Mar 31, 2023
The Company has one class of equity shares having a face value of Rs.5.00 each. Each shareholder is eligible for one vote per share held. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
During the year ended March 31,2023, the Board of Directors have declared an interim dividend of Rs.5 per share (100%), Rs.3.75 per share (75%), Rs.3.75 per share (75%) and Rs. 2.50 per share (50%) at their respective Board meeting held on August 12, 2022, November 11, 2022, February 3, 2023 and March 13, 2023. (March 31, 2022: Rs.13.75 /- share)
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.
Disaggregated revenue information
Revenue is recognized when the performance obligations under the contract with customers are satisfied. In respect of all classes of revenue from operations as disclosed above, the performance obligation is satisfied at a point in time. For disaggregation of revenue by geographical regions, refer Note 33 - Segment information.
Trade Receivables and Contract assets / liabilities
Trade receivable and Unbilled revenue : The Company classifies the right to consideration in exchange for deliverables as contract receivable / unbilled revenue. A receivable is a right to consideration that is unconditional upon passage of time. Revenues in excess of billings is recorded as unbilled revenue and is classified as a other current asset. Trade receivable and unbilled revenues are presented net of impairment in Note 10 and Note 8.2 respectively. Deferred income / unearned revenue : Billings in excess of revenue recognised are disclosed as âDeferred Revenuesâ under other current liabilities - Note 19;
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year.Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.
The Company has entered into operating leases on KU band Satellite transponders on non cancellable operating lease, with lease terms between 1 and 5 years. The Company has also entered into operating lease arrangements for office premises.
i) Contribution to Provident Fund : Contributions towards Employees Provident Fund made to the Regional / Employee Provident Fund are recognised as expenses in the year in which the services are rendered.
ii) Contribution to Employee State Insurance : Contributions to Employees State Insurance Scheme are recognised as expense in the year in which the services are rendered.
B) Defined benefit plan - Gratuity
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on cessation of employment at 15 days salary (last drawn salary) for each completed year of service. The fund has the form of a trust and it is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
The scheme is funded with an insurance company (LIC) in the form of a qualifying insurance policy.
The following tables summarize the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the Gratuity plan.
The overall expected rate of return on assets is determined based on market prices prevailing on that date, applicable to the period over which the obligation is to be settled. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Based on the experience of the previous years, the Company expects to contribute about Rs.1.40 crores to the gratuity fund in the next year. However, the actual contribution by the Company will be based on the actuarial valuation report received from the insurance Company.
The Company contributes all ascertained liabilities towards gratuity to the Sun TV Network Ltd Employees Group Gratuity Trust and the Trustees also administer the contributions so made to the trust. As of March 31, 2023 and March 31,2022 the plan assets have been primarily invested in insurer managed funds.
The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The sensitivity analysis are based on a change in significant assumption, keeping all other assumptions constant. The sensitivity analysis may not be a representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another.
Note 31. Contingencies A) Contingent Liabilities
a. Matters wherein management has concluded that the Companyâs liability is probable has been provided for.
b. Contingent liability is disclosed in case of:
i) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation; and
ii) a present obligation arising from past events, when no reliable estimate is possible. (Refer note below for the related disclosure)
Contingent assets are disclosed where an inflow of economic benefits is probable. Provision, contingent liabilities, and contingent assets are reviewed at each Balance Sheet date.
c. Matters wherein management is confident of succeeding in these litigations and have concluded the liability to the Company to be remote. This is based on the relevant facts of judicial precedents and as advised by legal counsel which involves various legal proceedings and claims, in different stages of process, in relation to civil and criminal matters.
Disputed taxes not provided for in respect of: |
As at March 31, 2023 |
As at March 31, 2022 |
a) Claims related to Income Tax** |
20.23 |
10.35 |
b) Claims related to Custom duty |
- |
63.63 |
c) Claims related to Service Tax* |
29.09 |
27.27 |
d) Claims related to Goods and Service Tax* |
4.41 |
- |
Total |
53.73 |
101.25 |
*The Company received show cause cum demand notice from the Service Tax and Goods and Service Tax department seeking service tax on certain services and disallowances of input credit availed on certain services. The Company has filed appeals for all such show cause notices /orders received with various authorities. The Company based on the judicial pronouncements and other submissions that believes its position is likely to be accepted by the authorities.
**The Company is contesting certain disallowances to the taxable income and demands raised by the Income tax authorities. The management, based on internal assessment and considering the views of its tax advisors, believe that its position will likely be upheld in the appellate process and ultimate outcome of these proceedings will not have a material adverse effect on the Companyâs financial position and results of operations.
B) Commitments for capital contracts |
||
Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
Estimated amount of contracts remaining to be executed on capital expenditure and not provided for Outstanding commitments on capital contracts |
0.18 |
0.17 |
Commitments for acquisition of film and program broadcasting rights, Production and distribution related rights |
393.96 |
228.75 |
The management assessed that the fair value of cash and cash equivalents, trade receivables, trade payables and other current and non current financial liabilities and financial assets approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The method and assumptions used to estimate the fair values is the fair values of financial instruments traded in active markets are based on quoted market prices at the balance sheet date.
Note 36. Description of valuation techniques used and key inputs to valuation on investment in tax free and taxable bonds:
The valuation for tax free and taxable bonds are based on valuations performed by an accredited independent valuer. The valuer is a specialist in valuing these types of Bonds. The valuation model used is in accordance with a method recommended by the International Valuation Standards.
The Company has disclosed fair value of the tax free and taxable bonds using IMaCS standard methodology which captures the market condition as on given day of valuation on T 1 basis.
The Company has no restrictions on the disposal of its tax free bonds.
Significant unobservable Inputs:
The Independent valuer has made detailed study based on standards methodology for scrip level valuation and have considered the available secondary market and primary market trades for valuation of bonds on reporting date. Outlier trades if any are identified and excluded. Widespread Polling is also considered with market participant to understand the movement in levels. In the case of liquid instruments, the valuation is arrived at based on the value bonds with similar maturity issued by similar issuers or securities are linked to a benchmark and a spread over benchmark is arrived at and the same is carried forward.
Note 37. Fair value disclosure on Investment properties:
The Companyâs investment properties consists of office premises/ commercial properties let out on lease.
As at March 31,2023 and March 31,2022, the fair values of the properties are Rs.113.83 crores and Rs.105.93 crores respectively.
These valuations are based on valuations performed by an registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. The valuation model used is in accordance with a method recommended by the International Valuation Standards.
The Company has no restrictions on the disposal of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements.
Description of valuation techniques used and key inputs to valuation on investment properties:
The Company has fair valued the office premises and commercial property let out on lease using Market approach method.
Significant unobservable Inputs
The independent valuer has made detailed study of prevailing market rate for the commercial buildings in the areas wherein the office premises property is being let out by the Company. This has been adjusted for amenities, depreciation and other leasehold improvements made by the Company to the respective properties.
Note 38. Financial risk management objectives and policies
The Company''s principal financial liabilities, include trade and other payables. The Company has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations.The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs senior management ensures that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency risk and other price risk, such as equity price risk. The value of financial instruments may change as a result of changes in the foreign currency exchange rates, equity price fluctuation, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy. Financial instrument affected by market risk includes investment in equity instruments etc.
Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities. As per the Forex policy, the Company, takes forward contract for transactions where the foreign currency risk on account of movement in exchange rate expected to be high and which is material to the Company. The impact of foreign exchange rate fluctuations is evaluated by assessing its exposure to exchange rates risks. Exposure to foreign exchange fluctuation risks is with monetary receivables / payables denominated in AFD Alin IlSn HAH RRP 7ARanHSm
The following tables demonstrate the sensitivity to a reasonably possible change in foreign exchange rates, with all other variables held constant. The impact on the Companyâs profit before tax is due to changes in the fair value of monetary assets and liabilities. The sensitivity analysis in the following sections relate to the position as at March 31, 2023 and March 31,2022 and as forecasted for volatile currencies.
