Accounting Policies of Baba Arts Ltd. Company
Mar 31, 2023
Note 1 - Significant Accounting Policies under IND AS A : Corporate Information
Baba Arts Limited (âthe Companyâ) is promoted by Shri Gordhan P. Tanwani and is principally in the business of Cinematic and Television Content Production and Distribution, Trading in Intellectual Property Rights of Films and Post Production Activities. The equity shares of the Company are listed on BSE Ltd., Mumbai.
The Registered Office of the Company is situated at 3A, Valecha Chambers, New Link Road, Andheri (West), Mumbai -400053.
The Board of Directors of the Company approved the financial statements for the year ended March 31, 2023 and authorized for issue on 25th May, 2023.
B : Basis of Preparation and Presentation
(a) These financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed under section 133 of the Companies Act, 2013 (''the Act'') read with Companies (Indian Accounting Standards) Rules, 2015 as amended by Companies (Indian Accounting Standards) Rules, 2016 and other relevant provisions from the Act. The Company has consistently applied accounting policies to all periods.
(b) Historical Cost Convention: The financial statements have been prepared on a historical cost basis, except for the certain financial assets and liabilities that are stated at fair value.
(c) All amounts disclosed in the financial statements and notes are presented in INR (In Rupees) and all the values have been rounded off to the nearest Rupees in Lakhs as per the requirement of Schedule III of the Act, unless otherwise stated.
(d) Significant accounting judgements, estimates and assumptions
The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expense for the periods presented.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and future periods are affected. Key sources of estimation of uncertainty at the date of the financial statements, which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of useful lives of property, plant and equipment, valuation of deferred tax assets, provisions and contingent liabilities.
Critical accounting estimatesUseful lives and residual values of property, plant and equipment
The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods.
The Companyâs tax jurisdiction is India and significant judgements are involved in determining the provisions for income taxes including amounts to be recovered or paid for uncertain tax position. Management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits.
Valuation of deferred tax assets
The Company reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy for the same has been explained under Note No: 3 (viii)
Defined benefit obligations are measured at fair value for financial reporting purposes. Fair value determined by actuary is based on actuarial assumptions. Management judgement is required to determine such actuarial assumptions. Such assumptions are reviewed annually using the best information available with the management.
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models are from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Changes in assumptions could affect the reported value of fair value of financial instruments
Provisions and contingent liabilities
A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date adjusted to reflect the current best estimates.
The Company uses significant judgements to disclose contingent liabilities. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. Contingent assets are neither recognised nor disclosed in the standalone financial statements.
C : Significant Accounting Policies
(i) Revenue Recognition
The Company derives revenue primarily from New Media & Digital Content Syndication across various Digital Platforms, In addition traditionally the revenue source for the company have been Cinematic and Television Content Production and Distribution, Trading in Intellectual Property Rights of Films .
For Revenue recognition the Company identifies and evaluates each performance obligation under the contract. It is then based on the delivery of performance obligations and an assessment of when control is transferred to the customer. Revenue is recognized either when the performance obligation in the contract has been performed (âpoint in timeâ recognition) or âover timeâ as control of the performance obligation is transferred to the customer in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services.
Revenue generated from internet/ web series produced for the broadcasters is recognized over the period of the contract.
Recorded Music Audio and Audio Video songs and or albums, mainly involves the Audio of the song is ready depending on song the team would then shoot with a particular cast and get the song ready for their Audio and Video Distribution along with marketing the same across various social media platforms. Any and all music distributed is either produced internally and or acquired directly from other companies or independent artist or music composers, etc. All revenues from recorded music are derived from licensing and self-exploiting the content across various digital OTT platforms like Youtube, Facebook, Instagram, Sportify, Jio Saavan, and many such audio and video platforms.
The recorded music rights may be licensed for a specific period to digital platforms or channels and OTT platforms or assigned on perpetual basis. In case of assignment on perpetual basis, the revenues are recognized when the control is transferred to the customer. In case of licensing of recorded music rights, the digital platforms or channels and OTT platforms, as per industrial practice, share the data / reports of usage by subscribers or visitors to their platforms and share the revenue with the Company at variable rates as most of the revenue is from AVOD subscriptions and the company gets a part of the revenue from each platform from the ads services on the content licensed and broadcasted therein. The Company, accordingly, recognizes the revenues based upon the usage reports received from the digital platforms and channels or OTT platforms.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, service level credits, performance bonuses, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.
Contract assets are recognized when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.
Interest income is recognized using the effective interest method.
Dividend income is recognized when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
(ii) Foreign Currency Loans/Transactions
(a) Functional and presentation currency:
Items included in the financial statements of the company are measured using the currency of the primary economic environment in which the entity operates (âthe functional currencyâ). These financial statements are presented in Indian Rupee (INR), which is companyâs functional and presentation currency.
(b) Transactions and balances
Transactions in Foreign currency are recorded at the rate prevailing on the date of when the amount is received or remitted. Foreign currency denominated monetary assets and liabilities are converted into rupee at the exchange rate prevailing on the balance sheet date; gains/ losses are reflected in the statement of profit and loss. NonMonetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-Monetary assets and liabilities that are measured in terms of historical cost in foreign currencies are not retranslated.
(a) Short Term Employee Benefits
Short term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.
(b) Long Term Employee Benefits
The liability towards gratuity is not funded. The present value of these defined benefit obligations are ascertained by an independent actuarial valuation as per the requirement of IND AS 19- Employee Benefits. The liability recognized in the balance sheet is the present value of the defined benefit obligations on the balance sheet date, together with adjustments for unrecognized past service costs. Gains and losses through re-measurements of net defined benefit liability/(asset) are recognized in other comprehensive income. The effects of any plan amendments are recognized in the Statement of Profit & Loss.
(iv) Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated depreciation and impairment loss, if any. Costs directly attributable to acquisition are capitalized until the property, plant and equipment are ready for use, as intended by management.
Advances paid towards the acquisition of property, plant & equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets and cost of assets not put to use before such date are disclosed under Capital work-in-progress.
Subsequent expenditure relating to property, plant & equipment is capitalized only when it is probable that future economic benefit associated with this will flow to the company and the cost of item can be measured reliably. Repairs and maintenance cost are recognized in statement of profit & loss when incurred. The cost and related accumulated depreciation are eliminated from financial statement upon sale or retirement of the asset and resultant gains and losses are recognized in the statement of profit & loss. Assets to be disposed off are reported at lower of carrying value or fair value less cost to sell.
