funds as per local from films as overflows are recognized on the basis of business statements received from the distributors. Revenues from terrestrial rights, video rights, satellite rights etc are recognized on transfer / assignment/ effective date of respective rights in accordance with the respective agreement or on realization of the substantial consideration whichever is earlier and on delivery of the specified telecasting material.
Although revenues are accounted on accrual basis as aforesaid, the cost is charged to profit and loss account based on the amortization principles stated in the accounting policy under the head ''cost of feature films''.
ii) Artist Management Receipts:
Artist Management Receipts are recognized in the statement of Profit & Loss on accrual basis as per the Contracts entered by the Artists with respective parties.
iii) Interest Income:
Interest Income is accounted on accrual basis, at the contracted rates.
iv) Others:
Revenue in respect of insurance/other claims is recognized only when it is reasonably certain that the ultimate collection will be made.
m) Employee Benefits: i) Short-term obligations:
Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related services are recognized in respect of employees services up to the end of the reporting period and are measured at the amount expected to be paid when liabilities
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax liabilities are generally recognized for all deductible temporary differences. In case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the taxable profit nor the accounting profit, deferred tax liabilities are not recognized. Also, for temporary differences if any that may arise from initial recognition of goodwill, deferred tax liabilities are not recognized.
Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable income will be available against which those deductible temporary differences can be utilized. In case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the taxable profit nor the accounting profit, deferred tax assets are not recognized.
The Company reviews the carrying amount of deferred tax assets at the end of each reporting period and reduce amounts to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the asset to be recovered.
Presentation of current and deferred tax:
Current and deferred tax are recognized as income or an expense in the statement of profit and loss, except when they relate to items that are recognized in Other Comprehensive Income/ Equity, in which case, the current and deferred tax income/ expense are recognized in Other Comprehensive Income/ Equity. regulations. The company has no further payment obligations once the contribution have been paid. The contributions are accounted for as defined contribution plans and the contribution are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
iii) Bonus Plan:
The company recognizes a liability and an expense for bonuses. The company recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
n) Taxes on Income:
Income tax expense comprises current and deferred tax. It is recognized in the statement of profit and loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.
i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year/ period as per the provisions of tax laws enacted in India and any adjustment to the tax payable or receivable in respect of previous years/periods. It is measured using tax rates enacted or substantively enacted at the reporting date.
ii) Deferred tax:
Deferred tax is recognized on deductible temporary differences between the carrying amounts of assets and liabilities in the balance sheet and the corresponding tax bases used in the computation of taxable income, the carry forward of unused tax losses and the carry forward of unused tax credits.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is a possible obligation or a present obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.
q) Investment and other financial assets: i) Classification:
The company classifies its financial assets in the following measurement categories:
a) those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss),and
b) those measured at amortized cost
The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income.
ii) Measurement:
At initial recognition, the company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
iii) Minimum Alternative Tax (''MAT''):
Minimum Alternative Tax (''MAT'') under the provisions of the Income-tax Act, 1961 is recognized as current tax in the statement of profit and loss. The credit available under the Act in respect of MAT paid is recognized as a deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set-off against the normal tax liability. MAT credit recognized as a deferred tax asset is reviewed at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists.
o) Earnings per share:
The basic earnings per share (''EPS'') is computed by dividing the net profit attributable to equity shareholders for the period, by the weighted average number of equity shares outstanding during the period.
Diluted EPS is computed using the weighted average number of equity and dilutive (potential) equity equivalent shares outstanding during the period except where the results would be anti-dilutive.
p) Provisions and Contingencies
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is more likely than not that an outflow of economic benefits will be required to settle the obligation. Provisions are discounted where the effect of discounting is material at a pre-tax rate that reflects current market assessments of the time value of money. Unwinding of the discount (accretion) is recognized as a finance cost. Discount rates are assessed and projected timing of future obligations each reporting period.
As a Lessor: Lease income from operating leases where the Company is a lessor is recognized as income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
r) Leases:
As a lessee: Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
The tax rate used for the year 2017-18 and for the year 2016-17 tax rate is 20.39% (18% surcharge @ 7% and education cess @ 3%) payable on taxable profits under the Income Tax Act, 1961.
Provision for Tax
The current tax provision is based on tax payable on book profits computed u/s 115JB of the Income Tax Act, 1961. Credit for set off of this book profit tax is not recognized in the books in view of the uncertainty about future taxable profits.
Mar 31, 2016
1. SIGNIFICANT ACCOUNTING POLICIES
i. Accounting Convention:
The accompanying financial statements have been prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles in India. The Company has prepared these financial statements to comply in all material respects with Accounting Standards notified under Section 133 of the Companies Act 2013.
ii. Use of estimates:
The preparation of financial statements in conformity with the generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimate results. Differences between the actual results and estimates are recognized in the period in which the results are known / materialized.
iii. Revenue recognition:
a) Turnover:
Audio Product Sale:
Sale of goods to intermediate parties (distributors) and others is recognized when the significant risks and rewards of ownership are transferred and is disclosed net of returns and trade discount.
Audio Rights Receipts
Revenue from sale of Audio Rights is recognized on transfer / Assignment / Delivery of the masters as per the terms of the Contracts / Agreements with the parties.
Royalty from Music Rights:
Royalty is recognized only when it is reasonably certain that the ultimate collection will be made and/or is also
recognized on consideration due as per the Terms of agreement with respective parties.
Revenue from films:
Income from production of films is recognized in the statement of Profit and Loss on release of films as per the contracts / arrangements with distributors. Revenue from distribution of motion pictures is recognized based on ticket sales on exhibition of motion pictures at exhibition theatres. Recoveries from films as overflows are recognized on the basis of business statements received from the distributors. Revenues from terrestrial rights, video rights, satellite rights etc are recognized on transfer / assignment/ effective date of respective rights in accordance with the respective agreement or on realization of the substantial consideration whichever is earlier and on delivery of the specified telecasting material.
Although revenues are accounted on accrual basis as aforesaid, the cost is charged to profit and loss account based on the amortization principles stated in the accounting policy under the head ''cost of feature films'',
b) Artist Management Receipts:
Artist Management Receipts are recognized in the statement of Profit & Loss on accrual basis as per the Contracts entered by the Artists with respective parties.
c) Interest Income:
Interest Income is accounted on accrual basis, at the contracted rates.
d) Others:
Revenue in respect of insurance/other claims is recognized only when it is reasonably certain that the ultimate collection will be made.
iv. Fixed Assets:
Fixed Assets are stated at cost of acquisition less accumulated depreciation and impairment losses. Cost includes all expenses incurred to bring the assets to its current location and condition.
v. Impairment of Assets:
Carrying amount of cash generating units/ assets are reviewed at each Balance Sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever the carrying amount exceeds the recoverable amount.
vi. Investments:
All long term investments are valued at cost. Provision for diminution in the value of each long term investments is made to recognize a decline other than of a temporary nature.
Current investments are carried individually at lower of cost and fair value and the resultant decline if any, is charged to revenue.
vii. Copyrights (audio film albums):
The cost of copyrights (audio film albums) is charged to revenue on the date of release of audio, considering the uncertainty of future economic benefits and the short duration over which such benefits may accrue.
viii. In-house music production (Audio non-film albums):
In-house music production costs are charged to revenue on completion/release of albums, considering the uncertainty of future economic benefits and the short duration over which such benefits may accrue.
ix. Depreciation:
Depreciation is provided for on Straight Line method at the rates prescribed in Schedule II to the Companies Act, 2013.
In respect of depreciable assets for which impairment loss is recognized, depreciation / amortization is charged on the revised carrying amount over remaining useful life of the assets.
Improvements to Leasehold Premises are amortized over the period of lease.
x. Inventories:
Items of inventory are valued on the basis as given below:
a) Raw Materials & Packing Materials:
Raw materials and Packing Materials are valued at cost (on First In First Out basis) or net realizable value whichever is lower.
b) Work-ln-Progress:
Work-In-Progress is valued at cost of Raw Materials consumed / used.
c) Finished Goods:
Finished Goods are valued at cost or net realizable value whichever is lower. Cost comprises of cost of purchase, cost of copyrights (audio/video films), cost of in-house music productions (audio/video-non-films/films), cost of conversion and other costs incurred in bringing the inventory to their present location and condition.
d) Cost of Feature Films:
- The Company amortizes 60% of the cost of movie rights acquired or produced by it, on first theatrical release of the movie. The said amortization is made proportionately based on Management''s estimates of revenues pertaining to Domestic Theatrical Rights, International Theatrical Rights, Television Rights, Video Rights and others over a period of 1 2 months from the date of theatrical release of the movie.
