Jun 30, 2010
A) Basis of preparation of financial statements
The financial statements have been prepared to comply in all material
aspects with the Accounting Standards issued by the Institute of
Chartered Accountants of India (ICAI), in accordance with Indian
Generally Accepted Accounting Principles and as per the provision of
the Companies Act, 1956. The financial statements are prepared under
the historical cost convention on accrual and going concern basis.
b) Use of estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities on the date of financial statements, the reported
amount of revenues and expenses and the disclosures relating to
contingent liabilities as on the date of financial statements. Actual
results could differ from those of estimates. Any revision in
accounting estimates is recognized in accordance with the respective
accounting standard.
c) Revenue Recognition
- Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
- Revenue from sale of goods is recognized when the significant risks
and rewards of ownership of the goods have passed to the buyer.
- Revenue from services is recognized on accrual basis over the period
of services.
d) Fixed Assets and Depreciation
Fixed Assets are stated at cost of acquisition/construction less
accumulated depreciation and impairment loss. Cost includes direct
expenses as well as clearly identifiable indirect expenses incurred to
bring the assets to their working condition for its intended use, net
of CENVAT/Service Tax recoverable.
Capital work in progress includes assets that are under
construction/development and not yet ready to use.
Fixed Assets are depreciated on a straight-line basis at the rates
specified in Schedule XIV of Companies Act, 1956 except a few items of
Fixed Assets which are depreciated on a written down value basis.
Proportionate depreciation is charged for addition / deletion during
the year. Individual assets of value less than Rs.5, 000 are
depreciated in the year of purchase.
e) Intangible Assets
- Project development Expenses
Expenditure related to the development of IPTV project are treated as
Project Development Expenses and classified as "Intangible Assets" to
be amortized over a period of 5 years.
- Content Rights
The Company purchases movie/film rights, software rights, copyrights
and trademarks related to IPTV Project. Expenditure related to the
acquisition of content rights for IPTV is classified as "Intangible
Assets" to be amortized over a period of 5 years or license period,
whichever is lower.
- Others
Other Intangible assets are amortized over a period of 5 years.
f) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rates of exchange
in force at the time the transactions are effected. Monetary items are
translated into rupees at the exchange rates prevailing at the balance
sheet date. Non- monetary items are carried at their historical rupee
values. Exchange differences on foreign exchange transaction are
recognized in profit and loss account.
g) Investments
Investments are classified into current and long-term investments.
Current investments are stated at lower of cost or market value.
Long-term investments are classified at cost less provisions, if any,
for permanent diminution in the value of such investments.
h) Inventories
Inventories are valued at the lower of cost or net realizable value.
Cost is determined on a weighted average basis. Inventories include
other costs incurred in bringing the inventories to their present
location and condition.
i) Employee Benefits
- Provident fund is a defined contribution scheme and is charged to
Profit and Loss Account on accrual basis.
- The Companys liabilities towards gratuity are considered as defined
benefit plans. The present value of obligation towards gratuity is
determined on actuarial valuation basis.
- The Companys liabilities towards leave encashment benefits is
accounted for on the basis of actuarial valuation and the resuitant
actuarial gains and losses are charged to profit & loss account.
j) Operating Leases
- Lease Income:
Lease rentals in respect of Operating Lease arrangements are recognized
in Profit & Loss Account in accordance with AS-19 "Leases". Costs,
including depreciation, incurred in earning the lease income are
recognized as expenses.
- Lease Expense:
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as
Operating Leases. Operating Lease payments are recognised as an expense
in the Profit & Loss Account on a straight line basis over the lease
period.
k) Finance Leases
Assets acquired under finance leases are capitalized at the inception
of the lease and depreciated on straight line basis over the useful
life in accordance with the Companys depreciation policy. The amount
outstanding towards these liabilities is shown as borrowings in the
balance sheet.
I) Earnings Per Share
The Company reports basic and diluted earnings per share in accordance
with AS-20 "Earnings Per Share". Basic earnings per share are computed
by dividing the net profit or loss for the year by the weighted average
number of Equity Shares outstanding during the year. Diluted earnings
per share is computed by dividing the net profit or loss for the year
by the weighted average number of Equity Shares outstanding during the
year as adjusted for the effects of all dilutive potential equity
shares.
m) Taxation
Tax expenses comprise current income tax, deferred tax, & fringe
benefit tax. Income tax & fringe benefit tax comprises the amount of
tax for the period determined in accordance with the Income Tax Act,
1961.
- Fringe Benefit Tax (FBT):
FBT payable under the provisions of Section 115WC of the Income Tax
Act, 1961 is in accordance with the Guidance Note on Accounting for
Fringe Benefits Tax issued by the ICAI regarded as an additional Income
Tax and considered in determination of the profit / (losses) for the
year.
- Deferred Tax
The Company provides for deferred tax using the liability method, based
on the timing difference resulting from the recognition of items in the
financial statements / and in estimating its current income tax
provision. Deferred Tax Assets arising from temporary timing
difference are recognized to the extent, there is reasonable certainty
that the assets can be realized in future. Deferred tax assets are
recognized only if there is a virtual certainty backed by convincing
evidence of realization of such assets. Deferred tax assets and
liabilities are reviewed as at each balance sheet date and are
appropriately adjusted, to the extent considered necessary, to reflect
the amount that is reasonably or virtually certain to be realized.
n) Impairment of Assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the carrying value of such asset is reduced to its recoverable
amount and the impairment loss is charged to Profit and Loss Account.
If at the Balance Sheet date there is an indication that an impairment
loss recognized in prior periods no longer exists or has decreased,
then the assets are restated to that effect.
o) Provisions, Contingent Liabilities and Contingent Assets
Contingent Liabilities as defined in AS - 29 on "Provisions, Contingent
Liabilities and Contingent Assets" are disclosed by way of Notes to
Accounts. Provision is made if it becomes probable that an outflow of
future economic benefits will be required for an item previously dealt
with as a contingent liability.
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