Depreciation is provided for property, plant and equipment so as to expense the cost over their estimated useful lives based on evaluation. The estimated useful lives of property, plant & equipment is taken as prescribed under Schedule II of the Companies Act, 2013.
|
Asset Details |
Useful Life |
|
Office Premises |
30 Years |
|
Plant and Machinery (incl. Computers) |
1 to 15 Years |
|
Furniture and Fixtures |
10 Years |
|
Office Equipment |
5 Years |
|
Motor Car |
8 Years |
The estimated useful lives and residual value are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Cost excludes GST Input Tax Credit, Cenvat Credit, Sales Tax and Service Tax Credit, Custom Duty entitlement and such other levies / taxes. Depreciation on such assets is claimed on âreducedâ cost.
Gains or losses arising from the retirement or disposal of a tangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Statement of Profit and Loss.
Depreciation is not recorded on capital work-in-progress until construction and installation are complete and the asset is ready for its intended use.
(a) Financial assets (other than at fair value)
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognizes lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
(b) Non-Financial assets Tangible and intangible assets
Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognized in the statement of profit and loss.
(a) Consumables:
Consumables are valued at lower of cost and market value.
(b) Intellectual Property Rights (Copy Rights):
IPR of films are valued at lower of cost or net realizable value.
(c) Under Production Films / Television Serials:
Cost of films are valued at actual cost incurred/ accrued which includes amount paid, bills settled and advance paid for which the bills are awaited.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and costs necessary to make the sale.
In case of films/recorded music which are released during the year, the realization from the sale of rights are reduced from the cost of production and the balance cost if any, is carried forward till the time the negative rights of the films/ recorded films are not exploited. The excess or deficit of the cost of production after exploitation of ânegativeâ rights will be treated as profit or loss in the profit & loss a/c as the case may be.
Inventory of Television Serials is valued at actual cost. The cost of content is amortized in the ratio of current revenue to expected total revenue. At the end of each accounting period, balance unamortized cost is compared with the net expected revenue. If net expected revenue is less than the unamortized cost, the same is written down to net expected revenue.
The Company is engaged in business of production of films/recorded audio or video music wherein the expected Operating Cycle for production is in the range of 18 to 24 months. Accordingly, Inventory (under production films) / Advances / Assets / Liabilities relating to film production are classified as Current Assets / Liabilities.
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred taxes are recognized in statement of profit and loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity, respectively.
Income tax expense is the aggregate amount of Current tax. Current tax is the amount of Income Tax determined to be payable in respect of the taxable income for an accounting period or computed on the basis of the provisions of Section 115JB of Income Tax Act, 1961 by way of minimum alternate tax (MAT) at the prescribed percentage on the adjusted book profits of a year, when Income Tax liability under the normal method of tax payable basis works out either a lower amount or nil amount compared to the tax liability u/s 115 JB.
Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction.
Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount, except when the deferred income tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.
Deferred income tax asset are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled.
The Company recognizes interest levied and penalties related to income tax assessments in interest expenses.
Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.
(a) Classification:
The Company classifies its financial assets in the following measurement categories:
" those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
" those measured at amortised cost.
The classification depends on the entityâs 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 Statement of Profit and Loss or Other Comprehensive Income.
(b) Financial assets at amortized cost
Financial assets are subsequently measured at amortized cost if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and 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.
(c) Financial assets at fair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows that give rise on specified dates to solely payments of principal and interest on the principal amount outstanding and by selling financial assets. The Company has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of equity investments not held for trading.
(d) Financial assets at fair value through profit or loss (FVTPL)
Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognized in profit or loss.
(e) De-recognition of financial assets:
A financial asset is de-recognised only when
- The Company has transferred the rights to receive cash flows from the financial asset or
- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the company has transferred an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not de-recognised.
(f) Where the Company has neither transferred a financial asset nor retained substantially all risks and rewards of ownership of the financial asset, the financial asset is de-recognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset
(g) Cash and cash equivalents:
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
(a) Classification as debt or equity:
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
(b) Initial recognition and measurement:
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the fair value.
(c) Subsequent measurement:
Financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.
(d) Derecognition:
A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.
(e) Trade Payables & Other Current Liabilities
For trade payables and other payables maturing within one year from the balance sheet date, carrying amounts approximate fair value due to short maturity of these instruments.
(f) Security Deposit
Under the previous GAAP, interest free Security Deposit (that are refundable in cash) are recorded at their transaction value. Under the Ind AS all financial assets are required to be recognized at fair value. Accordingly, the Company has fair valued these Security Deposits under Ind AS. Difference between the fair value and the transaction value of Security Deposit has been recognized as deferred rent income. Deferred rent is recognized as income over period of deposit with corresponding recognition of interest expenses on the outstanding amount.
(viii) Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
(ix) Earnings per Share
Basic earnings per share are computed by dividing profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares). For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
(x) Borrowing cost
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
(xi) Provisions and Contingent Assets and Contingent Liabilities
Provisions are recognised when the Company has a present legal or constructive obligation as result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at the present value of managements best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Provisions are not recognized for future operating losses.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises where a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognized but are disclosed where an inflow of economic benefits is probable. The estimation of financial effect in respect of contingent liabilities and contingent assets wherever not practicable, is not disclosed and such fact is accordingly stated.
(xii) Goods and Services Tax
Goods and Services Tax (GST) liability is accounted on accrual basis. The Company is accounting liability for GST arising under reverse charge mechanism for various services availed by the company, at the time of booking of relevant expenditure. Credit for input GST is claimed as per appropriate laws, rules and regulations.
The company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, companyâs incremental borrowing rate.
Generally, the company uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the following:
- Fixed payments, including in-substance fixed payments;
- Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
- Amounts expected to be payable under a residual value guarantee; and
- The exercise price under a purchase option that the company is reasonably certain to exercise, lease payments in an optional renewal period if the company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the company is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the companyâs estimate of the amount expected to be payable under a residual value guarantee, or if company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Short-term leases and leases of low-value assets
The company has elected not to recognize right-of-use assets and lease liabilities for short term leases of real estate properties and other assets that have a lease term of 12 months or less. The company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease. The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term. In case of a finance lease, finance income is recognized over the lease term based on a pattern reflecting a constant periodic rate of return on the lessorâs net investment in the lease. When the Company is an intermediate lessor it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease. If an arrangement contains lease and non-lease components, the Company applies Ind AS 115 Revenue from contracts with customers to allocate the consideration in the contract.
Operating segments are reported in a manner consistent with the reporting provided to the chief operating decision maker. The chief operating decision maker of the Company consists of the managing director and chief financial officer which assesses the financial performance and position of the Company, and makes strategic decisions.
(xv) Recent Indian Accounting Standards (IND AS)
Ministry of Corporate Affairs (âMCAâ) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1, 2023, as below:
a. Ind AS 1 - Presentation of Financial Statements
The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements.
The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company is evaluating the impact, if any, in its financial statements.
c. Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are âmonetary amounts in financial statements that are subject to measurement uncertaintyâ. Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company does not expect this amendment to have any significant impact in its financial statements.