Credit risk is the risk of financial loss to the Company if a customer or counterparty fails to meet its contractual obligations and arises principally from the Companyâs receivables, deposits given, investments made and balances at bank. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as
well as concentration of risks. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit.
The maximum exposure to the credit risk is equal to the carrying amount of financial assets as of March 31,2023 and March 31, 2022 respectively. On account of adoption of Ind AS 109 on âFinancial Instrumentsâ, the Company uses expected credit loss model to assess the impairment loss or gain.
The Company''s prime source of liquidity is cash and cash equivalents and the cash flow generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
As of March 31, 2023, the Company had a working capital of Rs.4,876.07 crores (March 31, 2022 - Rs.4,359.90 crores) including cash and cash equivalents of Rs.127.13 crores (March 31,2022 - Rs.215.73 crores) and current investment of Rs.3,499.34 crores (March 31,2022 - Rs. 2,421.98 crores).
As of March 31,2023 and March 31,2022 there are no material liability which is outstanding. Accordingly, no liquidity risk is perceived.
The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual undiscounted payments.
For the purpose of the Companyâs capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to maximise the shareholder value.
Note 43. The Company has no borrowings or charge created as at March 31, 2023 and March 31,2022. In earlier years, the Company had registered "Satisfaction of Charges" with Registrar of Companies (ROC) in respect of 3 charges amounting to Rs.0.29 Crores; However these charges are appearing as "open" in MCA website due to non updation and the Company is following up with MCA for necessary corrections.
Note 44. The Company has reclassified / regrouped previous year figures to conform to this year''s classification. Note 45. Approval of financial statements
The standalone financial statements were reviewed and recommended by the Audit Committee and has been approved by the Board of Directors at their meeting held on May 19, 2023.
Mar 31, 2022
Note 7.3.1 - Investment in Bharat bonds ETF
The Company holds 2,50,000 Bharat Bonds Exchange Traded Fund issued by Edelweiss Mutual Fund ("issuer"), having face value of Rs.1000/- per bond. These bonds listed on the Stock Exchange, carry the highest credit rating of AAA. These bonds have a defined maturity period and will mature in April, 2023 and at maturity, Company will get back the investments along with return indicated. The return on this investment will be realized either by holding the debentures till maturity or upon the sale of the same to another investor before the debentures are redeemed by the issuer.
The Company has irrevocably designated these debentures to be subsequently measured at FVTPL, in order to eliminate measurement inconsistency.
Note 7.3.2 - Investment in Nippon India ETF Nifty SDL-2026 units issued by Nippon India Mutual Fund
During the current year, the Company invested in the long term 744,079 units of Nippon India ETF Nifty SDL- 2026 issued by Nippon India Mutual Fund ("issuer"), having face value of Rs.10/- per unit. These units are listed on the Stock Exchange and proceeds from the sale of these units would predominantly be utilized for investment into State Development Loans (SDLs) representing Nifty SDL Apr 2026 Top 20 Equal Weight Index. The units have a defined maturity period and will mature in April 30, 2026. Upon maturity, the Company will get back the investments along with return indicated. The return on this investment will be realized either by holding the unit till maturity or upon the sale prior to the maturity.
The Company has irrevocably designated these debentures to be subsequently measured at FVTPL, in order to eliminate measurement inconsistency.
During the current year, the Company invested in the long term 978,260 units of Nippon India ETF Nifty CPSE Bond Plus SDL - 2024 issued by Nippon India Mutual Fund ("issuer"), having face value of Rs.10/- per unit. These units are listed on the Stock Exchange and proceeds from the sale of these units would predominantly be utilized for investment into Central Public Sector Enterprises (CPSEs), Public Financial Institutions(PFIs) and State Development Loans (SDLs) of Top 5 States / union Territory representing Nifty CPSE Bond Plus SDL Sep 2024, 50:50 Index. The units have a defined maturity period and will mature in September 30, 2024. Upon maturity, the Company will get back the investments along with return indicated. The return on this investment will be realized either by holding the unit till maturity or upon the sale prior to the maturity.
The Company has irrevocably designated these debentures to be subsequently measured at FVTPL, in order to eliminate measurement inconsistency.
Note 7.3.4 - Investment in Non-Convertible Debentures of Aseem Infrastructure Limited
During the current year,the Company holds 250 Non-Convertible Debentures issued by Aseem Infrastructure Limited ("issuer"), having face value of Rs.10,00,000/- per debenture. These bonds are listed on the Stock Exchanges and carry the highest credit rating of AAA. These bonds have a defined maturity period and will mature in October, 2024 and at maturity, Company will get back the investments along with return indicated. The return on this investment will be realized either by holding the debentures till maturity or upon the sale of the same to another investor before the debentures are redeemed by the issuer.
The Company has irrevocably designated these debentures to be subsequently measured at FVTPL, in order to eliminate measurement inconsistency.
Note 7.3.5 - Investment in units of India Infrastructure Trusts managed by Brookfield India Infrastructure Manager Private Limited
During the current year, the Company invested in the long term 24,00,000 units of India Infrastructure Trusts, an infrastructure investment trust (InvIT) whose Investment Managers are Brookfield India Infrastructure Manager Private Limited (âBIIMPLâ). These units have a face value of Rs.100/- per unit and the initial investment proceeds were utilised to finance the construction of a pipeline system for transport of natural gas. The main customer for the InvIT is Reliance Industries Limited which company has executed a minimum guarantee to deliver an assured return of 9.24 % p.a. over the duration of the investment with a best case return of 12.65 % p.a. The InvIT has been assigned Corporate Credit rating of AAA/Stable by CRISIL and are not listed on any Stock Exchange. This InvIT has a defined maturity period and will mature in the year 2039 and the Company has the option to hold till maturity or sell prior to the maturity, at which time, the Company will get back the investments. The return on this investment will be realized during the period of holding and these units provide a steady cash flow distribution by way of interest/dividends/ principal payouts etc.
The Company has irrevocably designated these debentures to be subsequently measured at FVTPL, in order to eliminate measurement inconsistency.
During the current year, the Company invested in the long term 1,98,40,473 units of AXIS AAA Bond Plus SDL ETF issued by Axis Mutual Fund ("issuer"), having face value of Rs.1/- per unit. These units are listed on the Stock Exchange and proceeds from the sale of these units would predominantly be utilized for investment into AAA rated Corporate Bonds & State Development Loans (SDLs) represented by Nifty AAA Bond Plus SDL Apr 2026 50 : 50 Index. The units have a defined maturity period and will mature in April, 2026. Upon maturity, the Company will get back the investments along with return indicated. The return on this investment will be realized either by holding the unit till maturity or upon the sale prior to the maturity.
The Company has irrevocably designated these debentures to be subsequently measured at FVTPL, in order to eliminate measurement inconsistency.
Fair value hierarchy disclosures for investment in Non Convertible debentures have been provided in Note 35 - 37. Note 7.4.2 - Investment in Non Convertible debentures issued by Axis Finance
The Company holds 250 redeemable non-convertible debentures issued by Axis Finance Ltd ("issuer"), having face value of Rs. 10,00,000 /- debenture and the principal is protected at maturity. These debentures listed on the National Stock Exchange, carry the highest credit rating of AAA and will be redeemed in June 30, 2022 at a price being the last traded (closing) price of 6.45 Gsec 2049 as on 30th May 2022. The return on this investment will be realised either by holding the debentures till maturity or upon the sale of the same to another investor before the debentures are redeemed by the issuer.
The Company has irrevocably designated these debentures to be subsequently measured at FVTPL, in order to eliminate measurement inconsistency.
