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Accounting Policies of Mediaone Global Entertainment Ltd. Company

Jun 30, 2012

1: Disclosure of Accounting Policies: The financial statements have been prepared to comply in all material respects with the Mandatory Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and the relevant provisions of Companies Act, 1956. These financial statements have been prepared under the historical cost convention on the accrual basis. The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on the management''s best knowledge of current events and actions the company may undertake in future, actual results ultimately differ from estimates.

2: Valuation of Inventories: Inventory of rights is valued at cost.

3: Cash flow Statement: Cash flow statement prepared under the direct method forms part of the financial statements.

4: Contingencies and events occurring after the Balance Sheet date: NIL

5: Net Profit or Loss for the period, prior period items and changes in accounting policies:

(a) Net profit for the period: All items of income and expenses in the period are included in the determination of net profit for the period, unless specifically mentioned elsewhere in the financial statements or is required by an Accounting Standard.

(b) Prior period items-Nil.

(c) Changes in accounting policies: There are no significant changes in accounting policies of the companyfromthatofthe previous period.

6: Depreciation Accounting: Fixed assets are depreciated underwritten down Value Method (WDV) in the manner prescribed under Schedule XIV to the Companies Act, 1956. For the assets acquired during the year, the depreciation has been charged on pro-rata basis. Individual Assets costing less than Rs. 5,000, are written off in the period of acquisition.

7: Accounting for Construction Contracts: The above Standard is not applicable to the Company, as it is not engaged in the business of construction.

8: Accounting for Research and Development: This standard has been withdrawn with effect from 1 -4-2003 consequent to the introduction of Accounting Standard AS-26 on Accounting for Intangible Assets.

9: Revenue Recognition:

1. Revenue from theatrical exhibition is accounted on sale of tickets.

2. Revenue from distribution is recognised based on the agreements entered into. Minimum guarantee is charged off in the year in which agreement is entered into irrespective of the spill over of period over which revenue accrues to the enterprise.

3. Revenue from rights are recognised in the period in which agreements are entered into.

4. Revenue from production is recognised based on the nature of agreements - While Minimum Guarantee is recognised on release, For Advance based agreements revenue is recognised over the period in which it accrues to the enterprise.

10: Accounting for Fixed Assets: Fixed assets are capitalised at acquisition cost, which comprises of freight, installation cost, duties, taxes, and other directly attributable cost of bringing the assets to its working condition for the intended use.

11: Accounting for effects in foreign exchange rates:

a) Conversion - All monetary items denominated in foreign currency are reflected at the rates prevailing on the Balance sheet date.

b) Initial Recognition - Income and Expenditure items involving foreign exchange are translated at the exchange rate prevailing on the dates of transaction.

c) Exchange Differences - Exchange differences, if any, arising on account of fluctuations in foreign exchange have been duly reflected in the Profit & Loss Account.

d) Subsidiary: During the year the operations of subsidiary has become integral to the business of holding company and accordingly the monetary items are stated at closing rates and revenue items are converted at average rates. The fluctuation reserve recognised earlier is carried forward at historic cost as per the Standard.

12: Accounting for Government Grants: The Company has not received any grants.

13: Accounting for Investments: All Long term Investments are carried at cost. Investment in subsidiary is stated at cost.

14. Accounting for Amalgamation: This standard is not applicable for the current reporting period.

15: Accounting for Retirement benefits:

a) Gratuity: The company has gratuity payable ofRs. 1,141,379/- as on the balance sheet date which was recognised earlier. The liability of the present employees as per actuarial valuation is less than the aforesaid amount. However, no reversal is made as the details of claim / settlement of resigned employees is not available.

b) No other short term or long term benefit has accrued to the employees.

16: Borrowing Cost: Finance charges in respect of production of film is capitalised as part of inventory cost till the time it is ready for release. Interest so capitalized during the period is Rs. 2.82 Crores.

17: Segment Reporting: This standard is not applicable to the company as there are no identifiable segments.

Jun 30, 2011

A. Basis of Preparation of financial statements .

The accompanying financial statements have been prepared under the historical cost convention and are in compliance with the applicable accounting standards issued by the institute of Chartered Accountants of India (ICAI) as referred to in section 211 (3c) of the companies Act, 1956.All items of income and expenditure having a material bearing on the financial statements have been recognised on the accrual basis.

All assets and liabilities other than borrowings and deferred taxes) that are expected to be settled in the ordinary course of business within 12 months from the Balance Sheet date are separately stated as current assets or current liabilities respectively . Borrowings repayable within one year from the date of Balance Sheet, if any have been disclosed separately.