Mar 31, 2015
(i) Background
The Company is promoted by Shri Gordhan P. Tanwani and is in the
business of Film Production, Distribution, TV Serial Production,
trading of Intellectual Property Rights and Post Production Activities.
The Registered Office of the Company is at 3A, Valecha Chambers, New
Link Road, Andheri (West), Mumbai -400053
(ii) (a) Basis of preparation
The Financial Statements have been prepared to comply in all material
respects with the Accounting Standards prescribed under Section 133 of
the Companies Act, 2013("the Act") read with rule 7 of the Companies
(Accounts) Rules, 2014 and the relevant provisions of the Companies
Act, 2013. The Financial statements are prepared under historical cost
convention on an accrual basis of accounting in accordance except where
impairment is made The Accounting policies have been consistently
applied by the Company and are consistent with those used in the
previous year.
(b) Use of estimates
The Preparation of financial statements in conformity with GAAP
(Generally Accepted Accounting Policies) requires that the Management
of the Company makes estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the result of
operations during the reporting period. Although these estimates are
based upon management's best knowledge of current events and actions,
actual results could differ from these estimates.
(iii) Revenue Recognition
a. Revenue from Post Production activities is based on machine hours
spent and is net of service tax.
b. Revenue from trading in satellite rights is recognized on its sales
or on exploitation contract.
c. Revenue is recognized to the extent it is probable that the
economic benefit will flow to the Company and the revenue can be
reliably measured.
d. The Company deals in Intellectual Property Rights (IPR) of films;
in case of sale of IPR of films/ receipts/ income (including interest
on advance payments made) to the Company are subject to certain
conditions, eventualities and uncertainties.
e. The receipts/ income (including interest on advance payments made)
are deemed to accrue as and when events take place or conditions are
fulfilled or uncertainties are removed. Accordingly such income
(including interest on advance payment made) is accounted only after
the events take place or conditions are fulfilled or uncertainties are
removed. This is in accordance with Accounting Standard in respect of
recognition of revenue and prudential norms.
f. In respect of Cinematic & Television content produced / acquired,
income is recognized on the following basis :
i. In respect of Cinematic & Television content, which is not complete
i.e. under production, no income is recognized.
ii. In respect of Cinematic & Television content, which is complete
but not released, income is recognized as - so much of the estimated
income on release as bears to the whole of the estimated income in the
same proportion as the actual recoveries / realizations / confirmed
contracts bears to the total expected realization.
iii. In respect of Cinematic content completed and released during the
year, income is recognized on release / delivery of release prints
except income, if any, already recognized as per clause f (ii).
iv. In respect of Cinematic content, which is complete but not
released, income from streams other than theatrical release is
recognized on the basis of contracts / deal memo and delivery of Digi
Betas.
(iv) Fixed Assets
Fixed assets are stated at cost less accumulated depreciation/
amortization and impairment losses if any. Cost comprises of purchase
price, allocated pre - operative costs and any attributable cost of
bringing the asset to its working condition for its intended use.
(v) Depreciation
a. Depreciation on fixed assets is provided on Straight Line Method at
the rate prescribed in Schedule II to the Companies Act, 2013 over the
estimated useful life as estimated by the Management.
b. Depreciation is charged on a pro - rata basis for assets purchased/
sold during the year (from the date on which it is 'Put to Use').
c. Depreciation on impaired assets is provided by adjusting the
depreciation charge in the remaining periods so as to allocate the
revised carrying amount of the asset over its remaining useful life.
The recoverable amount is measured at the higher of the net selling
price and value in use; determined by present value of estimated cash
flows.
(vi) Impairment
The carrying amount of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal / external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its estimated recoverable amount. The recoverable
amount is greater of asset's net selling price and value in use. In
assessing the value in use, the estimated future cash flows are
discounted to the present value at the weighted average cost of
capital. Previously recognized impairment loss is further provided or
reversed depending on changes in circumstances.
(vii) Inventories
a. Consumables
Consumables are valued at lower of cost and market value.
b. Intellectual Property Rights (Copy Rights)
IPR of films are valued at lower of cost or net realizable value as
certified by the Management.
c. Under Production Films / Television Serials
Cost of films are valued at actual cost incurred/ accrued which
includes amount paid, bills settled and advance paid for which the
bills are awaited.
In case of films which are released during the year, the realization
from the sale of rights are reduced from the cost of production and the
balance cost if any, is carried forward till the time the negative
rights of the films are not exploited. The excess or deficit of the
cost of production after exploitation of "negative" rights will be
treated as profit or loss in the profit & loss a/c as the case may be.
Inventory of Television Serials is valued at actual cost. The cost of
content is amortised in the ratio of current revenue to expected total
revenue. At the end of each accounting period, balance unamortized cost
is compared with the net expected revenue. If net expected revenue is
less than the unamortized cost, the same is written down to net
expected revenue.
The Company is engaged in business of production of films wherein the
expected operating cycle for production is in the range of 18 to 24
months. Accordingly Inventory (under production films) / Advances /
Assets / Liabilities relating to film production are classified as
Current Assets / Liabilities.
(viii) Taxation
a. Current tax: Provision for current tax( Income Tax and Wealth Tax)
for the year has been made after considering deduction / allowances /
claims admissible to the Company under the Income Tax Act, 1961.
b. Deferred Tax:
(i) Deferred tax is recognized on timing differences; being difference
between taxable income and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
(ii) It is measured based on the tax rates and the tax laws enacted or
substantively enacted at the Balance sheet date.
(ii) Deferred tax assets arising from temporary timing differences are
recognized to the extent there is reasonable certainty that the assets
can be realized in future.
(iv) Deferred tax assets in respect of unabsorbed depreciation and
carry forward of losses are recognized if there is virtual certainty
that there will be sufficient future taxable income available to
realize such losses.
(ix) Borrowing Cost:
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets or production of films are
capitalized as a part of cost of such assets. A qualifying asset is one
that necessarily takes substantial period of time to get ready for its
intended use. All other borrowing costs are charged to the Statement of
Profit and Loss in the period in which they are incurred.
(x) Foreign Currency Transactions
a. Transactions in Foreign Currency are recorded at the rate
prevailing on the date when the amount is received or remitted.
b. Foreign currency assets and liabilities are converted into rupee at
the exchange rate prevailing on the balance sheet date; gains/ losses
are reflected in the profit and loss account.
c. Exchange difference on account of acquisition of fixed assets is
adjusted to carrying cost of fixed assets.
(xi) Investments
Investments are considered as long term and are accordingly stated at
cost less provision, if any, for permanent diminution in value of such
investments.
(xii) Employee Benefits
a. Defined Contribution Plan: Contributions to Provident Fund and ESIC
are recognized / provided as expense in the Profit and Loss Account, on
accrual basis.
b. Defined Benefit Plan and Other Long Term Benefits: Retirement
benefits in form of gratuity and other long term benefits in form of
leave encashment are determined on the basis of actuarial valuation.