- Balance 40% of COP is amortized as per the management estimate / review of future revenues but not exceeding nine years and subject to a minimum of 4.4% in any year.
e) Cost of under Production Films:
Expenses of under production films incurred till the films are ready for release are inventoried.
The production of films requires various types of materials in different qualities and quantities. Considering the peculiar nature of those items including their multiplicity and complexity, it is not practicable to maintain quantitative records of those items. Further, in the absence of certainty of reusability of such items, the same are not valued.
f) The Company reassesses the realizable value and / or revenue potential of inventory based on market condition and future demand and appropriate write down is made in cases where accelerated write down is warranted.
xi. Foreign Currency Transactions:
Transactions in foreign currency are recorded at the original rates of exchange in force at the time transactions are affected. Exchange differences arising on settlement are recognized in the profit and loss account.
Monetary items denominated in foreign currency are restated using the exchange rates prevailing at the date of balance sheet and the resulting net exchange difference is recognized in the profit and loss account.
xii. Borrowing Costs:
Borrowing costs that are attributable to the acquisition of qualifying assets are capitalized as part of the cost of such assets. Borrowing costs that are directly attributable to production of feature films are inventoried as part of cost of production of films. Other borrowing costs are recognized as expense in the period in which they are incurred.
xiii. Employee Benefits:
- Contribution to Provident Fund is charged to revenue.
- Defined Benefit Plan
Company''s liabilities towards gratuity is determined on actuarial basis using the projected unit credit method, which consider each period of service as giving rise to an additional unit of benefit and measures each unit separately to build up the final obligation. Past services are recognized on straight-line basis over the average period until the amended benefits become vested. Actuarial gain and losses are recognized immediately in the Statement of Profit and Loss Account as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by reference to market yields at the Balance Sheet date on government bonds where the currency and terms of the government bonds are consistent with the currency and estimated terms of the defined benefit obligation.
- In view of the past trends of leave availed, the amount of employee benefit in the form of compensated absences, being in the nature of short term benefit, is accounted for on accrual basis at an undiscounted value.
xiv. Income Taxes:
Provision for current income tax is made on current tax rate based on assessable income computed under the Income Tax Act 1961 or Book Profit computed under Section 115JB (MAT), whichever is higher. MAT credit is recognized subject to requirement of virtual certainty that sufficient future taxable income will be available for set off.
Deferred tax assets and liabilities are recognized for future tax consequences attributable to the timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent periods and are measured using tax rates enacted or substantively enacted as at the Balance Sheet date. Deferred Tax assets are not recognized unless, in the management judgment, there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax is reviewed at each balance sheet date.
xv. Provisions and Contingent Liabilities:
Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.
Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non- occurrence of one or more uncertain future events not wholly within the control of the company.
xvi. Segment Accounting:
Company considers Business segment as the Primary segment.
Based on similarity of activities / products, risk and reward structure, organization structure and internal reporting systems, the Company has structured its operations into the following business segments.
- Audio / Video productions
- Film Productions/Distribution.
Operations of the Company do not qualify, for reporting as geographic segments, under the criteria set out under Accounting Standard 17 on segment reporting issued by The Institute of Chartered Accountants of India.
xvii. Earnings Per Share:
Basic earnings per share are computed using the weighted average number of equity shares outstanding during the year. Diluted earnings per share are computed using the weighted average number of equity and dilutive equivalent shares outstanding during the year, except where the results would be anti-dilutive.
xviii. Cash Flow:
Cash Flows are reported using indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the Company are segregated.
xix. Leases:
Finance leases, where substantially all the risks and benefits incidental to ownership of the leased item, are transferred to the Company, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged to income. Lease management fees, legal charges and other initial direct costs are capitalized.
If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease item, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Leases where the less or effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.
Mar 31, 2015
I. Accounting Convention
The accompanying financial statements have been prepared under the
historical cost convention in accordance with Generally Accepted
Accounting Principles in India. The Company has prepared these
financial statements to comply in all material respects with Accounting
Standards notified under Section 133 of the Companies Act 2013.
ii. Use of estimates:
The preparation of financial statements in conformity with the
generally accepted accounting principles require management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities on the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimate results. Differences
between the actual results and estimates are recognised in the period
in which the results are known / materialised.
iii. Revenue recognition:
(a) Turnover:
Audio Product Sale:
Sale of goods to intermediate parties (distributors) and others is
recognised when the significant risks and rewards of ownership are
transferred and is disclosed net of returns and trade discount. Revenue
from sale of audio rights is recognised on transfer / assignment of the
rights as per the contracts /arrangements with the parties.
Royalties from Music Rights:
Royalty is recognised only when it is reasonably certain that the
ultimate collection will be made.
Revenue from films:
Income from production of films is recognised in the statement of
Profit and Loss on release of films as per the contracts / arrangements
with distributors. Revenue from distribution of motion pictures is
recognized based on ticket sales on exhibition of motion pictures at
exhibition theaters. Recoveries from films as overflows are recognized
on the basis of business statements received from the distributors.
Revenues from terrestrial rights, video rights, satellite rights etc
are recognized on transfer/assignment/ effective date of respective
rights in accordance with the respective agreement or on realization of
the substantial consideration whichever is earlier and on delivery of
the specified telecasting material.
Although revenues are accounted on accrual basis as aforesaid, the cost
is charged to profit and loss account based on the amortisation
principles stated in the accounting policy under the head 'cost of
feature films'.
(b) Artist Management Receipts:
Artist Management Receipts are recognized in the statement of Profit &
Loss on accrual basis as per the Contracts entered by the Artists with
respective parties.
(c) Interest Income:
Interest Income is accounted on accrual basis, at the contracted rates.
(d) Others:
Revenue in respect of insurance/other claims is recognised only when it
is reasonably certain that the ultimate collection will be made.
iv. Fixed Assets
Fixed Assets are stated at cost of acquisition less accumulated
depreciation and impairment losses. Cost includes all expenses incurred
to bring the assets to its current location and condition.
v. Impairment of Assets
Carrying amount of cash generating units/ assets are reviewed at each
Balance Sheet date to determine whether there is any indication of
impairment. If such indication exists, the recoverable amount is
estimated as the net selling price or value in use, whichever is
higher. Impairment loss, if any, is recognised whenever the carrying
amount exceeds the recoverable amount.
vi. Investments
All long term investments are valued at cost. Provision for diminution
in the value of each long term investments is made to recognize a
decline other than of a temporary nature.
Current investments are carried individually at lower of cost and
fairvalue and the resultant decline if any, is charged to revenue.
vll. Copyrights (audio film albums)
The cost of copyrights (audio film albums) is charged to revenue on the
date of release of audio, considering the uncertainty of future
economic benefits and the short duration over which such benefits may
accrue.
viii. In-house music production (Audio non-film albums):
In-house music production costs are charged to revenue on
completion/release of albums, considering the uncertainty of future
economic benefits and the short duration over which such benefits may
accrue.
ix. Depreciation:
Depreciation is provided for on Straight Line method at the rates
prescribed in Schedule II to the Companies Act, 2013.
In respect of depreciable assets for which impairment loss is
recognized, depreciation / amortization is charged on the revised
carrying amount over remaining useful life of the assets.
Improvements to Leasehold Premises are amortized over the period of
lease.
x. Inventories:
Items of inventory are valued on the basis as given below:
(a) Raw Materials & Packing Materials
Raw materials and Packing Materials are valued at cost (on First In
First Out basis) or net realisable value whichever is lower.
(b) Work-In-Progress
Work-In-Progress is valued at cost of Raw Materials consumed/used.
(c) Finished Goods
Finished Goods are valued at cost or net realisable value whichever is
lower. Cost comprises of cost of purchase, cost of copyrights
(audio/video films), cost of in-house music productions
(audio/video-non-films/films), cost of conversion and other costs
incurred in bringing the inventory to their present location and
condition.