Fair value hierarchy disclosures for investment in Non Convertible debentures have been provided in Note 35 - 37.
(ii) Term/Rights attached to Equity Shares
The Company has one class of equity shares having a face value of Rs.5.00 each. Each shareholder is eligible for one vote per share held. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
During the year ended March 31,2022, The Board of Directors have declared an interim dividend of Rs.3.75 per share (75%), Rs.2.50 per share (50%), Rs.2.50 per share (50%) and Rs. 5.00 per share (100%) at their respective Board meeting held on August 13, 2021, November 5, 2021, February 10, 2022 and March 7, 2022. (March 31,2021: Rs.5.00 /- share)
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.
Disaggregated revenue information
Revenue is recognized when the performance obligations under the contract with customers are satisfied. In respect of all classes of revenue from operations as disclosed above, the performance obligation is satisfied at a point in time. For disaggregation of revenue by geographical regions, refer Note 33 - Segment information.
Trade Receivables and Contract assets / liabilities
Trade receivable and unbilled revenue : The Company classifies the right to consideration in exchange for deliverables as contract receivable / unbilled revenue.
A receivable is a right to consideration that is unconditional upon passage of time. Revenues in excess of billings is recorded as unbilled revenue and is classified as a financial asset. Trade receivable and unbilled revenues are presented net of impairment in Note 10 and Note 9.2 respectively.
Deferred income / unearned revenue : Billings in excess of revenue recognised are disclosed as âDeferred Revenuesâ under other current liabilities - Note 19; As against the opening balance of deferred revenue of Rs.27.20 crores , revenue recognised during the year amounts to Rs.23.79 crores ;
Note: "For the year ended March 31,2021 Taxes relating to earlier years" represents income tax determined by the Income Tax Authorities based on the Company''s application under the Direct Tax Vivad se Vishwas Act, 2020, in respect of pending income tax litigations pertaining to Financial years 2003-04 to 2016-17 amounting to Rs.236.66 crores and provision created on similar basis for the subsequent financial years 2017-18 to 2019-20 amounting to Rs.136.98 crores and recorded by the Company in the current financial year. This has been done inter alia to reduce pending income tax litigation in respect of the claims under Income Tax Act,1961 and de-risking the Companyâs financial position, notwithstanding the fact that the Companyâs position have consistently been upheld in the past by Appellate Authorities.
Note 28. Earnings Per Share (EPS)
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.
i) Contribution to Provident Fund : Contributions towards Employees Providend Fund made to the Regional / Employee Provident Fund are recognised as expenses in the year in which the services are rendered.
ii) Contribution to Employee State Insurance : Contributions to Employees State Insurance Scheme are recognised as expense in the year in which the services are rendered.
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on cessation of employment at 15 days salary (last drawn salary) for each completed year of service. The fund has the form of a trust and it is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
The scheme is funded with an insurance company (LIC) in the form of a qualifying insurance policy.
The following tables summarize the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the Gratuity plan.
The overall expected rate of return on assets is determined based on market prices prevailing on that date, applicable to the period over which the obligation is to be settled. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Based on the experience of the previous years, the Company expects to contribute about Rs.1.65 crores to the gratuity fund in the next year. However, the actual contribution by the Company will be based on the actuarial valuation report received from the insurance Company.
Note 31. Contingencies A) Contingent Liabilities
a. Matters wherein management has concluded that the Companyâs liability is probable has been provided for . Refer Note 42.
b. Contingent liability is disclosed in case of:
i) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation; and
ii) a present obligation arising from past events, when no reliable estimate is possible.
Contingent assets are disclosed where an inflow of economic benefits is probable. Provision,contingent liabilities, and contingent assets are reviewed at each Balance Sheet date.
c. Matters wherein management is confident of succeeding in these litigations and have concluded the liability to the Company to be remote.This is based on the relevant facts of judicial precedents and as advised by legal counsel which involves various legal proceedings and claims, in different stages of process, in relation to civil and criminal matters.
Disputed taxes not pr0vided for in respect of:_March 31,1022 March 31, ^
a) Claims related to Income Tax 10.35 10.35
b) Claims related to Custom duty**@ 63.63 63.63
c) Claims related to Service Tax*** 27.27 27.44
Total 101.25_101.42
** The Company has received demand for differential customs duty aggregating to Rs. 0.50 crores on account of incorrect classification of certain assets imported during FY 2007-08. The Company has filed an appeal against the said demand, and based on its submissions at such appellate proceedings, management believes that the Companyâs claim is likely to be accepted by the authorities.
@ Further to enquiries by the customs authorities on customs duty exemptions availed by the Company in the previous year, the Company has received a formal show cause / demand notice containing a provisional demand of Rs. 63.13 crores. Then the Company has filed its responses to this notice and has also deposited a sum of Rs. 60.18 crores under protest pending final resolution of the matter. The Management has been advised by senior counsels that appropriate legal remedies are available to the Company in this matter and accordingly the company is confident of recovering the duty paid.
***The Company received show cause cum demand notice from the Service tax department seeking service tax on certain services and disallowances of input credit availed on certain services.The Company has filed appeals for all such show cause notices /orders received with various authorities. The Company based on the judicial pronouncements and other submissions believes its position is likely to be accepted by the authorities.
B) Commitments for capital contracts |
||
Particulars |
As at March 31, 2022 |
As at March 31, 2021 |
a) Estimated amount of contracts remaining to be executed on capital expenditure and not provided for |
||
Outstanding commitments on capital contracts |
0.17 |
0.25 |
Commitments for acquisition of film and program broadcasting rights, Production and distribution related rights |
228.75 |
428.55 |
Terms & Conditions of Transactions with Related Party
The sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. For the year ended March 31, 2022, the company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31,2021: INR Nil).
The management assessed that the fair value of cash and cash equivalents, trade receivables, trade payables and other current and non current financial liabilities and financial assets approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The method and assumptions used to estimate the fair values is the fair values of financial instruments traded in active markets are based on quoted market prices at the balance sheet date.
Note 36. Description of valuation techniques used and key inputs to valuation on investment in tax free and taxable bonds:
The valuation for tax free bonds are based on valuations performed by an accredited independent valuer. The valuer is a specialist in valuing these types of Bonds. The valuation model used is in accordance with a method recommended by the International Valuation Standards.
The Company has disclosed fair value of the tax free bonds using IMaCS standard methodology which captures the market condition as on given day of valuation on T 1 basis.
The Company has no restrictions on the disposal of its tax free bonds.
Significant unobservable Inputs:
The I ndependent valuer has made detailed study based on standards methodoloy for scrip level valuation and have considered the available secondary market and primary market trades for valuation of bonds on reporting date. Outlier trades if any are identified and excluded. Widespread Polling is also considered with market participant to understand the movement in levels. In the case of liquid instruments, the valuation is arrived at based on the value bonds with similar maturity issued by similar issuers or securities are linked to a benchmark and a spread over benchmark is arrived at and the same is carried forward.
The groupâs investment properties consists of office premises/ commercial properties let out on lease.
As at March 31,2022 and March 31,2021, the fair values of the properties are Rs.103.57 crores and Rs.67.28 crores respectively.
These valuations are based on valuations performed by an registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. The valuation model used is in accordance with a method recommended by the International Valuation Standards.
The Company has no restrictions on the disposal of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements.
Description of valuation techniques used and key inputs to valuation on investment properties:
The Company has fair valued the office premises and commercial property let out on lease using Market approach method
Significant unobservable Inputs
The independent valuer has made detailed study of prevailing market rate for the commercial buildings in the areas wherein the office premises property is being let out by the Company. This has been adjusted for amenities, depreciation and other leasehold improvements made by the Company to the respective properties.