Actuarial gains / losses are recognized immediately in the Profit and
Loss Account.
c. Short term compensated absences are provided based on past
experience of leave availed.
(xiii) Cash and Cash equivalents
Cash and cash equivalents for the purpose of Cash Flow Statement
comprise cash at bank including Fixed Deposits, cash in hand and cash
at film sets.
(xiv) Contingencies / Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation,
in respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on best
estimate required to settle the obligation at the Balance Sheet date.
These are reviewed at each Balance Sheet date and adjusted to reflect
the current best estimates. A contingent liability is disclosed, unless
the possibility of an outflow of resources embodying the economic
benefit is remote.
(xv) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
(xvi) Service Tax
Service Tax liability is accounted on accrual basis. The Company is
accounting liability for service tax arising under reverse charge
mechanism for various services availed by the Company, at the time of
booking of relevant expenditure. Credit for input service tax is
claimed as per appropriate laws, rules and regulations.
Mar 31, 2014
(i) Background
The Company is promoted by Shri Gordhan P Tanwani and is in the
business of Film Production, Distribution, TV Serial Production,
trading of Intellectual Property Rights and Post Production Activities.
The Registered Office of the Company is at 3A, Valecha Chambers, New
Link Road, Andheri (West), Mumbai -400053
(ii) (a) Basis of preparation
The Financial Statements have been prepared to comply in all material
respects with the Accounting Standards notified by Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The Financial statements are
prepared under historical cost convention on an accrual basis of
accounting in accordance except where impairment is made The Accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
(b) Use of estimates
The Preparation of financial statements in conformity with GAAP
(Generally Accepted Accounting Policies) requires that the Management
of the Company makes estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the result of
operations during the reporting period. Although these estimates are
based upon management''s best knowledge of current events and actions,
actual results could differ from these estimates.
(iii) Revenue Recognition
a. Revenue from Post Production activities is based on machine hours
spent and is net of service tax.
b. Revenue from trading in satellite rights is recognized on its sales
or on exploitation contract.
c. Revenue is recognized to the extent it is probable that the economic
benefit will flow to the Company and the revenue can be reliably
measured.
d. The Company deals in Intellectual Property Rights (IPR) of films, in
case of sale of IPR of films, receipts/ income (including interest on
advance payments made) to the company are subject to certain
conditions, eventualities and uncertainties.
e. The receipts/ income (including interest on advance payments made)
are deemed to accrue as and when events take place or conditions are
fulfilled or uncertainties are removed. Accordingly such income
(including interest on advance payment made) is accounted only after
the events take place or conditions are fulfilled or uncertainties are
removed. This is in accordance with Accounting Standard in respect of
recognition of revenue and prudential norms.
f. In respect of cinematic & Television content produced / acquired,
income is recognised on the following basis :
i. In respect of cinematic & Television content, which is not complete
i.e. under production, no income is recognised.
ii. In respect of cinematic & Television content, which is complete but
not released, income is recognised as - so much of the estimated income
on release as bears to the whole of the estimated income in the same
proportion as the actual recoveries / realisations / confirmed
contracts bears to the total expected realisation.
iii. In respect of cinematic content completed and released during the
year, income is recognised on release / delivery of release prints
except income, if any, already recognised as per clause f (ii).
iv. In respect of cinematic content, which is complete but not
released, income from streams other than theatrical release is
recognised on the basis of contracts / deal memo and delivery of Digi
Betas.
(iv) Fixed Assets
Fixed assets are stated at cost less accumulated depreciation/
amortization and impairment losses if any. Cost comprises of purchase
price, allocated pre - operative costs and any attributable cost of
bringing the asset to its working condition for its intended use.
(v) Depreciation
a. Depreciation on fixed assets is provided on Straight Line Method at
the rate prescribed in Schedule XIV of the Companies Act, 1956 over the
estimated useful life as estimated by the Management.
b. Depreciation is charged on a pro - rata basis for assets purchased/
sold during the year (from the date on which it is ''Put to Use'').
c. Depreciation on impaired assets is provided by adjusting the
depreciation charge in the remaining periods so as to allocate the
revised carrying amount of the asset over its remaining useful life.
The recoverable amount is measured at the higher of the net selling
price and value in use; determined by present value of estimated cash
flows.
(vi) Impairment
The carrying amount of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal / external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its estimated recoverable amount. The recoverable
amount is greater of asset''s net selling price and value in use. In
assessing the value in use, the estimated future cash flows are
discounted to the present value at the weighted average cost of
capital. Previously recognized impairment loss is further provided or
reversed depending on changes in circumstances.
(vii) Inventories
a. Consumables
Consumables are valued at lower of cost and market value.
b. Intellectual Property Rights (Copy Rights)
IPR of films are valued at lower of cost or net realizable value as
certified by the Management.
c. Under Production Films / Television Serials
Cost of films are valued at actual cost incurred/ accrued which
includes amount paid, bills settled and advance paid for which the
bills are awaited.
In case of films which are released during the year, the realization
from the sale of rights are reduced from the cost of production and the
balance cost if any, is carried forward till the time the negative
rights of the films are not exploited. The excess or deficit of the
cost of production after exploitation of"negative" rights will be
treated as profit or loss in the profit & loss a/c as the case may be.
Inventory of Television Serials is valued at actual cost. The cost of
content is amortised in the ratio of current revenue to expected total
revenue. At the end of each accounting period, balance unamortized cost
is compared with the net expected revenue. If net expected revenue is
less than the unamortized cost, the same is written down to net
expected revenue.
The Company is engaged in business of production of films wherein the
expected Operating Cycle for production is in the range of 18 to 24
months. Accordingly Inventory (under production films) / Advances /
Assets / Liabilities relating to film production are classified as
Current Assets / Liabilities.
(viii) Taxation
a. Current tax: Provision for current tax( Income Tax and Wealth Tax)
for the year has been made after considering deduction / allowances /
claims admissible to the company under the Income Tax Act, 1961.
b. Deferred Tax: Deferred tax is recognized on timing differences;
being difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods.
c. It is measured based on the tax rates and the tax laws enacted or
substantively enacted at the Balance sheet date.
d. Deferred tax assets arising from temporary timing differences are
recognized to the extent there is reasonable certainty that the assets
can be realized in future.
e. Deferred tax assets in respect of unabsorbed depreciation and carry
forward of losses are recognized if there is virtual certainty that
there will be sufficient future taxable income available to realize
such losses.
(ix) Borrowing Cost:
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets or production of films are
capitalized as a part of cost of such assets. A qualifying asset is one
that necessarily takes substantial period of time to get ready for its
intended use. All other borrowing costs are charged to the Statement of
Profit and Loss in the period in which they are incurred.