(d) Cost of Feature Films
* The Company amortizes 60% of the cost of movie rights acquired or
produced by it, on first theatrical release of the movie. The said
amortization is made proportionately based on Management's estimates of
revenues pertaining to Domestic Theatrical Rights, International
Theatrical Rights, Television Rights, Video Rights and others over a
period of 12 months from the date of theatrical release of the movie.
* Balance 40% of COP is amortized as per the management estimate /
review of future revenues but not exceeding nine years and subject to a
minimum of 4.4% in any year.
(e) Cost of under Production Films
Expenses of under production films incurred till the films are ready for
release are inventorised.
The production of films requires various types of materials in
different qualities and quantities. Considering the peculiar nature of
those items including their multiplicity and complexity, it is not
practicable to maintain quantitative records of those items. Further,
in the absence of certainty of reusability of such items, the same are
not valued.
(f) The Company reassesses the realizable value and / or revenue
potential of inventory based on market condition and future demand and
appropriate write down is made in cases where accelerated write down is
warranted.
xi. Foreign Currency Transactions:
Transactions in foreign currency are recorded at the original rates of
exchange in force at the time transactions are effected. Exchange
differences arising on settlement are recognised in the profit and loss
account.
Monetary items denominated in foreign currency are restated using the
exchange rates prevailing at the date of balance sheet and the
resulting net exchange difference is recognised in the profit and loss
account.
xii. Borrowing Costs:
Borrowing costs that are attributable to the acquisition of qualifying
assets are capitalized as part of the cost of such assets. Borrowing
costs that are directly attributable to production of feature films are
inventorised as part of cost of production of films. Other borrowing
costs are recognised as expense in the period in which they are
incurred.
xiii. Employee Benefits:
* Contribution to Provident Fund is charged to revenue.
* Defined Benefit Plan
Company's liabilities towards gratuity is determined on actuarial basis
using the projected unit credit method, which consider each period of
service as giving rise to an additional unit of benefit and measures
each unit separately to build up the final obligation. Past services
are recognised on straight-line basis over the average period until the
amended benefits become vested. Actuarial gain and losses are
recognised immediately in the Statement of Profit and Loss Account as
income or expense. Obligation is measured at the present value of
estimated future cash flow using a discount rate that is determined by
reference to market yields at the Balance Sheet date on government
bonds where the currency and terms of the government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
* In view of the past trends of leave availed, the amount of employee
benefit in the form of compensated absences, being in the nature of
short term benefit, is accounted for on accrual basis at an undiscounted
value.
xiv. Income Taxes:
Provision for current income tax is made on current tax rate based on
assessable income computed under the Income Tax Act 1961 or Book Profit
computed under section 115JB (MAT), whichever is higher. MAT credit is
recognized subject to requirement of virtual certainty that sufficient
future taxable income will be available for set off.
Deferred tax assets and liabilities are recognised for future tax
consequences attributable to the timing differences between taxable
income and accounting income that are capable of reversal in one or more
subsequent periods and are measured using tax rates enacted or
substantively enacted as at the Balance Sheet date. Deferred Tax assets
are not recognised unless, in the management judgment, there is virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. The carrying
amount of deferred tax is reviewed at each balance sheet date.
xv. Provisions and Contingent Liabilities:
Provisions are recognized in the accounts in respect of present
probable obligations, the amount of which can be reliably estimated.
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non- occurrence of one or more uncertain future events
not wholly within the control of the company.
xvi. Segment Accounting
Company considers Business segment as the Primary segment.
Based on similarity of activities / products, risk and reward
structure, organization structure and internal reporting systems, the
Company has structured its operations into the following business
segments.
* Audio/Video productions
* Film Productions / Distribution.
Operations of the Company do not qualify, for reporting as geographic
segments, under the criteria set out under Accounting Standard 17 on
segment reporting issued by The Institute of Chartered Accountants of
India.
xvii. Earning Per Share
Basic earnings per share are computed using the weighted average number
of equity shares outstanding during the year. Diluted earning per share
are computed using the weighted average number of equity and dilutive
equivalent shares outstanding during the year, except where the results
would be anti-dilutive.
xviii. Cash Flow
Cash Flows are reported using indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non cash
nature and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from regular revenue generating, investing and
financing activities of the Company are segregated.
xix. Leases
Finance leases, where substantially all the risks and benefits
incidental to ownership of the leased item, are transferred to the
Company, are capitalized at the lower of the fair value and present
value of the minimum lease payments at the inception of the lease term
and disclosed as leased assets. Lease payments are apportioned between
finance charges and reduction of the lease liability based on the
implicit rate of return. Finance charges are charged to income. Lease
management fees, legal charges and other initial direct costs are
capitalized.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease item, capitalised leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the less or effectively retains substantially all the
risks and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognised as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term.
Mar 31, 2014
I. Accounting Convention
The accompanying financial statements have been prepared under the
historical cost convention in accordance with Generally Accepted
Accounting Principles in India. The Company has prepared these
financial statements to comply in all material respects with Accounting
Standards notified under the Companies (Accounting Standard) Rules,
2006 read with the General Circular 15/2013 dated September 13, 2013 of
the Ministry of Corporate Affairs in respect of Section 133 of the
Companies Act 2013 and the relevant provisions of the Companies Act
1956.
ii. Use of estimates:
The preparation of financial statements in conformity with the
generally accepted accounting principles require management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities on the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimate results. Differences
between the actual results and estimates are recognised in the period
in which the results are known / materialised.
iii. Revenue recognition:
(a) Turnover:
Audio Product Sale :
Sale of goods to intermediate parties (distributors) and others is
recognised when the significant risks and rewards of ownership are
transferred and is disclosed net of returns and trade discount. Revenue
from sale of audio rights is recognised on transfer / assignment of the
rights as per the contracts /arrangements with the parties.
Royalties from Music Rights :
Royalty is recognised only when it is reasonably certain that the
ultimate collection will be made.
Revenue from films:
Income from production of films is recognised in the statement of
Profit and Loss on release of films as per the contracts / arrangements
with distributors. Revenue from distribution of motion pictures is
recognized based on ticket sales on exhibition of motion pictures at
exhibition theatres. Recoveries from films as overflows are recognized
on the basis of business statements received from the distributors.
Revenues from terrestrial rights, video rights, satellite rights etc
are recognized on transfer / assignment/ effective date of respective
rights in accordance with the respective agreement or on realization of
the substantial consideration whichever is earlier and on delivery of
the specified telecasting material.
Although revenues are accounted on accrual basis as aforesaid, the cost
is charged to profit and loss account based on the amortisation
principles stated in the accounting policy under the head ''cost of
feature films''.
(b) Artist Management Receipts:
Artist Management Receipts are recognized in the statement of Profit &
Loss on accrual basis as per the Contracts entered by the Artists with
respective parties.
(c) Interest Income:
Interest Income is accounted on accrual basis, at the contracted rates.
(d) Others:
Revenue in respect of insurance/other claims is recognised only when it
is reasonably certain that the ultimate collection will be made.
iv. Fixed Assets
Fixed Assets are stated at cost of acquisition less accumulated
depreciation and impairment losses. Cost includes all expenses incurred
to bring the assets to its current location and condition.
v. Impairment of Assets
Carrying amount of cash generating units/ assets are reviewed at each
Balance Sheet date to determine whether there is any indication of
impairment. If such indication exists, the recoverable amount is
estimated as the net selling price or value in use, whichever is
higher. Impairment loss, if any, is recognised whenever the carrying
amount exceeds the recoverable amount.
vi. Investments
All long term investments are valued at cost. Provision for diminution
in the value of each long term investments is made to recognize a
decline other than of a temporary nature.
Current investments are carried individually at lower of cost and fair
value and the resultant decline if any, is charged to revenue.
vii. Copyrights (audio film albums)
The cost of copyrights (audio film albums) is charged to revenue on the
date of release of audio, considering the uncertainty of future
economic benefits and the short duration over which such benefits may
accrue.
viii. In-house music production (Audio non-film albums):
In-house music production costs are charged to revenue on
completion/release of albums, considering the uncertainty of future
economic benefits and the short duration over which such benefits may
accrue.
ix. Depreciation:
Depreciation is provided for on Straight Line method at the rates
prescribed in Schedule XIV to the Companies Act, 1956.
In respect of depreciable assets for which impairment loss is
recognized, depreciation / amortization is charged on the revised
carrying amount over remaining useful life of the assets.