Note 38. Financial risk management objectives and policies
The group''s principal financial liabilities, include trade and other payables. The Company has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations.The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs senior management ensures that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency risk and other price risk, such as equity price risk. The value of financial instruments may change as a result of changes in the foreign currency exchange rates, equity price fluctuation, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy. Financial instrument affected by market risk includes investment in equity instruments etc.
Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities. As per the Forex policy, the Company, takes forward contract for transactions where the foreign currency risk on account of movement in exchange rate expected to be high and which is material to the Company. The impact of foreign exchange rate fluctuations is evaluated by assessing its exposure to exchange rates risks. Exposure to foreign exchange fluctuation risks is with monetary receivables / payables denominated in USD, CAD, ZAR and SGD.
The Company''s prime source of liquidity is cash and cash equivalents and the cash flow generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
As of March 31, 2022, the Company had a working capital of Rs.4,359.83 crores (March 31, 2021 - Rs.4,134.02 crores) including cash and cash equivalents of Rs.509.95 crores (March 31,2021 - Rs.461.28 crores) and current investment of Rs.2,391.70 crores (March 31,2021 - Rs. 2,393.25 crores ).
As of March 31,2022 and March 31,2021 there are no material liability which is outstanding. Accordingly, no liquidity risk is perceived.
For the purpose of the Companyâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Companyâs capital management is to maximise the shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Companyâs policy for capital management aims to enhance capital efficiency by the long-term improvement of its value through business growth, while maintaining a sound financial structure. Indicators for monitoring the capital management include total equity attributable to owners of the parent and ROCE (ratio of Profit before taxes to total equity attributable to owners of the parent).
Reason for change more than 25%
Current Ratio - Increase in Current Ratio is due to higher current tax provision in the previous year as the Company had opted to settle earlier year tax demand under Direct Tax Vivad se Vishwas Act, 2020 which had been reduced in the current year due to tax remittance.
Trade Payable Turnover Ratio - The Ratio for the financial year ended March 31,2021 was lower than normal levels because of the Covid induced impacts on production of serials/movies/other programming during the most months of that financial year. The operations stabilized during the subsequent financial year ended March 31,2022, and the ratio has risen as expenses on content acquisitions have normalised at pre-pandemic levels.
Return on Investment - Quoted in active market - During the year ended March 31, 2022, the debt markets were extremely volatile which necessitated certain mark to market provisions. Further on account of the uncertainty, the Company decided to hold most of its investments in short term papers on which yields are much lower.
Note 43. The Company has no borrowings or charge created as at March 31,2022 and March 31,2021. In earlier years, the Company has registered "Satisfaction of Charges" with Registrar of Companies (ROC) in respect of 3 charges amounting to Rs.0.29 Crores; However these charges are appearing as "open" in MCA website due to non updation and the Company is following up with MCA for necessary corrections.
Note 44. Impact of COVID-19 on its financial statements
The outbreak of COVID -19 pandemic and consequent lock down has impacted the regular business operations of the Company in the initial quarter. The financial statements for the year ended March 31, 2022 are therefore not comparable with those for the earlier periods presented. The Company has assessed the impact of the pandemic on its financial statements / position based on the internal and external information, to the extent known and available up to the date of approval of these financial statements and based on the current estimates, the Company expects no further adjustments to the carrying amounts as at March 31,2022 of the investments, intangible assets, receivables and other financial assets. This assessment and the outcome of the pandemic as regards the aforesaid matters is highly dependent on the circumstances / developments, as they evolve in the subsequent periods.
Note 45. Approval of financial statements
The standalone financial statements were reviewed and recommended by the Audit Committee and has been approved by the Board of Directors at their meeting held on May 27, 2022.
Mar 31, 2021
Note 7.3.1- Investments in Bharat bonds - ETF
The Group holds 2,50,000 Bharat Bonds Exchange Traded Fund issued by Edelweiss Mutual Fund ("issuer"), having face value of Rs. 1000/- per bond. These bonds listed on the Stock Exchange, carry the highest credit rating of AAA. These bonds have a defined maturity period and will mature on April, 2023 and at maturity, Company will get back the investments along with return indicated. The return on this investment will be realized either by holding the debentures till maturity or upon the sale of the same to another investor before the debentures are redeemed by the issuer.
The Company has irrevocably designated the debentures to be subsequently measured at FVTPL, in order to eliminate measurement inconsistency.
Note 7.3.2 - Investment in Nippon India ETF Nifty SDL-2026 units issued by Nippon India Mutual Fund
During the current year, the Company invested in the long term 744,079 units of Nippon India ETF Nifty SDL- 2026 issued by Nippon India Mutual Fund ("issuer"), having face value of Rs.10/- per unit. These units are listed on the Stock Exchange and proceeds from the sale of these units would predominantly be utilized for investment into State Development Loans (SDLs) representing Nifty SDL Apr 2026 Top 20 Equal Weight Index. The units have a defined maturity period and will mature on 30th April, 2026. Upon maturity, the Company will get back the investments along with return indicated. The return on this investment will be realized either by holding the unit till maturity or upon the sale prior to the maturity.
During the current year, the Company invested in the long term 978,260 units of Nippon India ETF Nifty CPSE Bond Plus SDL - 2024 issued by Nippon India Mutual Fund ("issuer"), having face value of Rs.10/- per unit. These units are listed on the Stock Exchange and proceeds from the sale of these units would predominantly be utilized for investment into Central Public Sector Enterprises (CPSEs), Public Financial Institutions(PFIs) and State Development Loans (SDLs) of Top 5 States / union Territory representing Nifty CPSE Bond Plus SDL Sep 2024, 50:50 Index. The units have a defined maturity period and will mature on 30th September, 2024. Upon maturity, the Company will get back the investments along with return indicated. The return on this investment will be realized either by holding the unit till maturity or upon the sale prior to the maturity.
The Company holds 250 redeemable non-convertible debentures issued by Axis Finance Ltd ("issuer"), having face value of Rs. 10,00,000 /- debenture and the principal is protected at maturity. These debentures listed on the National Stock Exchange, carry the highest credit rating of AAA and will be redeemed on June 30, 2022 at a price being the last traded (closing) price of 6.45 Gsec 2049 as on 30th May 2022. The return on this investment will be realised either by holding the debentures till maturity or upon the sale of the same to another investor before the debentures are redeemed by the issuer.
The Company has irrevocably designated these debentures to be subsequently measured at FVTPL, in order to eliminate measurement inconsistency.
Fair value hierarchy disclosures for investment in Non Convertible debentures have been provided in Note 35.
(ii) Term / Rights attached to Equity Shares
The Company has one class of equity shares having a face value of Rs. 5.00 each. Each shareholder is eligible for one vote per share held. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
During the year ended March 31,2021 ,The Board of Directors have declared an interim dividend of Rs. 5.00 per share (100%) at their Board meeting held on February 8,2021. (March 31,2020: Rs. 25.00/-per share)
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.
Trade Receivables and Contract assets / liabilities
Trade receivable and Unbilled revenue : The Company classifies the right to consideration in exchange for deliverables as contract receivable / unbilled revenue.
A receivable is a right to consideration that is unconditional upon passage of time. Revenues in excess of billings is recorded as unbilled revenue and is classified as a financial asset. Trade receivable and unbilled revenues are presented net of impairment in Note 10 and Note 9.2 respectively.
Deferred income / unearned revenue : Billings in excess of revenue recognised are disclosed as âDeferred Revenuesâ under other current liabilities - Note 19; As against the opening balance of deferred revenue of Rs. 11.25 crores, revenue recognised during the year amounts to Rs. 10.66 crores;
â"Taxes relating to earlier years" represents income tax determined by the Income Tax Authorities based on the Company''s application under the Direct Tax Vivad se VishwasAct, 2020, in respect of pending income tax litigations pertaining to Financial years 2003-04 to 2016-17 amounting to Rs.236.66 crores and provision created on similar basis for the subsequent financial years 2017-18 to 2019-20 amounting to Rs.136.98 crores and recorded by the Company in the current financial year. This has been done inter alia to reduce pending income tax litigation in respect of the claims under Income Tax Act,1961 and de-risking the Companyâs financial position, notwithstanding the fact that the Companyâs position have consistently been upheld in the past by Appellate Authorities.