(x) Foreign Currency Transactions
a. Transactions in Foreign Currency are recorded at the rate prevailing
on the date when the amount is received or remitted.
b. Foreign currency assets and liabilities are converted into rupee at
the exchange rate prevailing on the balance sheet date; gains/ losses
are reflected in the profit and loss account.
c. Exchange difference on account of acquisition of fixed assets is
adjusted to carrying cost of fixed assets.
(xi) Investments
Investments are considered as Long Term and are accordingly stated at
cost less provision, if any, for permanent diminution in value of such
investments.
(xii) Employee Benefits
a. Defined Contribution Plan: Contributions to Provident Fund and ESIC
are recognized / provided as expense in the Profit and Loss Account, on
accrual basis.
b. Defined Benefit Plan and Other Long Term Benefits: Retirement
benefits in form of gratuity and other long term benefits in form of
leave encashment are determined on the basis of actuarial valuation.
Actuarial gains / losses are recognized immediately in the Profit and
Loss Account.
c. Short term compensated absences are provided based on past
experience of leave availed.
(xiii)Cash and Cash equivalents
Cash and cash equivalents for the purpose of Cash Flow Statement
comprise cash at bank including Fixed Deposits, cash in hand and cash
at film sets.
(xiv) Contingencies / Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation,
in respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on best
estimate required to settle the obligation at the Balance Sheet date.
These are reviewed at each Balance Sheet date and adjusted to reflect
the current best estimates. A contingent liability is disclosed, unless
the possibility of an outflow of resources embodying the economic
benefit is remote.
(xv) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
(xvi) Service Tax
Service Tax liability is accounted on accrual basis. The Company is
accounting liability for service tax arising under reverse charge
mechanism for various services availed by the company, at the time of
booking of relevant expenditure. Credit for input service tax is
claimed as per appropriate laws, rules and regulations.
Mar 31, 2013
(i) Background
The Company is promoted by Shri Gordhan P Tanwani and is in the
business of Film Production, Distribution, TV Serial Production,
trading of Intellectual Property Rights and Post Production Activities.
The Registered Office of the Company is at 3A, Valecha Chambers, New
Link Road, Andheri (West), Mumbai -400053
(ii) (a) Basis of preparation
The Financial Statements have been prepared to comply in all material
respects with the Accounting Standards notified by Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The Financial statements are
prepared under historical cost convention on an accrual basis of
accounting in accordance except where impairment is made The Accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
(b) Use of estimates
The Preparation of financial statements in conformity with GAAP
(Generally Accepted Accounting Policies) requires that the Management
of the Company makes estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the result of
operations during the reporting period. Although these estimates are
based upon management''s best knowledge of current events and actions,
actual results could differ from these estimates.
(iii) Revenue Recognition
a. Revenue from Post Production activities is based on machine hours
spent and is net of service tax.
b. Revenue from trading in satellite rights is recognized on its sales
or on exploitation contract.
c. Revenue is recognized to the extent it is probable that the
economic benefit will flow to the Company and the revenue can be
reliably measured.
d. The Company deals in Intellectual Property Rights (IPR) of films,
in case of sale of IPR of films, receipts/ income (including interest
on advance payments made) to the Company are subject to certain
conditions, eventualities and uncertainties.
e. The receipts/ income (including interest on advance payments made)
are deemed to accrue as and when events take place or conditions are
fulfilled or uncertainties are removed. Accordingly such income
(including interest on advance payment made) is accounted only after
the events take place or conditions are fulfilled or uncertainties are
removed. This is in accordance with Accounting Standard in respect of
recognition of revenue and prudential norms.
f. In respect of cinematic & Telvision content produced / acquired,
income is recognised on the following basis :
i. In respect of cinematic & Television content, which is not complete
i.e. under production, no income is recognised.
ii. In respect of cinematic & Television content, which is complete but
not released, income is recognised as - so much of the estimated income
on release as bears to the whole of the estimated income in the same
proportion as the actual recoveries / realisations / confirmed
contracts bears to the total expected realisation.
iii. In respect of cinematic content completed and released during the
year, income is recognised on release / delivery of release prints
except income, if any, already recognised as per clause f (ii).
iv. In respect of cinematic content, which is complete but not
released, income from streams other than theatrical release is
recognised on the basis of contracts / deal memo and delivery of Digi
Betas.
(iv) Fixed Assets
Fixed assets are stated at cost less accumulated depreciation/
amortization and impairment losses if any. Cost comprises of purchase
price, allocated pre - operative costs and any attributable cost of
bringing the asset to its working condition for its intended use.
(v) Depreciation
a. Depreciation on fixed assets is provided on Straight Line Method at
the rate prescribed in Schedule XIV of the Companies Act, 1956 over the
estimated useful life as estimated by the Management.
b. Depreciation is charged on a pro - rata basis for assets purchased/
sold during the year (from the date on which it is ''Put to Use'').
c. Depreciation on impaired assets is provided by adjusting the
depreciation charge in the remaining periods so as to allocate the
revised carrying amount of the asset over its remaining useful life.
The recoverable amount is measured at the higher of the net selling
price and value in use; determined by present value of estimated cash
flows.
(vi) Impairment
The carrying amount of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal / external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its estimated recoverable amount. The recoverable
amount is greater of asset''s net selling price and value in use. In
assessing the value in use, the estimated future cash flows are
discounted to the present value at the weighted average cost of
capital. Previously recognized impairment loss is further provided or
reversed depending on changes in circumstances.
(vii) Inventories
a. Consumables
Consumables are valued at lower of cost and market value.
b. Intellectual Property Rights (Copy Rights)
IPR of films are valued at lower of cost or net realizable value as
certified by the Management.
c. Under Production Films
Cost of films are valued at actual cost incurred/ accrued which
includes amount paid, bills settled and advance paid for which the
bills are awaited.
In case of films which are released during the year, the realization
from the sale of rights are reduced from the cost of production and the
balance cost if any, is carried forward till the time the negative
rights of the films are not exploited. The excess or deficit of the
cost of production after exploitation of "negative" rights will be
treated as profit or loss in the profit & loss a/c as the case may be.
Inventory of Television Serials is valued at actual cost. The cost of
content is amortised in the ratio of current revenue to expected total
revenue. At the end of each accounting period, balance unamortized cost
is compared with the net expected revenue. If net expected revenue is
less than the unamortized cost, the same is written down to net
expected revenue.
The Company is engaged in business of production of films wherein the
expected Operating Cycle for production is in the range of 18 to 24
months. Accordingly Inventory (under production films) /Advances
/Assets / Liabilities relating to film production are classified as
Current Assets / Liabilities.