Improvements to Leasehold Premises are amortized over the period of
lease.
x. Inventories:
Items of inventory are valued on the basis as given below:
(a) Raw Materials & Packing Materials
Raw materials and Packing Materials are valued at cost (on First In
First Out basis) or net realisable value whichever is lower.
(b) work-In-Progress
Work-In-Progress is valued at cost of Raw Materials consumed / used.
(c) Finished Goods
Finished Goods are valued at cost or net realisable value whichever is
lower. Cost comprises of cost of purchase, cost of copyrights
(audio/video films), cost of in-house music productions
(audio/video-non-films/films), cost of conversion and other costs
incurred in bringing the inventory to their present location and
condition.
(d) Cost of Feature Films
* The Company amortizes 60% of the cost of movie rights acquired or
produced by it, on first theatrical release of the movie. The said
amortization is made proportionately based on Management''s estimates of
revenues pertaining to Domestic Theatrical Rights, International
Theatrical Rights, Television Rights, Video Rights and others over a
period of 12 months from the date of theatrical release of the movie.
* Balance 40% of COP is amortized as per the management estimate /
review of future revenues but not exceeding nine years and subject to a
minimum of 4.4% in any year.
(e) Cost of under Production Films
Expenses of under production films incurred till the films are ready
for release are inventorised.
The production of films requires various types of materials in
different qualities and quantities. Considering the peculiar nature of
those items including their multiplicity and complexity, it is not
practicable to maintain quantitative records of those items. Further,
in the absence of certainty of reusability of such items, the same are
not valued.
(f) The Company reassesses the realizable value and / or revenue
potential of inventory based on market condition and future demand and
appropriate write down is made in cases where accelerated write down is
warranted.
xi. Foreign Currency Transactions:
Transactions in foreign currency are recorded at the original rates of
exchange in force at the time transactions are effected. Exchange
differences arising on settlement are recognised in the profit and loss
account.
Monetary items denominated in foreign currency are restated using the
exchange rates prevailing at the date of balance sheet and the
resulting net exchange difference is recognised in the profit and loss
account.
xii. Borrowing Costs:
Borrowing costs that are attributable to the acquisition of qualifying
assets are capitalized as part of the cost of such assets. Borrowing
costs that are directly attributable to production of feature films are
inventorised as part of cost of production of films. Other borrowing
costs are recognised as expense in the period in which they are
incurred.
xiii. Employee Benefits:
* Contribution to Provident Fund is charged to revenue.
* Defined Benefit Plan
Company''s liabilities towards gratuity is determined on actuarial basis
using the projected unit credit method, which consider each period of
service as giving rise to an additional unit of benefit and measures
each unit separately to build up the final obligation. Past services
are recognised on straight-line basis over the average period until the
amended benefits become vested. Actuarial gain and losses are
recognised immediately in the Statement of Profit and Loss Account as
income or expense. Obligation is measured at the present value of
estimated future cash flow using a discount rate that is determined by
reference to market yields at the Balance Sheet date on government
bonds where the currency and terms of the government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
* In view of the past trends of leave availed, the amount of employee
benefit in the form of compensated absences, being in the nature of
short term benefit, is accounted for on accrual basis at an
undiscounted value.
xiv. Income Taxes:
Provision for current income tax is made on current tax rate based on
assessable income computed under the Income Tax Act 1961 or Book Profit
computed under section 115JB (MAT), whichever is higher. MAT credit is
recognized subject to requirement of virtual certainty that sufficient
future taxable income will be available for set off.
Deferred tax assets and liabilities are recognised for future tax
consequences attributable to the timing differences between taxable
income and accounting income that are capable of reversal in one or
more subsequent periods and are measured using tax rates enacted or
substantively enacted as at the Balance Sheet date. Deferred Tax assets
are not recognised unless, in the management judgment, there is virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. The carrying
amount of deferred tax is reviewed at each balance sheet date.
xv. Provisions and Contingent Liabilities:
Provisions are recognized in the accounts in respect of present
probable obligations, the amount of which can be reliably estimated.
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non- occurrence of one or more uncertain future events
not wholly within the control of the company.
xvi. Segment Accounting
Company considers Business segment as the Primary segment. Based on
similarity of activities / products, risk and reward structure,
organization structure and internal reporting systems, the Company has
structured its operations into the following business segments.
* Audio / Video productions
* Film Productions / Distribution.
Operations of the Company do not qualify, for reporting as geographic
segments, under the criteria set out under Accounting Standard 17 on
segment reporting issued by The Institute of Chartered Accountants of
India.
xvii. Earning Per Share
Basic earnings per share are computed using the weighted average number
of equity shares outstanding during the year. Diluted earning per
share are computed using the weighted average number of equity and
dilutive equivalent shares outstanding during the year, except where
the results would be anti-dilutive.
xviii. Cash Flow
Cash Flows are reported using indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non cash
nature and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from regular revenue generating, investing and
financing activities of the Company are segregated.
xix. Leases
Finance leases, where substantially all the risks and benefits
incidental to ownership of the leased item, are transferred to the
Company, are capitalized at the lower of the fair value and present
value of the minimum lease payments at the inception of the lease term
and disclosed as leased assets. Lease payments are apportioned between
finance charges and reduction of the lease liability based on the
implicit rate of return. Finance charges are charged to income. Lease
management fees, legal charges and other initial direct costs are
capitalized.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease item, capitalised leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognised as an expense
in the Statement of Profit and Loss on a straight- line basis over the
lease term.
Operating lease payment is recognised on a straight line basis over the
lease term.
Mar 31, 2013
I. Accounting Convention
The accompanying fnancial statements have been prepared under the
historical cost convention in accordance with Generally Accepted
Accounting Principles in India. The Company has prepared these fnancial
statements to comply in all material respects with Accounting Standards
notifed under the Companies (Accounting Standard) Rules, 2006 and the
relevant provisions of the Companies Act 1956.
ii. Use of estimates:
The preparation of fnancial statements in conformity with the generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
on the date of the fnancial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimate results. Differences between the actual
results and estimates are recognised in the period in which the results
are known / materialised.
iii. Revenue recognition:
(a) Operating revenue:
Audio Product Sale :
Sale of goods to intermediate parties (distributors) and others is
recognised when the signifcant risks and rewards of ownership are
transferred and is disclosed net of returns and trade discount. Revenue
from sale of audio rights is recognised on transfer / assignment of the
rights as per the contracts /arrangements with the parties.
Royalties from Music Rights :
Royalty is recognised only when it is reasonably certain that the
ultimate collection will be made.
Revenue from flms:
Income from production of flms is recognised in the statement of Proft
and Loss on release of flms as per the contracts / arrangements with
distributors. Revenue from distribution of motion pictures is
recognized based on ticket sales on exhibition of motion pictures at
exhibition theatres. Recoveries from flms as overfows are recognized on
the basis of business statements received from the distributors.
Revenues from terrestrial rights, video rights, satellite rights etc
are recognized on transfer / assignment/ effective date of respective
rights in accordance with the respective agreement or on realization of
the substantial consideration whichever is earlier and on delivery of
the specifed telecasting material.
Although revenues are accounted on accrual basis as aforesaid, the cost
is charged to proft and loss account based on the amortisation
principles stated in the accounting policy under the head ''cost of
feature flms''.
Artist Management Receipts
Artist Management Receipts are recognised in the statements of Proft &
Loss A/c on accrual basis as per the Contracts entered by the Artists
with respective parties.
(b) Interest Income:
Interest Income is accounted on accrual basis, at the contracted rates.
(c) Others:
Revenue in respect of insurance/other claims is recognised only when it
is reasonably certain that the ultimate collection will be made.
iv. Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation. Cost
includes all expenses incurred to bring the assets to its current
location and condition.
v. Impairment of Assets
Carrying amount of cash generating units/ assets are reviewed at each
Balance Sheet date to determine whether there is any indication of
impairment. If such indication exists, the recoverable amount is
estimated as the net selling price or value in use, whichever is
higher. Impairment loss, if any, is recognised whenever the carrying
amount exceeds the recoverable amount.
vi. Investments
All long term investments are valued at cost. Provision for diminution
in the value of each long term investments is made to recognize a
decline other than of a temporary nature.
