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Accounting Policies of Adlabs Entertainment Ltd. Company

Mar 31, 2015


1.1 Basis of Preparation of Financial Statements

The Company follows Mercantile System of Accounting. The financial statements have been prepared and presented under the historical cost convention and in accordance with the accounting standards specified under section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014 and other relevant provisions to the extent applicable.

All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current-noncurrent classification of assets and liabilities.

1.2 Use of Estimates

The Presentation of the financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and reported amount of revenues and expenses during the reporting year. Difference between the actual results and estimates are recognized in the year in which the results are known / materialized.

1.3 Fixed Assets & Depreciation

Fixed assets are valued at cost less accumulated depreciation. All cost comprises of purchase price, duties levies attributable to the fixed assets are capitalized. Costs also include interest and financing costs, test and trial run cost till commencement of commercial operations of amusement park project, net charges on foreign exchange contracts (Buyers credit) and adjustments arising from exchange rate variations including mark to market provisions attributable to the fixed assets are also capitalized.

Fixed assets retired from active use and held for disposal are stated at lower of their net book value and net realizable value and are disclosed separately.

Depreciation is charged on Straight Line Method in Accordance with the rate and in the manner specified in Schedule II of the Companies Act, 2013 or on the basis of useful lives of the assets as estimated by management, whichever is lower. Useful life ofthe assets is tabulated below.

Sr. Nature of Asset Estimated Useful Life No

1. Building 30 Years

2. Roads 5 Years

3. Plant and Machinery 15 Years

4. Furniture and fittings

(a) General furniture and fittings 10 Years

(b) Furniture and fittings used in 8 Years hotels and restaurants.

5. Motor Vehicles

(a) Motor cycles 8 Years

(b) Motor buses and motor cars 8 Years

(c) Electrically operated vehicles 8 Years including battery powered or fuel cell powered vehicles

6. Office equipments 5 Years

7. Computers and data processing units

(a) Servers and networks 6 Years

(b) End user devices, such as, desktops, 3 Years laptops, etc.

8. Electrical Installations and Fittings 10 Years

9. Pipes & Fittings 15 Years

10. Trees&Nursery 3 Years to 30 Years

1.4 Revenue Recognition

The Company has revenue recognition policies for its various operating segments that are appropriate to the nature of each business.


Revenues from theme park/water park ticket sales are recognized when the tickets are issued.

During the year the Company has changed its accounting policy for recognizing revenue from sale of Open Pass/Gift Passes or Open Day Tickets with all days validity which are Non-Refundable in nature. Previously revenue from sale of such Passes/Tickets was recognized when they were sold/ booked. The Company now recognizes the revenue when Passes/Tickets are utilized or expired.

Management believes that such change will result into more appropriate presentation of financial statements.

The impact of this voluntary change in accounting policy on the financial statement of March 31,2014 is as follows

(Rs. in Million)

As reported Adjustment Restated

Revenue from ticket sales for 713.83 (0.95) 712.88 the year ended March31,2014

Advance against ticket sales 0.96 0.95 1.91 as on March 31, 2014 (Under the head Other Current Liability)

Had the company continued to use earlier method of recognizing revenue, the revenue from ticket sales for the year ended March 31, 2015 would have increased by Rs. 0.17 Million and the advance against ticket sales as on March 31, 2015 (Under the head Other Current Liability) would reduce by Rs. 0.17 Million.

Food / Beverages

Revenue is recognized when food/ drinks are supplied or served or services rendered. Sales are inclusive of VAT.


Retail sale are recognized on delivery of the merchandise to the customer, when the property in goods and significant risk and rewards are transferred for a price and no effective ownership control is retained.


The revenue is recognized on accrual basis and when significant risk and rewards are transferred.

1.5 Inventories

Inventories are valued at lower of cost and net realizable value. Cost is arrived in the following manner:

Food items : Weighted Average Basis

Merchandise : Cost

Consumable & Spare Parts : Cost

1.6 Intangible Assets

i) Intangible Assets are stated at Cost of Acquisition net of recoverable taxes less accumulated amortizations/deletions.

ii) Depreciation is charged, based on the useful lives of the assets as estimated by the management.

Sr.No Nature of asset Estimated Useful Life

1. Trademarks and Logos 10 Years

2. Softwares 6 Years

3. Films 10 Years

1.7 Provisions, Contingent Liabilities and Contingent assets

A provision is recognized when the company has a present obligation as a result of a past event, and is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are determined based on the best estimate required to settle the obligation at the balance sheet date. A contingent liability is disclosed unless the possibility of an outflow of resources embodying economics benefits is remote. A contingent asset is neither recognized nor disclosed.

Contingent Liabilities

A suit has been filed by one vendor under Section 18 to be read with Section 17 of Micro, Small and Medium Enterprises Act 2006 and as on March 31, 2015 has claimed an amount of Rs. 9.74 Million. The Company has acknowledged only Rs. 0.96 Million and has rejected the further claim of Rs. 8.78 Million as frivolous. The Company is pursuing all legal remedies and is confident of a favourable outcome.