(viii) Taxation
a. Current tax: Provision for current tax( Income Tax and Wealth Tax)
for the year has been made after considering deduction / allowances /
claims admissible to the company under the Income Tax Act, 1961.
b. Deferred Tax: Deferred tax is recognized on timing differences;
being difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods.
c. It is measured based on the tax rates and the tax laws enacted or
substantively enacted at the Balance sheet date.
d. Deferred tax assets arising from temporary timing differences are
recognized to the extent there is reasonable certainty that the assets
can be realized in future.
e. Deferred tax assets in respect of unabsorbed depreciation and cany
forward of losses are recognized if there is virtual certainty that
there will be sufficient future taxable income available to realize
such losses.
(ix) Foreign Currency Transactions
a. Transactions in Foreign Currency are recorded at the rate
prevailing on the date when the amount is received or remitted.
b. Foreign currency assets and liabilities are converted into rupee at
the exchange rate prevailing on the balance sheet date; gains/ losses
are reflected in the profit and loss account.
c. Exchange difference on account of acquisition of fixed assets is
adjusted to carrying cost of fixed assets.
(x) Investments
Investments are considered as Long Term and are accordingly stated at
cost less provision, if any, for permanent diminution in value of suoh
investments.
(xi) Employee Benefits
a. Defined Contribution Plan: Contributions to Provident Fund and ESIC
are recognized / provided as expense in the Profit and Loss Account, on
accrual basis.
b. Defined Benefit Plan and Other Long Term Benefits: Retirement
benefits in form of gratuity and other long term benefits in form of
leave encashment are determined on the basis of actuarial valuation.
Actuarial gains / losses are recognized immediately in the Profit and
Loss Account.
c. Short term compensated absences are provided based on past
experience of leave availed.
(xii) Cash and Cash equivalents
Cash and cash equivalents for the purpose of Cash Flow Statement
comprise cash at bank including Fixed Deposits, cash in hand and cash
at film sets.
(xiii) Conti ngencies / Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation,
in respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on best
estimate required to settle the obligation at the Balance Sheet date.
These are reviewed at each Balance Sheet date and adjusted to reflect
the current best estimates. A contingent liability is disclosed, unless
the possibility of an outflow of resources embodying the economic
benefit is remote.
(xiv)Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
Mar 31, 2012
(i) Background
The Company is promoted by Shri Gordhan P Tanwani and is in the
business of Film Production, Distribution, trading of Intellectual
Property Rights and Post Production Activities.
The Registered Office of the company at 3A, Valecha Chambers, New Link
Road, Andheri (West ), Mumbai -400053
(ii) (a) Basis of preparation
The Financial Statements have been prepared to comply in all material
respects with the Accounting Standards notified by Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The Financial statements are
prepared under historical cost convention on an accrual basis of
accounting in accordance except where impairment is made The Accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
(b) Use of estimates
The Preparation of financial statements in conformity with GAAP
(Generally Accepted Accounting Policies) requires that the Management
of the Company makes estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the result of
operations during the reporting period. Although these estimates are
based upon management's best knowledge of current events and actions,
actual results could differ from these estimates.
(iii) Revenue Recognition
a. Revenue from Post Production activities is based on machine hours
spent and is net of service tax.
b. Revenue from trading in satellite rights is recognized on its sales
or on exploitation contract.
c. Revenue is recognized to the extent it is probable that the
economic benefit will flow to the Company and the revenue can be
reliably measured.
d. The Company deals in Intellectual Property Rights (IPR) of films,
in case of sale of IPR of films, receipts/ income (including interest
on advance payments made) to the company are subject to certain
conditions, eventualities and uncertainties.
e. The receipts/ income (including interest on advance payments made)
are deemed to accrue as and when events take place or conditions are
fulfilled or uncertainties are removed. Accordingly such income
(including interest on advance payment made) is accounted only after
the events take place or conditions are fulfilled or uncertainties are
removed. This is in accordance with Accounting Standard in respect of
recognition of revenue and prudential norms.
f. In respect of cinematic content produced / acquired, income is
recognised on the following basis :
i. In respect of cinematic content, which is not complete i.e. under
production, no income is recognised.
ii. In respect of cinematic content, which is complete but not
released, income is recognised as - so much of the estimated income on
release as bears to the whole of the estimated income the same
proportion as the actual recoveries / realisations / confirmed
contracts bears to the total expected realisation.
iii. In respect of cinematic content completed and released during the
year, income is recognised on release / delivery of release prints
except income, if any, already recognised as per clause f (ii).
iv. In respect of cinematic content, which is complete but not
released, income from streams other than theatrical release is
recognised on the basis of contracts / deal memo and delivery of Digi
Betas.
(iv) Fixed Assets
Fixed assets are stated at cost less accumulated depreciation/
amortization and impairment losses if any. Cost comprises of purchase
price, allocated pre - operative costs and any attributable cost of
bringing the asset to its working condition for its intended use.
(v) Depreciation
a. Depreciation on fixed assets is provided on Straight Line Method at
the rate prescribed in Schedule XIV of the Companies Act, 1956 over the
estimated useful life as estimated by the Management.
b. Depreciation is charged on a pro - rata basis for assets purchased/
sold during the year (from the date on which it is 'Put to Use').
c. Depreciation on impaired assets is provided by adjusting the
depreciation charge in the remaining periods so as to allocate the
revised carrying amount of the asset over its remaining useful life.
The recoverable amount is measured at the higher of the net selling
price and value in use; determined by present value of estimated cash
flows.
(vi) Impairment
The carrying amount of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal / external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its estimated recoverable amount. The recoverable
amount is greater of asset's net selling price and value in use. In
assessing the value in use, the estimated future cash flows are
discounted to the present value at the weighted average cost of
capital. Previously recognized impairment loss is further provided or
reversed depending on changes in circumstances.
(vii) Inventories
a. Consumables
Consumables are valued at lower of cost and market value.
b. Intellectual Property Rights (Copy Rights)
IPR of films are valued at lower of cost or net realizable value as
certified by the Management.
c. Under Production Films
Cost of films are valued at actual cost incurred/ accrued which
includes amount paid, bills settled and advance paid for which the
bills are awaited.
In case of films which are released during the year, the realization
from the sale of rights are reduced from the cost of production and the
balance cost if any, is carried forward till the time the negative
rights of the films are not exploited. The excess or deficit of the
cost of production after exploitation of "negative" rights will be
treated as profit or loss in the profit & loss a/c as the case may be.
The Company is engaged in business of production of films wherein the
expected Operating Cycle for production is in the range of 18 to 24
months. Accordingly Inventory (under production films) / Advances /
Assets / Liabilities relating to film production are classified as
Current Assets / Liabilities.