29.5. The average incremental borrowing rate applied to lease liabilities is 10.50%
29.6. Ind AS 116 resulted in an increase in cash inflows from operating activities and an increase in cash outflows from financing activities on account of lease payments.
Note 30. Employee benefit plansA) Defined Contribution plans
i) Contribution to Provident Fund : Contributions towards Employees Providend Fund made to the Regional / Employee Provident Fund are recognised as expenses in the year in which the services are rendered.
ii) Contribution to Employee State Insurance : Contributions to Employees State Insurance Scheme are recognised as expense in the year in which the services are rendered.
B) Defined benefit plan - Gratuity
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on cessation of employment at 15 days salary (last drawn salary) for each completed year of service. The fund has the form of a trust and it is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
The scheme is funded with an insurance company (LIC) in the form of a qualifying insurance policy.
The following tables summarize the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the Gratuity plan.
a. Matters wherein management has concluded that the Companyâs liability is probable has been provided for. Refer Note 38.
b. Contingent liability is disclosed in case of:
i) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation; and
ii) a present obligation arising from past events, when no reliable estimate is possible.
Contingent assets are disclosed where an inflow of economic benefits is probable. Provision, contingent liabilities, and contingent assets are reviewed at each Balance Sheet date.
c. Matters wherein management is confident of succeeding in these litigations and have concluded the liability to the Company to be remote.This is based on the relevant facts of judicial precedents and as advised by legal counsel which involves various legal proceedings and claims, in different stages of process, in relation to civil and criminal matters.
* During the Financial year, to inter alia reduce pending income tax litigation in respect of the claims under Income Tax Act, 1961, the Company had made necessary applications under the Direct Tax Vivad se VishwasAct, 2020 in respect of the Financial years 2003-04 to 2016-17. The same have been approved by the Income Tax Department based on which taxes demanded have been recorded in full as required and accounted for in the books of accounts as of March 31,2021 resulting in significant drop in disputed income taxes as at March 31,2021. Rs.204.02crores has also been since paid.
** The Company has received demand for differential customs duty aggregating to Rs. 0.50 crores on account of incorrect classification of certain assets imported during FY 2007-08. The Company has filed an appeal against the said demand, and based on its submissions at such appellate proceedings, management believes that the Companyâs claim is likely to be accepted by the authorities.
@ Further to enquiries by the customs authorities on customs duty exemptions availed by the Company in the previous year, the Company has received a formal show cause / demand notice containing a provisional demand of Rs. 63.13 crores. Then the Company has filed its responses to this notice and has also deposited a sum of Rs. 60.18 crores under protest pending final resolution of the matter. The Management has been advised by senior counsels that appropriate legal remedies are available to the Company in this matter and accordingly the company confident of recovering the duty paid.
***The Company received show cause cum demand notice from the Service tax department seeking service tax on certain services and disallowances of input credit availed on certain services. The Company has filed appeals for all such show cause notices /orders received with various authorities. The Company based on the judicial pronouncements and other submissions believes its position is likely to be accepted by the authorities.
The management assessed that the fair value of cash and cash equivalents, trade receivables, trade payables and other current and non current financial liabilities and financial assets approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The method and assumptions used to estimate the fair values is the fair values of financial instruments traded in active markets are based on quoted market prices at the balance sheet date.
There have been no transfers between Level 1 and Level 2 during the period.
Note 35.1 Description of valuation techniques used and key inputs to valuation on investment in tax free bonds:
The valuation for tax free bonds are based on valuations performed by an accredited independent valuer. The valuer is a specialist in valuing these types of Bonds. The valuation model used is in accordance with a method recommended by the International Valuation Standards.
The Company has disclosed fair value of the tax free bonds using IMaCS standard methodology which captures the market condition as on given day of valuation on T 1 basis.
The Company has no restrictions on the disposal of its tax free bonds.
Significant unobservable Inputs:
The Independent valuer has made detailed study based on standards methodoloy for scrip level valuation and have considered the available secondary market and primary market trades for valuation of bonds on reporting date. Outlier trades if any are identified and excluded. Widespread Polling is also considered with market participant to understand the movement in levels. In the case of liquid instruments, the valuation is arrived at based on the value bonds with similar maturity issued by similar issuers or securities are linked to a benchmark and a spread over benchmark is arrived at and the same is carried forward.
The Companyâs investment properties consists of office premises let out on lease.
As at March 31, 2021 and March 31, 2020, the fair values of the properties are Rs.67.28 crores and Rs.61.20 crores respectively.
These valuations are based on valuations performed by an accredited independent valuer. The valuer is a specialist in valuing these types of investment properties. The valuation model used is in accordance with a method recommended by the International Valuation Standards.
The Company has no restrictions on the disposal of its investment properties and no contractual obligations to purchase, construct or develop investment properties orfor repairs, maintenance and enhancements.
Significant unobservable Inputs
The independent valuer has made detailed study of prevailing market rate for the commercial buildings in the areas wherein the office premises property is being let out by the Company. This has been adjusted for amenities, depreciation and other leasehold improvements made by the Company to the respective properties.
Note 36. Financial risk management objectives and policies
The Company''s principal financial liabilities, include trade and other payables. The Company has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs senior management ensures that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency risk and other price risk, such as equity price risk. The value of financial instruments may change as a result of changes in the foreign currency exchange rates, equity price fluctuation, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy. Financial instrument affected by market risk includes investment in equity instruments etc.
The Company''s prime source of liquidity is cash and cash equivalents and the cash flow generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
As of March 31, 2021, the Company had a working capital of Rs.4,160.67 crores (March 31, 2020 - Rs.3,460.24 crores) including cash and cash equivalents of Rs.461.28 crores (March 31, 2020 - Rs.402.48 crores) and current investment of Rs.2,393.25 crores (March 31,2020 - Rs. 1,957.95 crores).
As of March 31,2021 and March 31,2020 there are no material liability which is outstanding. Accordingly, no liquidity risk is perceived.
For the purpose of the Companyâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Companyâs capital management is to maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Companyâs policy for capital management aims to enhance capital efficiency by the long-term improvement of its value through business growth, while maintaining a sound financial structure. Indicators for monitoring the capital management include total equity attributable to owners of the parent and ROE (ratio of Profit before taxes to total equity attributable to owners of the parent).
Note 39. Impact of COVID-19 on its financial statements
The outbreak of CO VID -19 pandemic and consequent lockdown has impacted the regular business operations of the Company. The financial statements for the year ended March 31,2021 are therefore not comparable with those for the earlier periods presented. The Company has assessed the impact of the pandemic on its financial statements / position based on the internal and external information, to the extent known and available up to the date of approval of these financial statements and based on the current estimates, the Company expects no further adjustments to the carrying amounts as at March 31,2021 of the investments, intangible assets, receivables and other financial assets. This assessment and the outcome of the pandemic as regards the aforesaid matters is highly dependent on the circumstances / developments, as they evolve in the subsequent periods.
Note 40. Approval of financial statements
The financial statements were reviewed and recommended by the Audit Committee and has been approved by the Board of Directors at their meeting held on June 11,2021.
Mar 31, 2019
NOTES TO THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2019
(All amounts are in crores of Indian Rupees, unless otherwise stated)
Note 28. Earnings Per Share (EPS)
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.