Current investments are carried individually at lower of cost and fair
value and the resultant decline if any, is charged to revenue.
vii. Copyrights (audio flm albums)
The cost of copyrights (audio flm albums) is charged to revenue on the
date of release of audio, considering the uncertainty of future
economic benefts and the short duration over which such benefts may
accrue.
viii. In-house music production (Audio non-flm albums):
In-house music production costs are charged to revenue on
completion/release of albums, considering the uncertainty of future
economic benefts and the short duration over which such benefts may
accrue.
ix. Depreciation:
Depreciation is provided for on Straight Line method at the rates
prescribed in Schedule XIV to the Companies Act, 1956.
In respect of depreciable assets for which impairment loss is
recognized, depreciation / amortization is charged on the revised
carrying amount over remaining useful life of the assets.
Improvements to Leasehold Premises are amortized over the period of
lease.
x. Inventories:
Items of inventory are valued on the basis as given below:
(a) Raw Materials & Packing Materials
Raw materials and Packing Materials are valued at cost (on First In
First Out basis) or net realisable value whichever is lower.
(b) Work-In-Progress
Work-In-Progress is valued at cost of Raw Materials consumed / used.
(c) Finished Goods
Finished Goods are valued at cost or net realisable value whichever is
lower. Cost comprises of cost of purchase, cost of copyrights
(audio/video flms), cost of in-house music productions
(audio/video-non-flms/flms), cost of conversion and other costs
incurred in bringing the inventory to their present location and
condition.
(d) Cost of Feature Films
- The Company amortizes 60% of the cost of movie rights acquired or
produced by it, on frst theatrical release of the movie. The said
amortization is made proportionately based on Management''s estimates of
revenues pertaining to Domestic
Theatrical Rights, International Theatrical Rights, Television Rights,
Video Rights and others over a period of 12 months from the date of
theatrical release of the movie.
- Balance 40% of COP is amortized as per the
management estimate / review of future revenues but not exceeding nine
years and subject to a minimum of 4.4% in any year.
(e) Cost of under Production Films
Expenses of under production flms incurred till the flms are ready for
release are inventorised.
The production of flms requires various types of materials in different
qualities and quantities. Considering the peculiar nature of those
items including their multiplicity and complexity, it is not
practicable to maintain quantitative records of those items. Further,
in the absence of certainty of reusability of such items, the same are
not valued.
(f) The Company reassesses the realizable value and / or revenue
potential of inventory based on market condition and future demand and
appropriate write down is made in cases where accelerated write down is
warranted.
xi. Foreign Currency Transactions:
Transactions in foreign currency are recorded at the original rates of
exchange in force at the time transactions are effected. Exchange
differences arising on settlement are recognised in the proft and loss
account.
Monetary items denominated in foreign currency are restated using the
exchange rates prevailing at the date of balance sheet and the
resulting net exchange difference is recognised in the proft and loss
account.
xii. Borrowing Costs:
Borrowing costs that are attributable to the acquisition of qualifying
assets are capitalized as part of the cost of such assets. Borrowing
costs that are directly attributable to production of feature flms are
inventorised as part of cost of production of flms. Other borrowing
costs are recognised as expense in the period in which they are
incurred.
xiii. Employee Benefts:
- Contribution to Provident Fund is charged to revenue.
- Defned Beneft Plan
Company''s liabilities towards gratuity is determined on actuarial basis
using the projected unit credit method, which consider each period of
service as giving rise to an additional unit of beneft and measures
each unit separately to build up the fnal obligation. Past services are
recognised on straight-line basis over the average period until the
amended benefts become vested. Actuarial gain and losses are
recognised immediately in the Statement of Proft and Loss Account as
income or expense. Obligation is measured at the present value of
estimated future cash fow using a discount rate that is determined by
reference to market yields at the Balance Sheet date on government
bonds where the currency and terms of the government bonds are
consistent with the currency and estimated terms of the defned beneft
obligation.
- In view of the past trends of leave availed, the amount of
employee beneft in the form of compensated absences, being in the
nature of short term beneft, is accounted for on accrual basis at an
undiscounted value.
xiv. Income Taxes:
Provision for current income tax is made on current tax rate based on
assessable income computed under the Income Tax Act 1961 or Book Proft
computed under section 115JB (MAT), whichever is higher. MAT credit is
recognized subject to requirement of virtual certainty that suffcient
future taxable income will be available for set off.
Deferred tax assets and liabilities are recognised for future tax
consequences attributable to the timing differences between taxable
income and accounting income that are capable of reversal in one or
more subsequent periods and are measured using tax rates enacted or
substantively enacted as at the Balance Sheet date. Deferred Tax assets
are not recognised unless, in the management judgment, there is virtual
certainty that suffcient future taxable income will be available
against which such deferred tax assets can be realised. The carrying
amount of deferred tax is reviewed at each balance sheet date.
xv. Provisions and Contingent Liabilities:
Provisions are recognised in the accounts in respect of present
probable obligations, the amount of which can be reliably estimated.
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confrmed by the
occurrence or non- occurrence of one or more uncertain future events
not wholly within the control of the company.
xvi. Segment Accounting
Company considers Business segment as the Primary segment. Based on
similarity of activities / products, risk and reward structure,
organization structure and internal reporting systems, the Company has
structured its operations into the following business segments.
- Audio / Video productions
- Film Productions / Distribution.
Operations of the Company do not qualify, for reporting as geographic
segments, under the criteria set out under Accounting Standard 17 on
segment reporting issued by The Institute of Chartered Accountants of
India.
xvii. Earning Per Share
Basic earnings per share are computed using the weighted average number
of equity shares outstanding during the year. Diluted earning per
share are computed using the weighted average number of equity and
dilutive equivalent shares outstanding during the year, except where
the results would be anti-dilutive.
xviii. Cash Flow
Cash Flows are reported using indirect method, whereby net proft before
tax is adjusted for the effects of transactions of a non cash nature
and any deferrals or accruals of past or future cash receipts or
payments. The cash fows from regular revenue generating, investing and
fnancing activities of the Company are segregated.
xix. Leases
Finance leases, where substantially all the risks and benefts
incidental to ownership of the leased item, are transferred to the
Company, are capitalised at the lower of the fair value and present
value of the minimum lease payments at the inception of the lease term
and disclosed as leased assets. Lease payments are apportioned between
fnance charges and reduction of the lease liability based on the
implicit rate of return. Finance charges are charged to income. Lease
management fees, legal charges and other initial direct costs are
capitalised.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease item, capitalised leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefts of ownership of the leased term, are classifed as operating
leases. Operating lease payments are recognised as an expense in the
Proft and Loss account on a straight-line basis over the lease term.
Mar 31, 2012
I. Accounting Convention:
The accompanying financial statements have been prepared under the
historical cost convention in accordance with Generally Accepted
Accounting Principles in India. The Company has prepared these
financial statements to comply in all material respects with Accounting
Standards notified under the Companies (Accounting Standard) Rules,
2006 and the relevant provisions of the Companies Act 1956.
ii. Use of estimates:
The preparation of financial statements in conformity with the
generally accepted accounting principles require management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities on the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimate results. Differences
between the actual results and estimates are recognized in the period
in which the results are known / materialized.
iii. Presentation & Disclosure of Financial Statement:
For the purpose of preparation and presentation of Financial Statements
for the year ended 31st March 2012 the Company has adopted revised
schedule VI notified under the Companies Act 1956. Though, the adoption
of revised schedule VI has no impact on the recognition and measurement
principles consistently followed by the Company, it has significant
impact on presentation and disclosures made in the financial
statements. Accordingly, all assets & liabilities have been classified
as current & non - current as per the operating cycle (3 years
estimated by the Company for films business) and other criteria set out
in the Schedule VI of the Companies Act, 1956. Further, the Company, in
preparing financial statements including Notes to Accounts, has
maintained balance between providing excessive details that may not
assist users of financial statements and not providing important
information as a result of too much aggregation.
iv. Revenue recognition:
(a) Turnover:
Audio Product Sale:
Sale of goods to intermediate parties (distributors) and others is
recognized when the significant risks and rewards of ownership are
transferred and is disclosed net of returns and trade discount. Revenue
from sale of audio rights is recognized on transfer / assignment of the
rights as per the contracts /arrangements with the parties.