(viii)Taxation
a. Current tax: Provision for current tax( Income Tax and Wealth Tax)
for the year has been made after considering deduction / allowances /
claims admissible to the company under the Income Tax Act, 1961.
b. Deferred Tax: Deferred tax is recognized on timing differences;
being difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods.
c. It is measured based on the tax rates and the tax laws enacted or
substantively enacted at the Balance sheet date.
d. Deferred tax assets arising from temporary timing differences are
recognized to the extent there is reasonable certainty that the assets
can be realized in future.
e. Deferred tax assets in respect of unabsorbed depreciation and carry
forward of losses are recognized if there is virtual certainty that
there will be sufficient future taxable income available to realize
such losses.
(ix) Foreign Currency Transactions
a. Transactions in Foreign Currency are recorded at the rate
prevailing on the date when the amount is received or remitted.
b. Foreign currency assets and liabilities are converted into rupee at
the exchange rate prevailing on the balance sheet date; gains/ losses
are reflected in the profit and loss account.
c. Exchange difference on account of acquisition of fixed assets is
adjusted to carrying cost of fixed assets.
(x) Investments
Investments are considered as Long Term and are accordingly stated at
cost less provision, if any, for permanent diminution in value of such
investments.
(xi) Employee Benefits
a. Defined Contribution Plan: Contributions to Provident Fund and ESIC
are recognized / provided as expense in the Profit and Loss Account, on
accrual basis.
b. Defined Benefit Plan and Other Long Term Benefits: Retirement
benefits in form of gratuity and other long term benefits in form of
leave encashment are determined on the basis of actuarial valuation.
Actuarial gains / losses are recognized immediately in the Profit and
Loss Account.
c. Short term compensated absences are provided based on past
experience of leave availed.
(xii) Cash and Cash equivalents
Cash and cash equivalents for the purpose of Cash Flow Statement
comprise cash at bank including Fixed Deposits, cash in hand and cash
at film sets.
(xiii) Contingencies / Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation,
in respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on best
estimate required to settle the obligation at the Balance Sheet date.
These are reviewed at each Balance Sheet date and adjusted to reflect
the current best estimates. A contingent liability is disclosed, unless
the possibility of an outflow of resources embodying the economic
benefit is remote.
(xiv)Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
Mar 31, 2011
1. (a) Basis of preparation
The Financial Statements have been prepared to comply in all material
respects with the Accounting Standards notified by Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The Financial statements are
prepared under historical cost convention on an accrual basis of
accounting except where impairment is made. The Accounting policies
have been consistently applied by the company and are consistent with
those used in the previous year.
(b) Use of estimates
The preparation of financial statements in conformity with GAAP
(Generally Accepted Accounting Policies) requires that the management
of the Company makes estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the result of
operations during the reporting period. Although these estimates are
based upon management's best knowledge of current events and actions,
actual results could differ from these estimates.
2. Revenue Recognition
a. Revenue from Post Production activities is based on machine hours
spent and is net of service tax.
b. Revenue from trading in satellite rights is recognized on its sales
or on exploitation contract.
c. Revenue is recognized to the extent it is probable that the
economic benefit will flow to the company and the revenue can be
reliably measured.
d. The company deals in Intellectual Property Rights (IPR) of films,
in case of sale of IPR of films, receipts/ income (including interest
on advance payments made) to the company are subject to certain
conditions, eventualities and uncertainties.
e. The receipts/ income (including interest on advance payments made)
are deemed to accrue as and when events take place or conditions are
fulfilled or uncertainties are removed. Accordingly such income
(including interest on advance payment made) is accounted only after
the events take place or conditions are fulfilled or uncertainties are
removed. This is in accordance with Accounting Standard in respect of
recognition of revenue and prudential norms.
f. In respect of cinematic content produced / acquired, income is
recognised on the following basis :
i. In respect of cinematic content, which is not complete i.e. under
production, no income is recognised.
ii. In respect of cinematic content, which is complete but not
released, income is recognized as à so much of the estimated income on
release as bears to the whole of the estimated income the same
proportion as the actual recoveries / realizations / confirmed
contracts bears to the total expected realisation.
iii. In respect of cinematic content completed and released during the
year, income is recognized on release / delivery of release prints
except income, if any, already recognized as per clause f (ii).
iv. In respect of cinematic content, which is complete but not
released, income from streams other than theatrical release is
recognised on the basis of contracts / deal memo and delivery of Digi
Betas.
3. Fixed Assets
Fixed assets are stated at cost less accumulated depreciation/
amortization and impairment losses if any. Cost comprises of purchase
price, allocated pre à operative costs and any attributable cost of
bringing the asset to its working condition for its intended use.
4. Depreciation
a. Depreciation on fixed assets is provided on Straight Line Method at
the rate prescribed in Schedule XIV of the Companies Act, 1956 over the
estimated useful life as estimated by the Management.
b. Depreciation is charged on a pro à rata basis for assets purchased/
sold during the year (from the date on which it is ÃPut to Use').
c. Depreciation on impaired assets is provided by adjusting the
depreciation charge in the remaining periods so as to allocate the
revised carrying amount of the asset over its remaining useful life.
The recoverable amount is measured at the higher of the net selling
price and value in use; determined by present value of estimated cash
flows.
5. Impairment
The carrying amount of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal / external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its estimated recoverable amount. The recoverable
amount is greater of asset's net selling price and value in use. In
assessing the value in use, the estimated future cash flows are
discounted to the present value at the weighted average cost of
capital. Previously recognized impairment loss is further provided or
reversed depending on changes in circumstances.
6. Inventories
a. Consumables
Consumables are valued at lower of cost and market value.
b. Intellectual Property Rights (Copy Rights)
IPR of films are valued at lower of cost or net realizable value as
certified by the management.
c. Under Production Films
Cost of films are valued at actual cost incurred/ accrued which
includes amount paid, bills settled and advance paid for which the
bills are awaited.
In case of films which are released during the year, the realization
from the sale of rights are reduced from the cost of production and the
balance cost if any, is carried forward till the time the negative
rights of the films are not exploited. The excess or deficit of the
cost of production after exploitation of "negative" rights will be
treated as profit or loss in the profit & loss a/c as the case may be.
7. Taxation
a. Current tax: Provision for current tax ( Income Tax and Wealth Tax)
for the year has been made after considering deduction / allowances /
claims admissible to the company under the Income Tax Act, 1961.
b. Deferred Tax: Deferred tax is recognized on timing differences;
being difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods.
c. It is measured based on the tax rates and the tax laws enacted or
substantively enacted at the Balance sheet date.
d. Deferred tax assets arising from temporary timing differences are
recognized to the extent there is reasonable certainty that the assets
can be realized in future.
e. Deferred tax assets in respect of unabsorbed depreciation and carry
forward of losses are recognized if there is virtual certainty that
there will be sufficient future taxable income available to realize
such losses.