1.8 Foreign Currency Transactions

Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transactions. Gains and losses, if any, at the year-end in respect of monetary assets and monetary liabilities not covered by the forward contracts are transferred to Profit & Loss Account except for Long Term Foreign Currency Monetary Items.

The Company as per provisions under para 46A of AS-11 notification, has added/deducted from the Cost of Assets the Exchange Fluctuation including mark to market provisions arising on reporting of Long Term Foreign Currency Monetary Item utilized for acquiring the said Fixed Assets. The amount of Exchange Difference adjusted to Fixed Assets during the reporting year is ' 88.20 Million (net).

1.9 Borrowing Cost (Interest and Finance Charges)

Borrowing costs that are attributable to acquisition and construction of qualifying assets are capitalized till the asset is put to use. All other borrowing costs are recognized as expenditure in the year in which they are incurred.

Borrowing cost incurred for qualifying assets is capitalised up to the date the asset is ready for intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been incurred for the asset.

Capitalized borrowing costs amounted to Rs. 106.60 Million (previous year: Rs. 1,544.90 Million) and related to Fixed Assets.

Average cost for capitalization & financial charges thereon of 9.74% (previous year:10.77%) was used as a basis for capitalization for assets which are still under Work in Progress.

1.10 Employee Benefit

The company has provided for leave encashment and gratuity as per actuarial valuation done on projected unit credit method. Both the liabilities are non funded.

1.11 Income Tax

Current Tax:

Provision for current Income Tax is made on the estimated taxable income using the applicable tax rates and tax laws.

Deferred Tax:

Deferred Tax arising on the timing differences and which are capable of reversal in one or more subsequent year is recognized using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax asset is not recognized unless there is a virtual certainty as regards to the reversal of the same in future years.

1.12 Investments

Long term investments are stated at cost less other than temporary diminution in value, if any. Current investments are stated at lower of cost and fair value. Fair value of investments in mutual funds is determined on a portfolio basis.

1.13 Lease

(a) Where the company is a Lessor:

The Company has given on lease three premises/place for period of 5 years to 15 years. The lease rentals received during the reporting year amount to Rs. 1.18 Million.

The future minimum lease receipts of such operating leases as at March 31,2015 are summarized as below.

(Rs. in Million)

March 31,2015 March 31,2014

Amount receivable within one year from 1.21 0.65 the balance sheet date.

Amount receivable in the period between 4.77 2.92 one year and five years

Amount receivable beyond five years 7.14 7.98

Total 13.12 11.55

(b) Where the Company is a Lessee:

The Company has taken certain assets like Land, Office premises, furniture and fixtures and apartments on lease. They are on rental lease term which range between 10 months to 7 years. The lease rentals paid during the year amount to Rs. 16.27 Million.

The future minimum lease payments in respect of such operating leases as at March 31, 2015 are summarized below.

(Rs. in Million)

March 31,2015 March 31,2014

Amount payable within one year from 45.52 42.23 the balance sheet date

Amount payable in the period between 47.83 87.79 one year and five years

Amount payable beyond five years 0.03 0.58

Total 93.38 130.60

The above lease payments are exclusive of service tax.

1.14 Impairment of Asset

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An Impairment Loss is charged to the Profit & Loss Account in the year in which the asset is identified as impaired. The impairment loss recognized in prior accounting year is reversed if there has been a change in the estimate of recoverable amount.

1.15 Measurement of Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)

As permitted by the Guidance Note the Company has elected to present EBITDA as a separate line item on the face of the statement of profit and loss. The Company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the Company does not include depreciation and amortization, finance costs, tax expense and, where applicable, prior period items.

1.16 Details of dues to micro and small enterprises as per MSMED Act, 2006

Under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) which came into force from October 2, 2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises (MSME). On the basis of the information and records available with the Company, the following disclosures are made for the amounts due to the Micro and Small enterprises.

(Rs. in Million)

March 31,2015 March 31,2014

Principal amount due to any supplier 3.69 2.32 as at the period end

Interest due on the principal amount 0.39 - unpaid at the period end to any supplier

Amount of Interest paid by the Company - - in terms of Section 16 of the MSMED,along with the amount of the payment made to the supplier beyond the appointed day during the accounting period

Payment made to the enterprises beyond 0.31 - appointed date under Section 16 of MSMED

Amount of Interest due and payable for the 0.16 - period of delay in making payment, which has been paid but beyond the appointed day during the period, but without adding the interest specified under MSMED

The amount of interest accrued and remaining 0.55 - unpaid at the end of each accounting period; and

The amount of further interest remaining due - - and payable even in the succeeding years, until such date when the interest due as above is actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under Section 23 of the MSMED.

Oct 25, 2:25 pm
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