The followinq reflects the income and share data used in the basic and diluted EPS computations:
Year Ended |
||
March 31, 2019 |
March 31, 2018 |
|
Profit after tax (Rs. in crores) |
1,394.86 |
1,093.04 |
Weighted average number of shares |
||
- Basic |
39,40,84,620 |
39,40,84,620 |
- Diluted |
39,40,84,620 |
39,40,84,620 |
Earning per share of Rs. 5.00 each |
||
- Basic |
35.39 |
27.74 |
- Diluted |
35.39 |
27.74 |
Note 29. Operating lease disclosures Company as a lessee -
a) Lease commitment for transponders
The Company has entered into operating leases on KU band Satellite transponders on non cancellable operating lease, with lease terms between 1 and 5 years.
The Company has paid Rs.22.21 crores (March 31, 2018: Rs.22.42 crores) during the year towards minimum lease payment.
The Operating lease agreements, are renewable on a periodic basis and can be extended upto a maximum of 5 years from their respective dates of inception. There are no price escalation clause in the agreement.
Future minimum rentals payable under non-cancellable operating leases as at March 31, 2019 are as follows:
Year Ended |
|
|
March 31, 2019 |
March 31, 2018 |
|
Within one year |
22.11 |
17.33 |
After one year but not more than five years |
23.11 |
39.00 |
More than five years |
- |
- |
45.22 |
56.33 |
b) Other operating lease commitments
The Company has entered into operating lease arrangements for office premises. The leases are non-cancellable / lock in period for a period of 2 to 3 years and after which it may be renewed / cancellable based on the mutual agreement of the parties.
The Company has paid Rs.1.54 crores (March 31, 2018: Rs.0.84 crores) during the year towards minimum lease payment.
Future minimum rentals payable under non-cancellable operating leases as at March 31, 2019 are as follows:
Year Ended |
||
March 31, 2019 |
March 31, 2018 |
|
Within one year |
0.85 |
1.03 |
After one year but not more than five years |
0.71 |
0.22 |
More than five years |
- |
- |
1.56 |
1.25 |
|
Lease rentals paid during the year in respect of cancellable operating lea |
6.35 |
6.69 |
Note 30. Employee benefit plans - Gratuity
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on cessation of employment at 15 days salary (last drawn salary) for each completed year of service. The fund has the form of a trust and it is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
The scheme is funded with an insurance company (LIC) in the form of a qualifying insurance policy.
The following tables summarize the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the Gratuity plan.
Statement of Profit and Loss
Particulars |
Year ended March 31, 2019 |
Year ended March 31, 2018 |
Recognized in profit or loss: |
||
Current service cost |
2.08 |
2.05 |
Net Interest income on benefit obligation / assets |
0.08 |
(0.12) |
Recognized in other comprehensive income: |
||
Remeasurement gains / (losses) in other comprehensive income |
||
arising from changes in demographic assumptions |
0.06 |
0.28 |
Remeasurement gains / (losses) in other comprehensive income arising from changes in financial assumptions |
0.04 |
(0.77) |
Experience adjustments |
0.68 |
1.00 |
Return on Plan Assets (greater) / less than Discount rate |
0.05 |
0.10 |
Recognized in other comprehensive income |
0.83 |
0.61 |
Net benefit expense |
2.16 |
1.93 |
Particulars |
As at March 31, 2019 |
As at March 31, 2018 |
Defined benefit obligation |
15.91 |
13.16 |
Fair value of plan assets |
13.43 |
12.07 |
Plan Liability / (Asset) |
2.48 |
1.09 |
Changes in the present value of the defined benefit obligation are as follows:
Particulars |
As at March 31, 2019 |
As at March 31, 2018 |
Opening defined benefit obligation |
13.16 |
11.93 |
Current service cost |
2.08 |
2.05 |
Interest cost |
0.95 |
0.82 |
Remeasurement gains / (losses) on obligation |
0.78 |
0.50 |
Benefits paid |
(1.06) |
(2.14) |
Closing defined benefit obligation |
15.91 |
13.16 |
Changes in the fair value of plan assets are as follows:
Particulars |
As at March 31, 2019 |
As at March 31, 2018 |
Fair value of planned assets at the beginning of the year |
12.07 |
11.42 |
Expected return on plan assets |
0.93 |
0.94 |
Contributions |
1.59 |
1.96 |
Benefits paid |
(1.13) |
(2.14) |
Remeasurement gains / (losses) on plan assets |
(0.03) |
(0.11) |
Fair value of plan assets at the end of the year |
13.43 |
12.07 |
The principal actuarial assumptions used in determining gratuity obligation for the company''s plans are shown below:
Particulars |
As at March 31, 2019 |
As at March 31, 2018 |
Discount rate |
7.52% |
7.55% |
Expected rate of return on assets |
7.52% |
8.25% |
Employee turnover |
9.32% |
10.00% |
Mortality rates |
Indian Assured |
Indian Assured |
Lives Mortality (2006-08) |
Lives Mortality (2006-08) |
The overall expected rate of return on assets is determined based on market prices prevailing on that date, applicable to the period over which the obligation is to be settled. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Based on the experience of the previous years, the Company expects to contribute about Rs. 2.16 crores to the gratuity fund in the next year. However, the actual contribution by the Company will be based on the actuarial valuation report received from the insurance company.
The major categories of plan assets of the fair value of the total plan assets are as follows:
Investments details: Funds with LIC Total |
Gratuity plan |
|
March 31, 2019 |
March 31, 2018 |
|
13.43 |
12.07 |
|
13.43 |
12.07 |
The Company contributes all ascertained liabilities towards gratuity to the Sun TV Network Ltd Employees Group Gratuity Trust and the Trustees also administer the said contributions so made to the trust. As of March 31, 2019 and March 31, 2018 the plan assets have been primarily invested in insurer managed funds.
A quantitative sensitivity analysis for significant assumption as at March 31, 2019 is as shown below:
Gratuity plan: Assumptions |
||||
March 31, 2019 |
||||
Discount rate |
Future salary increases |
|||
Sensitivity Level Impact on defined benefit obligation |
1% increase 1% decrease |
1% increase |
1 % decrease |
|
(1.14) |
1.29 |
1.14 |
(1.04) |
A quantitative sensitivity analysis for significant assumption as at March 31, 2018 is as shown below:
March 31, 2018 |
||||
Assumptions |
Discount rate |
Future salary increases |
||
Sensitivity Level |
1% increase |
1 % decrease |
1% increase |
1 % decrease |
Impact on defined benefit obligation |
(0.78) |
0.87 |
0.74 |
(0.68) |
The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
Maturity profile of defined benefit obligation: |
||
March 31, 2019 |
March 31, 2018 |
|
Expected contribution to the plan for the next annual reporting period |
2.16 |
2.04 |
1 to 5 Years |
6.06 |
6.12 |
6 to 10 Years |
3.80 |
3.35 |
Total expected payments |
12.02 |
11.51 |
The average duration of the defined benefit plan obligation at the end of the reporting period is 7.98 years (March 31, 2018 : 6.85 years).
Note 31. Contingencies A) Contingent Liabilities
a. Matters wherein management has concluded that the Company''s liability is probable has been provided for. Refer Note 38.
b. Contingent liability is disclosed in case of:
i) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation; and
ii) a present obligation arising from past events, when no reliable estimate is possible.
Contingent assets are disclosed where an inflow of economic benefits is probable. Provision, contingent liabilities, and contingent assets are reviewed at each Balance Sheet date.
c. Matters wherein management is confident of succeeding in these litigations and have concluded the liability to the Company to be remote. This is based on the relevant facts of judicial precedents and as advised by legal counsel which involves various legal proceedings and claims, in different stages of process, in relation to civil and criminal matters.