Royalties from Music Rights:
Royalty is recognized only when it is reasonably certain that the
ultimate collection will be made.
Revenue from films:
Income from production of films is recognized in the statement of
Profit and Loss on release of films as per the contracts / arrangements
with distributors. Revenue from distribution of motion pictures is
recognized based on ticket sales on exhibition of motion pictures at
exhibition theatres. Recoveries from films as overflows are recognized
on the basis of business statements received from the distributors.
Revenues from terrestrial rights, video rights, satellite rights etc
are recognized on transfer / assignment of respective rights in
accordance with the respective agreement or on realization of the
substantial consideration whichever is earlier and on delivery of the
specified telecasting material.
Although revenues are accounted on accrual basis as aforesaid, the cost
is charged to profit and loss account based on the amortization
principles stated in the accounting policy under the head 'cost of
feature films'.
(b) Artist Management Receipts:
Artist Management Receipts are recognized in the statements of Profit &
Loss A/c on accrual basis as per the Contracts entered by the Artists
with respective parties.
(c) Interest Income:
Interest Income is accounted on accrual basis, at the contracted rates.
(d) Others:
Revenue in respect of insurance/other claims is recognized only when it
is reasonably certain that the ultimate collection will be made.
v. Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation. Cost
includes all expenses incurred to bring the assets to its current
location and condition.
vi. Impairment of Assets
Carrying amount of cash generating units/ assets are reviewed at each
Balance Sheet date to determine whether there is any indication of
impairment. If such indication exists, the recoverable amount is
estimated as the net selling price or value in use, whichever is
higher. Impairment loss, if any, is recognized whenever the carrying
amount exceeds the recoverable amount.
vii. Investments
All long term investments are valued at cost. Provision for diminution
in the value of each long term investments is made to recognize a
decline other than of a temporary nature.
Current investments are carried individually at lower of cost and fair
value and the resultant decline if any, is charged to revenue.
viii. Copyrights (audio film albums)
The cost of copyrights (audio film albums) is charged to revenue on the
date of release of audio, considering the uncertainty of future
economic benefits and the short duration over which such benefits may
accrue.
ix. In-house music production (Audio non-film albums):
In-house music production costs are charged to revenue on
completion/release of albums, considering the uncertainty of
future economic benefits and the short duration over which such
benefits may accrue.
x. Depreciation:
Depreciation is provided for on Straight Line method at the rates
prescribed in Schedule XIV to the Companies Act, 1956.
In respect of depreciable assets for which impairment loss is
recognized, depreciation / amortization is charged on the revised
carrying amount over remaining useful life of the assets.
Improvements to Leasehold Premises are amortized over the period of
lease.
xi. Inventories:
Items of inventory are valued on the basis as given below:
(a) Raw Materials & Packing Materials
Raw materials and Packing Materials are valued at cost (on First In
First Out basis) or net realizable value whichever is lower.
(b) Work-In-Progress
Work-In-Progress is valued at cost of Raw Materials consumed / used.
(c) Finished Goods
Finished Goods are valued at cost or net realizable value whichever is
lower. Cost comprises of cost of purchase, cost of copyrights
(audio/video films), cost of in-house music productions
(audio/video-non-films/films), cost of conversion and other costs
incurred in bringing the inventory to their present location and
condition.
(d) Cost of Feature Films
- The Company amortizes 60% of the cost of movie rights acquired or
produced by it, on first theatrical release of the movie. The said
amortization is made proportionately based on Management's estimates of
revenues pertaining to Domestic Theatrical Rights, International
Theatrical Rights, Television Rights, Video Rights and others over a
period of 12 months from the date of theatrical release of the movie.
- Balance 40% of COP is amortized as per the management estimate /
review of future revenues but not exceeding nine years and subject to a
minimum of 4.4% in any year.
(e) Cost of under Production Films
Expenses of under production films incurred till the films are ready
for release are inventoried.
The production of films requires various types of materials in
different qualities and quantities. Considering the peculiar nature of
those items including their multiplicity and complexity, it is not
practicable to maintain quantitative records of those items. Further,
in the absence of certainty of reusability of such items, the same are
not valued.
(f) The Company reassesses the realizable value and / or revenue
potential of inventory based on market condition and future demand and
appropriate write down is made in cases where accelerated write down is
warranted.
xii. Foreign Currency Transactions:
Transactions in foreign currency are recorded at the original rates of
exchange in force at the time transactions are effected. Exchange
differences arising on settlement are recognized in the profit and loss
account.
Monetary items denominated in foreign currency are restated using the
exchange rates prevailing at the date of balance sheet and the
resulting net exchange difference is recognized in the profit and loss
account.
xiii. Borrowing Costs:
Borrowing costs that are attributable to the acquisition of qualifying
assets are capitalized as part of the cost of such assets. Borrowing
costs that are directly attributable to production of feature films are
inventoried as part of cost of production of films. Other borrowing
costs are recognized as expense in the period in which they are
incurred.
xiv. Employee Benefits:
- Contribution to Provident Fund is charged to revenue.
- Defined Benefit Plan
Company's liabilities towards gratuity is determined on actuarial basis
using the projected unit credit method, which consider each period of
service as giving rise to an additional unit of benefit and measures
each unit separately to build up the final obligation. Past services
are recognized on straight-line basis over the average period until the
amended benefits become vested. Actuarial gain and losses are
recognized immediately in the Statement of Profit and Loss Account as
income or expense. Obligation is measured at the present value of
estimated future cash flow using a discount rate that is determined by
reference to market yields at the Balance Sheet date on government
bonds where the currency and terms of the government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
- In view of the past trends of leave availed, the amount of employee
benefit in the form of compensated absences, being in the nature of
short term benefit, is accounted for on accrual basis at an
undiscounted value.
xv. Income Taxes:
Provision for current income tax is made on current tax rate based on
assessable income computed under the Income Tax Act 1961 or Book Profit
computed under section 115JB (MAT), whichever is higher. MAT credit is
recognized subject to requirement of virtual certainty that sufficient
future taxable income will be available for set off.
Deferred tax assets and liabilities are recognized for future tax
consequences attributable to the timing differences between taxable
income and accounting income that are capable of reversal in one or
more subsequent periods and are measured using tax rates enacted or
substantively enacted as at the Balance Sheet date. Deferred Tax assets
are not recognized unless, in the management judgment, there is virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. The carrying
amount of deferred tax is reviewed at each balance sheet date.
xvi. Provisions and Contingent Liabilities:
Provisions are recognized in the accounts in respect of present
probable obligations, the amount of which can be reliably estimated.
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non- occurrence of one or more uncertain future events
not wholly within the control of the company.
xvii. Segment Accounting
Company considers Business segment as the Primary segment.
Based on similarity of activities / products, risk and reward
structure, organization structure and internal reporting systems, the
Company has structured its operations into the following business
segments.
- Audio / Video productions
- Film Productions / Distribution.
Operations of the Company do not qualify, for reporting as geographic
segments, under the criteria set out under Accounting Standard 17 on
segment reporting issued by The Institute of Chartered Accountants of
India.
xviii. Earnings Per Share
Basic earnings per share are computed using the weighted average number
of equity shares outstanding during the year. Diluted earnings per
share are computed using the weighted average number of equity and
dilutive equivalent shares outstanding during the year, except where
the results would be anti-dilutive.
xix. Cash Flow
Cash Flows are reported using indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non cash
nature and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from regular revenue generating, investing and
financing activities of the Company are segregated.
xx. Leases
Finance leases, where substantially all the risks and benefits
incidental to ownership of the leased item, are transferred to the
Company, are capitalized at the lower of the fair value and present
value of the minimum lease payments at the inception of the lease term
and disclosed as leased assets. Lease payments are apportioned between
finance charges and reduction of the lease liability based on the
implicit rate of return. Finance charges are charged to income. Lease
management fees, legal charges and other initial direct costs are
capitalized.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease item, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the less or effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight-line basis over the lease
term.
Mar 31, 2011
1. Basis of preparation of financial statements:
The accompanying financial statements have been prepared under the
historical cost convention in accordance with generally accepted
accounting principles, provisions of the Companies Act, 1956 and the
applicable accounting standards issued by Institute of Chartered
Accountants of India.
2. Use of estimates:
The preparation of financial statements in conformity with the
generally accepted accounting principles require management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities on the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimate results. Differences
between the actual results and estimates are recognised in the period
in which the results are known / materialised.