8. Foreign Currency Transactions
a. Transactions in Foreign Currency are recorded at the rate
prevailing on the date when the amount is received or remitted.
b. Foreign currency assets and liabilities are converted into rupee at
the exchange rate prevailing on the balance sheet date; gains/ losses
are reflected in the profit and loss account.
c. Exchange difference on account of acquisition of fixed assets is
adjusted to carrying cost of fixed assets.
9. Investments
Investments are considered as Long Term and are accordingly stated at
cost less provision, if any, for permanent diminution in value of such
investments.
10. Miscellaneous Expenditure
The share issue expenses and expenses in connection with the formation
of the company were treated as preliminary expenses, amortized over a
period of five years.
11. Employee Benefits
a. Defined Contribution Plan: Contributions to Provident Fund and ESIC
are recognized / provided as expense in the Profit and Loss Account, on
accrual basis.
b. Defined Benefit Plan and Other Long Term Benefits: Retirement
benefits in form of gratuity and other long term benefits in form of
leave encashment are determined on the basis of actuarial valuation.
Actuarial gains / losses are recognized immediately in the Profit and
Loss Account.
c. Short term compensated absences are provided based on past
experience of leave availed.
12. Cash and Cash equivalents
Cash and cash equivalents for the purpose of Cash Flow Statement
comprise cash at bank, in hand and cash at film sets.
13. Contingencies / Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation,
in respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on best
estimate required to settle the obligation at the Balance Sheet date.
These are reviewed at each Balance Sheet date and adjusted to reflect
the current best estimates. A contingent liability is disclosed, unless
the possibility of an outflow of resources embodying the economic
benefit is remote.
14. Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
Mar 31, 2010
1. (a) Basis of Accounting
The Financial statements are prepared under historical cost convention
on an accrual basis of accounting in accordance with the generally
accepted accounting principles, on going concern basis, and in line
with accounting standards issued by the Institute of Chartered
Accountants of India, as applicable, and the provisions of the
Companies Act, 1956
(b) The Preparation of financial statements in conformity with GAAP
(Generally Accepted Accounting Policies) requires that the Management
of the Company makes estimates and assumptions that affect the reported
amounts of income and expenses of the period, the reported balances of
assets and liabilities and the assumptions relating to contingent
liabilities as on the date of financial statements. Examples of such
estimates include the useful life of tangible and intangible fixed
assets, provision for doubtful debts / advances, future obligation in
respect of retirement benefit plans, etc. Difference, if any, between
the actual results and estimates is recognized in the period in which
the results are known.
2. Revenue Recognition
a. Revenue from Post Production activities is based on machine hours
spent and is net of service tax.
b. Revenue from trading in satellite rights is recognized on its sales
or on exploitation contract.
c. Revenue is recognized to the extent it is probable that the
economic benefit will flow to the Company and the revenue can be
reliably measured.
d. The Company deals in Intellectual Property Rights (IPR) of films,
in case of sale of IPR of films, receipts/ income (including interest
on advance payments made) to the company are subject to certain
conditions, eventualities and uncertainties.
e. The receipts/ income (including interest on advance payments made)
are deemed to accrue as and when events take place or conditions are
fulfilled or uncertainties are removed. Accordingly such income
(including interest on advance payment made) is accounted only after
the events take place or conditions are fulfilled or uncertainties are
removed. This is in accordance with Accounting Standard in respect of
recognition of revenue and prudential norms.
f. In respect of cinematic content produced / acquired, income is
recognised on the following basis :
i. In respect of cinematic content, which is not complete i.e. under
production, no income is recognised.
ii. In respect of cinematic content, which is complete but not
released, income is recognised as - so much of the estimated income on
release as bears to the whole of the estimated income the same
proportion as the actual recoveries / realisations / confirmed
contracts bears to the total expected realisation.
iii. In respect of cinematic content completed and released during the
year, income is recognised on release/ delivery of release prints
except income, if any, already recognised as per clause f (ii).
iv. In respect of cinematic content, which is complete but not
released, income from streams other than theatrical release is
recognised on the basis of contracts / deal memo and delivery of Digi
Betas.
3. Fixed Assets
Fixed assets are stated at cost less Depreciation. Cost comprises of
purchase price, allocated pre - operative costs and any attributable
cost of bringing the asset to its working condition for its intended
use.
4. Depreciation
a. Depreciation on fixed assets is provided on Straight Line Method at
the rate prescribed in Schedule XIV of the Companies Act, 1956 over the
estimated useful life as estimated by the Management.
b. Depreciation is charged on a pro - rata basis for assets purchased/
sold during the year (from the date on which it is Put to Use).
c. Depreciation on impaired assets is provided by adjusting the
depreciation charge in the remaining periods so as to allocate the
revised carrying amount of the asset over its remaining useful life.
The recoverable amount is measured at the higher of the net selling
price and value in use; determined by present value of estimated cash
flows.
5. Inventories
a. Consumables
Consumables are valued at lower of cost and market value.
b. Intellectual Property Rights (Copy Rights)
IPR of films are valued at lower of cost or net realizable value as
certified by the Management.
c. Under Production Films
Cost of films are valued at actual cost incurred/ accrued which
includes amount paid, bills settled and advance paid for which the
bills are awaited.
In case of films which are released during the year, the realization
from the sale of rights are reduced from the cost of production and the
balance cost if any, is carried forward till the time the negative
rights of the films are not exploited. The excess or deficit of the
cost of production after exploitation of "negative" rights will be
treated as profit or loss in the profit & loss a/c as the case may be.
6. Taxation
a. Current tax : Provision for current tax for the year has been made
after considering deduction/ allowances/ claims admissible to the
company under the Income Tax Act, 1961.
b. Deferred Tax : Deferred tax is recognized on timing differences,
being difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods.
c. It is measured using relevant enacted tax rates.
d. Deferred tax assets arising from temporary timing differences are
recognized to the extent there is reasonable certainty that the assets
can be realized in future.
e. Deferred tax assets in respect of unabsorbed depreciation and carry
forward of losses are recognized if there is virtual certainty that
there will be sufficient future taxable income available to realize
such losses.
7. Foreign Currency Transactions
a. Transactions in Foreign Currency are recorded at the rate
prevailing on the date when the amount is received or remitted.
b. Foreign currency assets and liabilities are converted into rupee at
the exchange rate prevailing on the balance sheet date; gains/ losses
are reflected in the profit and loss account.
c. Exchange difference on account of acquisition of fixed assets is
adjusted to carrying cost of fixed assets.
8. Investments
Investments are considered as Long Term and are accordingly stated at
cost less provision, if any, for permanent diminution in value of such
investments.
9. Miscellaneous Expenditure
The share issue expenses and expenses in connection with the formation
of the company were treated as preliminary expenses, amortized over a
period of five years.
10. Employee Benefits
Contributions to Provident Fund and Family Pension Fund are provided on
accrual basis and charged to revenue. The Company has provided for
Gratuity Liability based on actuarial valuation.
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