The accounting policies applied by the company, are consistent with those used in the previous year

b. Use of estimates

The Preparation of financial statements in conformity with generally accepted accounting principles in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of financial statements and notes thereto and the reported amounts of revenue and expenses during the accounting year. Actual results could differ from those estimates,

c. Fixed assets and depreciation

Fixed assets

Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any, Cost includes all direct expenses incurred to bring an asset to working condition for its intended use .Financing costs, if any , relating to acquisition of qualifying fixed assets are also to the extent they relate to the period till such assets are ready to be put to use. Amounts paid under contractual terms for purchasing fixed assets and fixed assets acquired but not put to use at the Balance Sheet date are classified as Capital Work in Progress.

Assets interred to be sold or otherwise disposed off within twelve months from the Balance Sheet date, if any, are classified as other current assets and are disclosed as assets held for disposal, and are stated at the lower of net book value as estimated by management.


Depreciation on fixed assets other than intangible assets and leasehold improvements is provided on written down value method pro-rata to the period of use of the assets, at the annual depreciation rates stipulated in schedule XIV to the companies Act, 1956.

d. Intangible assets

- License of Film Rights

Costs incurred towards purchase of License of Film Rights are depreciated on Straight Line method pro-rata to the period of use of the assets, at the annual depreciation rates stipulated in schedule XIV to the companies Act, 1956.

e. Impairment

The Carrying amounts 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 recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recovemble amount is the greater of the asset's net selling price and value in use.

In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets.

f. investments

- Long-Term investments

Securities intended at the of investment to be held for 12 months or more are classified as long term investments and are stated at cost, adjusted for any diminution In value that is not temporary in nature. Long term investments that are intended to be disposed within 12 months from the balance sheet date are reclassified as current investments, and are recorded at the lower of cost and carrying value as at the date of transfer.

g. Debtors & Creditors

- the Debtors & Creditors balances are subject to confirmation by the respective parties.

h. Employee benefit plans

Employee benefit plans comprise defined contribution plans,

The Company contributes to a gratuity fund maintained by the Life Insurance Corporation of India ('LIC') based upon actuarial valuation.

i. Taxation

Tax expenses comprise current, deferred taxes, Provisions for Current taxes are made as per the current tax laws as regulated by the Income Tax Act, 1961, Deferred income taxes are recognized for the future tax consequences attributable to timing differences between financial statement determination of income and their recognition for tax purposes. The effect on deferred tax. assets and liabilities of a change in tax rates is recognized in income using the tax rates and tax laws that, have been enacted or substantively enacted by the balance sheet date .Deferred tax assets are recognized and carried forward only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized .At each balance sheet date the company re-assesses unrecognized deferred tax assets and recognizes any unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets cab be realized Fringe benefit tax is not applicable, as it has been abolished from the Act,

j. Earnings per share

The earnings considered in ascertaining the company's earnings per share are the net profit after tax. The number of shares used in computing the basic earnings per share is the weighted average number of equity shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving the basic earnings per share and also the weighted average shares, if any which would have been issued on the conversion of all dilative potential equity shares,

k. Revenue Recognition

- Theatrical Exhibition income is recognized when tickets are being sold and movie is exhibited.

- Distribution Income is being recognized on the basis of Box office collections received from various exhibitors at gross amount inclusive of taxes.

- Evert income is being recognized when such event is actually conducted and as per the terms of the relevant agreement.

- Safe of Rights income is being recognized when title to such right is being transferred and as per the terms and conditions of the relevant agreement

- Interest income is being recognized or time proportion basis.

l. Foreign currency transactions.

The Company had been following accounting standard 11 for recognizing foreign Exchange Differences which is disclosed as below:

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. At the year end, monetary items are converted into rupee equivalents at the year end exchange rates, No-monetary items which are carried at historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

All the exchange differences arising n settlement / conversion of foreign currency transactions are included in the profit and loss account, except in cases where they relate to the acquisition of fixed assets from outside India, in which case they are adjusted in the cost of corresponding asset.

m. Provisions

A provision is recognized when an enterprise 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. Provisions are not discounted to their present values and are determined based on management's estimate of the amount required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the management's current estimates.

n. Segment reporting

Segments have been identified in line with the Accounting Standards on Segment Reporting (AS 17) prescribed by Companies (Accounting Standards) Rules, 2006, taking into account the nature of services, the different risks and returns, the organizational structure and the internal financial reporting system. The Company is engaged in the business of Distributing movies, Serial broadcasts, and theatrical exhibition of movies. It has its operations confined only within India. Based on the dominant source and nature of risk and returns of the Company, its internal organization and management structure and its system of internal financial reporting, business segment has been identified as the primary segment.

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