3. Revenue recognition:
(i) Turnover:
Audio Product Sale:
Sale of goods to intermediate parties (distributors) and others is
recognised when the significant risks and rewards of ownership are
transferred and is disclosed net of returns and trade discount. Revenue
from sale of audio rights is recognised on transfer / assignment of the
rights as per the contracts /arrangements with the parties.
Royalties from Music Rights:
Royalty is recognised only when it is reasonably certain that the
ultimate collection will be made.
Revenue from films:
Income from production of films is recognised in the statement of
Profit and Loss on release of films as per the contracts / arrangements
with distributors. Revenue from distribution of motion pictures is
recognized based on ticket sales on exhibition of motion pictures at
exhibition theatres. Recoveries from films as overflows are recognized
on the basis of business statements received from the distributors.
Revenues from terrestrial rights, video rights, satellite rights etc
are recognized on transfer / assignment of respective rights on
effective date as per the contracts with the parties.
Although revenues are accounted on accrual basis as aforesaid, the cost
is charged to profit and loss account based on the amortisation
principles stated in the accounting policy under the head 'cost of
feature films'.
(ii) Artist Management Receipts:
Artist Management Receipts are recognised in the statements of Profit &
Loss A/c on accrual basis as per the Contracts entered by the Artists
with respective parties.
(iii) Interest Income:
Interest Income is accounted on accrual basis, at the contracted rates.
(iv) Others:
Revenue in respect of insurance/other claims is recognised only when it
is reasonably certain that the ultimate collection will be made.
4. Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation. Cost
includes all expenses incurred to bring the assets to its current
location and condition.
5. Impairment of Assets
Carrying amount of cash generating units/ assets are reviewed at each
Balance Sheet date to determine whether there is any indication of
impairment. If such indication exists, the recoverable amount is
estimated as the net selling price or value in use, whichever is
higher. Impairment loss, if any, is recognised whenever the carrying
amount exceeds the recoverable amount.
6. Investments
All long term investments are valued at cost. Provision for diminution
in the value of each long term investments is made to recognize a
decline other than of a temporary nature.
Current investments are carried individually at lower of cost and fair
value and the resultant decline if any, is charged to revenue.
7. Copyrights (audio film albums)
The cost of copyrights (audio film albums) is charged to revenue on the
date of release of audio, considering the uncertainty of future
economic benefits and the short duration over which such benefits may
accrue.
8. In-house music production (Audio non-film albums):
In-house music production costs are charged to revenue on
completion/release of albums, considering the uncertainty of future
economic benefits and the short duration over which such benefits may
accrue.
9. Depreciation:
Depreciation is provided for on Straight Line method at the rates
prescribed in Schedule XIV to the Companies Act, 1956.
In respect of depreciable assets for which impairment loss is
recognized, depreciation / amortization is charged on the revised
carrying amount over remaining useful life of the assets.
Improvements to Leasehold Premises are amortized over the period of
lease.
10. Inventories:
Items of inventory are valued on the basis as given below:
(i) Raw Materials & Packing Materials
Raw materials and Packing Materials are valued at cost (on First In
First Out basis) or net realisable value whichever is lower.
(ii) Work-In-Progress
Work-In-Progress is valued at cost of Raw Materials consumed / used.
(iii) Finished Goods
Finished Goods are valued at cost or net realisable value whichever is
lower. Cost comprises of cost of purchase, cost of copyrights
(audio/video films), cost of in-house music productions
(audio/video-non-films/films), cost of conversion and other costs
incurred in bringing the inventory to their present location and
condition.
(iv) Cost of Feature Films
i] The Company amortizes 60% of the cost of movie rights acquired or
produced by it, on first theatrical release of the movie. The said
amortization is made proportionately based on Management's estimates of
revenues pertaining to Domestic Theatrical Rights, International
Theatrical Rights, Television Rights, Video Rights and others over a
period of 12 months from the date of theatrical release of the movie.
ii] Balance 40% of COP is amortized on an equitable basis over a
maximum period of nine years.
(Refer Note B](3) of Schedule 21)
(v) Cost of under Production Films
Expenses of under production films incurred till the films are ready
for release are inventorised.
The production of films requires various types of materials in
different qualities and quantities. Considering the peculiar nature of
those items including their multiplicity and complexity, it is not
practicable to maintain quantitative records of those items. Further,
in the absence of certainty of reusability of such items, the same are
not valued.
(vi) The Company reassesses the realizable value and / or revenue
potential of inventory based on market condition and future demand and
appropriate write down is made in cases where accelerated write down is
warranted.
11. Foreign Currency Transactions:
Transactions in foreign currency are recorded at the original rates of
exchange in force at the time transactions are effected. Exchange
differences arising on settlement are recognised in the profit and loss
account.
Monetary items denominated in foreign currency are restated using the
exchange rates prevailing at the date of balance sheet and the
resulting net exchange difference is recognised in the profit and loss
account.
12. Borrowing Costs:
Borrowing costs that are attributable to the acquisition of qualifying
assets are capitalized as part of the cost of such assets. Borrowing
costs that are directly attributable to production of feature films are
inventorised as part of cost of production of films. Other borrowing
costs are recognised as expense in the period in which they are
incurred.
13. Employee Benefits:
i. Contribution to Provident Fund is charged to revenue.
ii. Defined Benefit Plan
Company's liabilities towards gratuity is determined on actuarial basis
using the projected unit credit method, which consider each period of
service as giving rise to an additional unit of benefit and measures
each unit separately to build up the final obligation. Past services
are recognised on straight-line basis over the average period until the
amended benefits become vested. Actuarial gain and losses are
recognised immediately in the Statement of Profit and Loss Account as
income or expense. Obligation is measured at the present value of
estimated future cash flow using a discount rate that is determined by
reference to market yields at the Balance Sheet date on government
bonds where the currency and terms of the government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
iii. In view of the past trends of leave availed, the amount of
employee benefit in the form of compensated absences, being in the
nature of short term benefit, is accounted for on accrual basis at an
undiscounted value.
14. Income Taxes:
Provision for current income tax is made on current tax rate based on
assessable income computed under the Income Tax Act 1961 or Book Profit
computed under section 115JB (MAT), whichever is higher. MAT credit is
recognized subject to requirement of virtual certainty that sufficient
future taxable income will be available for set off.
Deferred tax assets and liabilities are recognised for future tax
consequences attributable to the timing differences between taxable
income and accounting income that are capable of reversal in one or
more subsequent periods and are measured using tax rates enacted or
substantively enacted as at the Balance Sheet date. Deferred Tax assets
are not recognised unless, in the management judgment, there is virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. The carrying
amount of deferred tax is reviewed at each balance sheet date.
15. Provisions and Contingent Liabilities:
Provisions are recognised in the accounts in respect of present
probable obligations, the amount of which can be reliably estimated.
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non- occurrence of one or more uncertain future events
not wholly within the control of the company.
16. Segment Accounting
Company considers Business segment as the Primary segment.
Based on similarity of activities / products, risk and reward
structure, organization structure and internal reporting systems, the
Company has structured its operations into the following business
segments.
i] Audio / Video productions
ii] Film Productions / Distribution.
Operations of the Company do not qualify, for reporting as geographic
segments, under the criteria set out under Accounting Standard 17 on
segment reporting issued by The Institute of Chartered Accountants of
India.
17. Earning Per Share
Basic earnings per share are computed using the weighted average number
of equity shares outstanding during the year. Diluted earning per share
are computed using the weighted average number of equity and dilutive
equivalent shares outstanding during the year, except where the results
would be anti-dilutive.
18. Cash Flow
Cash Flows are reported using indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non cash
nature and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from regular revenue generating, investing and
financing activities of the Company are segregated.
19. Leases
Finance leases, where substantially all the risks and benefits
incidental to ownership of the leased item, are transferred to the
Company, are capitalised at the lower of the fair value and present
value of the minimum lease payments at the inception of the lease term
and disclosed as leased assets. Lease payments are apportioned between
finance charges and reduction of the lease liability based on the
implicit rate of return. Finance charges are charged to income. Lease
management fees, legal charges and other initial direct costs are
capitalised.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease item, capitalised leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognised as an expense
in the Profit and Loss account on a straight-line basis over the lease
term.