Disputed taxes not provided for in respect of: |
March 31, 2019 |
March 31, 2018 |
a) Claims related to Income Tax* |
736.32 |
542.43 |
b) Claims related to Custom duty**@ |
63.63 |
63.63 |
c) Claims related to Service Tax*** |
25.46 |
25.66 |
Total |
825.41 |
631.72 |
*The Company received demands of income tax disallowing the manner of allowance claimed by the Company for certain expenses. The Company''s appeal in respect of various years has been allowed by both the first and the second appellate authorities in the previous years. Accordingly, management believes that based on the favourable judgment as well as relying on judicial pronouncements and other arguments, its position is likely to be accepted by the concerned authorities.
** The Company has received demand for differential customs duty aggregating to Rs. 0.50 crores on account of incorrect classification of certain assets imported during FY 2007-08. The Company has filed an appeal against the said demand, and based on its submissions at such appellate proceedings, management believes that the Company''s claim is likely to be accepted by the authorities.
@ Further to enquiries by the customs authorities on customs duty exemptions availed by the Company in the previous year, the Company has received a formal show cause / demand notice containing a provisional demand of Rs. 63.13 crores. Then the Company has filed its responses to this notice and has also deposited a sum of Rs. 60.18 crores under protest pending final resolution of the matter. The Management has been advised by senior counsels that appropriate legal remedies are available to the Company in this matter and accordingly the company confident of recovering the duty paid.
***The Company received show cause cum demand notice from the Service tax department seeking service tax on certain services and disallowances of input credit availed on certain services. The Company has filed appeals for all such show cause notices / orders received with various authorities. The Company based on the judicial pronouncements and other submissions believes its position is likely to be accepted by the authorities.
B) Commitments for capital contracts
Particulars |
March 31, 2019 |
March 31, 2018 |
a) Estimated amount of contracts remaining to be executed on capital expenditure and not provided for |
||
Outstanding commitments on capital contracts |
0.31 |
0.63 |
Commitments for acquisition of film and program broadcasting rights |
231.29 |
272.68 |
Note 32 Related party transactions Names of the related parties
Individual owning an interest in voting power of the Company that gives them control
Mr. Kalanithi Maran
Enterprises in which Key Management Personnel or their relatives have significant influence
Kal Comm Private Limited |
Sun Foundation |
Kal Cables Private Limited |
Murasoli Maran Family Trust |
Sun Direct TV Private Limited |
Kal Media Services Private Limited |
Udaya FM Private Limited |
Kal Airways Private Limited |
Sun Distribution Services Private Limited |
Network Cable Solutions Private Limited |
Sun Business Solutions Private Limited |
Gemini TV Distribution Services Private Limited |
Kal Publications Private Limited |
|
Subsidiary Company |
|
Kal Radio Limited |
|
Joint Venture / Associates of the Joint Venture |
|
South Asia FM Limited |
Digital Radio (Mumbai) Broadcasting Limited |
Asia Radio Broadcast Private Limited |
Pioneer Radio Training Services Private Limited |
Digital Radio (Kolkata) Broadcasting Limited |
Digital Radio (Delhi) Broadcasting Limited |
Optimum Media Services Private Limited |
South Asia Multimedia Private Limited |
Deccan Digital Networks (Hyderabad) Private Limited |
AV Digital Networks (Hyderabad) Private Limited |
Metro Digital Networks (Hyderabad) Private Limited |
Key Management Personnel
Mr. Kalanithi Maran - Executive Chairman
Mr. K. Vijaykumar - Managing Director and Chief Executive Officer (upto March 31, 2019)
Mr. R. Mahesh Kumar- President (Managing Director with effect from April 1, 2019)
Mrs. Kavery Kalanithi - Executive Director
Mr. V.C. Unnikrishnan - Chief Financial Officer
Mr. R. Ravi - Company Secretary
Directors
Mr. S. Selvam - Non Executive Director
Mr. J. Ravindran - Independent Director
Mr. M.K. Harinarayanan - Independent Director
Mr. Nicholas Martin Paul - Independent Director
Mr. R. Ravivenkatesh - Independent Director
Relatives of Key Management Personnel
Mrs. Mallika Maran
Ms. Kaviya Kalanithi Maran (Executive Director with effect from April 1, 2019)
Terms & Conditions of Transactions with Related Party
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. For the year ended March 31, 2019, the company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2018: INR Nil).
Transactions and balances with related parties |
||||||
Particulars |
Enterprises in which Key Management Personnel or their relatives have significant influence |
Subsidiary/ Joint Ventures / Associates of the Joint Venture |
Key Managerial Personnel / Relatives of Key Managerial Personnel / Directors |
|||
31.03.2019 |
31.03.2018 |
31.03.2019 |
31.03.2018 |
31.03.2019 |
31.03.2018 |
|
Income: |
||||||
Subscription Income |
||||||
Sun Distribution Services Private Limited |
155.55 |
240.28 |
- |
- |
- |
- |
Sun Direct TV Private Limited |
278.39 |
232.84 |
- |
- |
- |
- |
Kal Media Services Private Limited |
135.55 |
82.43 |
- |
- |
- |
- |
Gemini TV Distribution Services Private Limited |
59.73 |
- |
- |
- |
- |
- |
Advertising Income |
||||||
Kal Publications Private Limited |
0.30 |
0.35 |
- |
- |
- |
- |
Income from IPL |
||||||
Sun Direct TV Private Limited |
- |
3.00 |
- |
- |
- |
- |
Digital Radio (Delhi) Broadcasting Limited |
- |
- |
3.55 |
3.00 |
- |
- |
Digital Radio (Mumbai) Broadcasting Limited |
- |
- |
2.43 |
2.00 |
- |
- |
Kal Radio Limited |
- |
- |
- |
2.00 |
- |
- |
Digital Radio (Kolkata) Broadcasting Limited |
- |
- |
2.21 |
2.00 |
- |
- |
Income from Movie distribution |
||||||
Sun Business Solutions Private Limited |
51.06 |
- |
- |
- |
- |
- |
Finance Income |
||||||
Sun Direct TV Private Limited |
9.98 |
7.92 |
- |
- |
- |
- |
Rental and Business Support Income |
||||||
Kal Radio Limited |
- |
- |
0.77 |
0.68 |
- |
- |
South Asia FM Limited |
- |
- |
0.30 |
0.26 |
- |
- |
Sun Direct TV Private Limited |
1.89 |
1.81 |
- |
- |
- |
- |
Kal Publications Private Limited |
1.36 |
1.30 |
- |
- |
- |
- |
Others |
0.91 |
0.96 |
- |
- |
- |
- |
Movie Content Income |
||||||
Sun Direct TV Private Limited |
4.43 |
9.34 |
- |
- |
- |
- |
Program production expenses |
||||||
Kal Publications Private Limited |
4.38 |
4.39 |
- |
- |
- |
- |
Pay channel service charges |
||||||
Sun Distribution Services Private Limited |
51.34 |
20.73 |
- |
- |
- |
- |
Kal Media Service Private Limited |
- |
5.71 |
- |
- |
- |
- |
Legal and Professional Fees |
||||||
Mrs. Mallika Maran |
- |
- |
- |
- |
0.02 |
0.02 |
Rent Expense |
||||||