Mar 31, 2010
1. Basis of preparation of financial statements:
The accompanying financial statements have been prepared under the
historical cost convention in accordance with generally accepted
accounting principles, provisions of the Companies Act, 1956 and the
applicable accounting standards issued by Institute of Chartered
Accountants of India.
2. Use of estimates:
The preparation of financial statements in conformity with the
generally accepted accounting principles require management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities on the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimate results. Differences
between the actual results and estimates are recognised in the period
in which the results are known / materialised.
3. Revenue recognition: (i) Turnover:
Audio Product Sale:
Sale of goods to intermediate parties (distributors) and others is
recognised when the significant risks and rewards of ownership are
transferred and is disclosed net of returns and trade discount. Revenue
from sale of audio rights is recognised on transfer / assignment of the
rights as per the contracts /arrangements with the parties.
Royalties from Music Rights :
Royalty is recognised only when it is reasonably certain that the
ultimate collection will be made.
Revenue from films:
Income from production of films is recognised in the statement of
Profit and Loss on release of films as per the contracts / arrangements
with distributors. Revenue from distribution of motion pictures is
recognized based on ticket sales on exhibition of motion pictures at
exhibition theatres. Recoveries from films as overflows are recognized
on the basis of business statements received from the distributors.
Revenues from terrestrial rights, video rights, satellite rights are
recognized on transfer / assignment of respective rights on effective
date as per the contracts with the parties.
Although revenues are accounted on accrual basis as aforesaid, the cost
is charged to profit and loss account based on the amortisation
principles stated in the accounting policy under the head cost of
feature films.
(ii) Artist Management Receipts:
Artist Management Receipts are recognised in the statements of Profit &
Loss A/c on accrual basis as per the Contracts entered by the Artists
with respective parties.
(iii) Interest Income:
Interest Income is accounted on accrual basis, at the contracted rates.
(iv) Others:
Revenue in respect of insurance/other claims is recognised only when it
is reasonably certain that the ultimate collection will be made.
4. Fixed Assets:
Fixed Assets are stated at cost less accumulated depreciation. Cost
includes all expenses incurred to bring the assets to its current
location and condition.
5. Impairment of Assets:
Carrying amount of cash generating units/ assets are reviewed at each
Balance Sheet date to determine whether there is any indication of
impairment. If such indication exists, the recoverable amount is
estimated as the net selling price or value in use, whichever is
higher. Impairment loss, if any, is recognised whenever the carrying
amount exceeds the recoverable amount.
6. Copyrights (audio film albums):
The cost of copyrights (audio film albums) is charged to revenue on the
date of release of audio, considering the uncertainty of future
economic benefits and the short duration over which such benefits may
accrue.
7. In-house music production (Audio non-film albums):
In-house music production costs are charged to revenue on
completion/release of albums, considering the uncertainty of future
economic benefits and the short duration over which such benefits may
accrue.
8. Depreciation:
Depreciation is provided for on Straight Line method at the rates
prescribed in Schedule XIV to the Companies Act, 1956.
In respect of depreciable assets for which impairment loss is
recognized, depreciation / amortization is charged on the revised
carrying amount over remaining useful life of the assets.
Improvements to Leasehold Premises are amortized over the period of
lease.
9. Inventories:
Items of inventory are valued on the basis as given below:
(i) Raw Materials & Packing Materials:
Raw materials and Packing Materials are valued at cost (on First In
First Out basis) or net realisable value whichever is lower.
(ii) Work-in-Progress:
Work-in-Progress is valued at cost of Raw Materials consumed / used.
(iii) Finished Goods:
Finished Goods are valued at cost or net realisable value whichever is
lower. Cost comprises of cost of purchase, cost of copyrights
(audio/video films), cost of in-house music productions
(audio/video-non-films/films), cost of conversion and other costs
incurred in bringing the inventory to their present location and
condition.
(iv) Cost of Feature Films:
Cost of feature films produced or acquired is inventorised and charged
to profit and loss account on release of films in the ratio of current
revenue to the total expected revenue. At the end of each accounting
period, the company reassesses the expected revenue / realisable value
of the balance unamortised cost and if the net realisable value is less
than unamortised cost, the same is written down to the net realisable
value.
(v) Cost of under Production Films:
Expenses of under production films incurred till the films are ready
for release are inventorised.
The production of films requires various types of materials in
different qualities and quantities. Considering the peculiar nature of
those items including their multiplicity and complexity, it is not
practicable to maintain quantitative records of those items. Further,
in the absence of reusability of such items, the same are not valued.
10. Foreign Currency Transactions:
Transactions in foreign currency are recorded at the original rates of
exchange in force at the time transactions are effected. Exchange
differences arising on settlement are recognised in the profit and loss
account.
Monetary items denominated in foreign currency are restated using the
exchange rates prevailing at the date of balance sheet and the
resulting net exchange difference is recognised in the profit and loss
account.
11. Borrowing Costs:
Borrowing costs that are attributable to the acquisition of qualifying
assets are capitalized as part of the cost of such assets. Borrowing
costs that are directly attributable to production of feature films are
inventorised as part of cost of production of films. Other borrowing
costs are recognised as expense in the period in which they are
incurred.
12. Employee Benefits:
i. Contribution to Provident Fund is charged to revenue.
ii. Defined Benefit Plan
Companys liabilities towards gratuity is determined on actuarial basis
using the projected unit credit method, which consider each period of
service as giving rise to an additional unit of benefit and measures
each unit separately to build up the final obligation. Past services
are recognised on straight-line basis over the average period until the
amended benefits become vested. Actuarial gain and losses are
recognised immediately in the Statement of Profit and Loss Account as
income or expense. Obligation is measured at the present value of
estimated future cash flow using a discount rate that is determined by
reference to market yields at the Balance Sheet date on government
bonds where the currency and terms of the government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
iii. In view of the past trends of leave availed, the amount of
employee benefit in the form of compensated absences, being in the
nature of short term benefit, is accounted for on accrual basis at an
undiscounted value.
13. Income Taxes:
Provision for current income tax is made on current tax rate based on
assessable income computed under the Income Tax Act 1961 or Book Profit
computed under section 115JB (MAT), whichever is higher. MAT credit is
recognized subject to requirement of virtual certainty that sufficient
future taxable income will be available for set off.
Deferred tax assets and liabilities are recognised for future tax
consequences attributable to the timing differences between taxable
income and accounting income that are capable of reversal in one or
more subsequent periods and are measured using tax rates enacted or
substantively enacted as at the Balance Sheet date. Deferred Tax assets
are not recognised unless, in the management judgment, there is virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. The carrying
amount of deferred tax is reviewed at each balance sheet date.
14. Provisions and Contingent Liabilities:
Provisions are recognised in the accounts in respect of present
probable obligations, the amount of which can be reliably estimated.
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non- occurrence of one or more uncertain future events
not wholly within the control of the company.
15. Segment Accounting:
Company considers Business segment as the Primary segment.
Based on similarity of activities / products, risk and reward
structure, organization structure and internal reporting systems, the
Company has structured its operations into the following business
segments.
i] Audio / Video productions
ii] Film Productions / Distribution.
Operations of the Company do not qualify, for reporting as geographic
segments, under the criteria set out under Accounting Standard 17 on
segment reporting issued by The Institute of Chartered Accountants of
India.
16. Earning Per Share:
Basic earnings per share are computed using the weighted average number
of equity shares outstanding during the year. Diluted earning per share
are computed using the weighted average number of equity and dilutive
equivalent shares outstanding during the year, except where the results
would be anti-dilutive.
17. Cash Flow:
Cash Flows are reported using indirect method, whereby net profit
before tax with adjusted for the effects of transactions of a non cash
nature and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from regular revenue generating, investing and
financing activities of the Company are segregated.
18. Leases:
Finance leases, where substantially all the risks and benefits
incidental to ownership of the leased item, are transferred to the
Company, are capitalised at the lower of the fair value and present
value of the minimum lease payments at the inception of the lease term
and disclosed as leased assets. Lease payments are apportioned between
finance charges and reduction of the lease liability based on the
implicit rate of return. Finance charges are charged to income. Lease
management fees, legal charges and other initial direct costs are
capitalised.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease item, capitalised leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognised as an expense
in the Profit and Loss account oia straight-line basis over the lease
term.