Kal Publications Private Limited |
2.90 |
2.79 |
- |
- |
- |
- |
Expenditure on Corporate Social Responsibility |
||||||
Sun Foundation |
16.66 |
11.26 |
- |
- |
- |
- |
Selling Expenses |
||||||
Kal Publications Private Limited |
0.07 |
0.02 |
- |
- |
- |
- |
Sun Business Solutions Private Limited |
0.51 |
- |
- |
- |
- |
- |
Sun Direct TV Private Limited |
1.41 |
- |
- |
- |
- |
- |
Remuneration paid (including ex-gratia/bonus) |
||||||
Salary - Mr. Kalanithi Maran |
- |
- |
- |
- |
13.87 |
13.83 |
Salary - Mrs. Kavery Kalanithi |
- |
- |
- |
- |
13.87 |
13.83 |
Salary - Mr. K Vijaykumar |
- |
- |
- |
- |
0.96 |
0.95 |
Salary - Mr. V.C. Unnikrishnan |
- |
- |
- |
- |
1.02 |
0.90 |
Salary - Mr. R Ravi |
- |
- |
- |
- |
0.26 |
0.23 |
Salary - Ms. Kaviya Kalanithi Maran |
- |
- |
- |
- |
0.28 |
0.28 |
Salary - Mr. R. Mahesh Kumar |
- |
- |
- |
- |
2.06 |
1.61 |
Ex-gratia / Bonus- Mr. Kalanithi Maran |
- |
- |
- |
- |
73.63 |
73.67 |
Ex-gratia / Bonus- Mrs. Kavery Kalanithi |
- |
- |
- |
- |
73.63 |
73.67 |
Ex-gratia / Bonus- Mr. K. Vijaykumar |
0.33 |
0.26 |
||||
Sitting Fees Paid to Directors |
||||||
Mr. S. Selvam |
- |
- |
- |
- |
0.01 |
0.01 |
Mr. J. Ravindran |
- |
- |
- |
- |
0.03 |
0.03 |
Mr. M.K. Harinarayanan Mr. Nicholas Martin Paul |
- |
- |
- |
- |
0.04 0.05 |
0.03 0.03 |
Mr. R.Ravivenkatesh |
- |
- |
- |
- |
0.04 |
0.03 |
Dividends Paid |
||||||
Mr. Kalanithi Maran |
- |
- |
- |
- |
369.46 |
295.56 |
Reimbursement/(Recovery) of Cost of shared services (Net) |
||||||
Kal Publications Private Limited |
0.26 |
0.22 |
- |
- |
- |
- |
Balances Outstanding: Accounts Receivable |
||||||
Sun Direct TV Private Limited |
174.48 |
151.32 |
- |
- |
- |
- |
Sun Distribution Services Private limited |
43.74 |
76.40 |
- |
- |
- |
- |
Kal Media Services Private Limited |
64.97 |
41.65 |
- |
- |
- |
- |
Gemini TV Distribution Services Private Limited |
35.68 |
- |
- |
- |
- |
- |
Sun Business Solutions Private Limited |
3.97 |
- |
- |
- |
- |
- |
Kal Publications Private Limited |
0.05 |
- |
- |
- |
- |
- |
Other Receivables |
||||||
Kal Publications Private Limited |
0.38 |
0.56 |
- |
- |
- |
- |
Sun Direct TV Private Limited |
0.32 |
2.50 |
- |
- |
- |
- |
Kal Radio Limited |
- |
- |
0.08 |
0.07 |
- |
- |
South Asia FM Limited |
- |
- |
0.05 |
0.03 |
- |
- |
Digital Radio (Delhi) Broadcasting Limited Others |
0.08 |
0.08 |
- |
0.05 |
- |
- |
Rental and other deposits |
||||||
Kal Publications Private Limited |
0.06 |
0.06 |
- |
- |
- |
- |
Security Deposit received |
||||||
Kal Radio Limited |
- |
- |
0.00 |
0.00 |
- |
- |
Kal Publications Private Limited |
0.01 |
0.01 |
- |
- |
- |
- |
Accounts Payable / Other Current Liabilities Sun Distribution Services Private Limited |
30.24 |
4.21 |
||||
Kal Publications Private Limited |
0.80 |
0.68 |
- |
- |
- |
- |
Kal Media Service Private Limited |
- |
1.13 |
- |
- |
- |
- |
Kal Radio Limited |
- |
- |
0.08 |
0.09 |
- |
- |
Sun Direct TV Private Limited |
1.63 |
- |
- |
- |
- |
- |
Remuneration / Ex-gratia / Bonus Payable |
||||||
Mr. Kalanithi Maran |
- |
- |
- |
- |
74.78 |
74.83 |
Mrs. Kavery Kalanithi Mr. K Vijaykumar Ms.Kaviya Kalanithi Maran Mr. R. Mahesh Kumar |
- |
- |
- |
- |
74.78 0.33 0.02 0.35 |
74.83 0.29 0.02 0.34 |
Mr. V.C. Unnikrishnan |
- |
- |
- |
- |
0.21 |
0.20 |
Mr. R Ravi |
0.05 |
0.04 |
Note: As the liabilities for gratuity and leave encashment are provided on actuarial basis for the Company as a whole, the amounts pertaining to the Directors are not included above.
NOTES TO THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2019
(All amounts are in crores of Indian Rupees, unless otherwise stated)
Note 33. Segment information
Based on the internal reporting provided to the chief operating decision maker, Media and Entertainment is the only operating segment for the company.
Geographic information |
Year ended |
|
Revenue from customers |
March 31, 2019 |
March 31, 2018 |
India |
3,446.32 |
2,691.27 |
Outside India |
216.95 |
171.18 |
Total revenues per statement of profit or loss |
3,663.27 |
2,862.45 |
There are no sales to external customers more than 10% of the total revenue.
As at |
||
Non-current operating assets |
March 31, 2019 |
March 31, 2018 |
India |
1,153.51 |
1,267.80 |
Rest of the world |
- |
- |
Total |
1,153.51 |
1,267.80 |
Non-current assets for this purpose consist of property, plant and equipment, investment properties, intangible assets, capital work in progress and other non current assets (other than financial instruments).
Note 34. Fair values
Set out below, is a comparison by class of the carrying amounts and fair value of the Company''s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:
Carrying value |
Fair value |
|||
March 31, 2019 |
March 31, 2018 |
March 31, 2019 |
March 31, 2018 |
|
Financial assets (Non Current & Current) |
||||
Other investments (Tax free bonds) |
240.09 |
193.41 |
238.92 |
194.85 |
Investments in Non Convertible debentures |
res 25.41 |
- |
25.41 |
- |
Investment in Mutual funds and quoted |
||||
equity shares |
2,071.44 |
1,505.10 |
2,071.44 |
1,505.10 |
2,336.94 |
1,698.51 |
2,335.77 |
1,699.95 |
The management assessed that the fair value of cash and cash equivalents, trade receivables, trade payables, and other current and non current financial liabilities and financial assets approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The method and assumptions used to estimate the fair values is the fair values of financial instruments traded in active markets are based on quoted market prices at the balance sheet date.
Note 35. Fair value hierarchy
The following table provides the fair value measurement hierarchy of the Company''s assets and liabilities:
Quantitative disclosures fair value measurement hierarchy for assets as at March 31, 2019:
Fair Value Measurement using |
|||||
Particulars |
Date of Valuation |
Total |
Quoted Price in active markets (Level 1) |
Significant observable inputs (Level 2) |
Significant unobservable inputs (Level 3) |
Asset measured at fairvalue: FVTPL financial investments: |
|||||
Quoted Equity Shares |
March 31, 2019 |
14.99 |
14.99 |
- |
- |
Investment in Non Convertible debentures |
March 31, 2019 |
25.41 |
25.41 |
- |
- |
Unquoted Mutual Funds |
March 31, 2019 |
2,056.45 |
2,056.45 |
- |
- |
Assets for which fair values are disclosed: Tax free bonds (unquoted) (Refer Note 35.1 ) |
March 31, 2019 |
238.92 |
238.92 |
||
Investment Properties (Refer Note 35.2) |
March 31, 2019 |
70.39 |
- |
70.39 |
- |
There have been no transfers between Level 1 and Level 2 during the period.
Quantitative disclosures fair value measurement hierarchy for assets as at March 31, 2018:
Fair Value Measurement using |
|||||
Particulars |
Date of Valuation |
Total |
Quoted Price in active markets (Level 1) |
Significant observable inputs (Level 2) |
Significant Unobservable inputs (Level 3) |
Asset measured at fairvalue: FVTPL financial investments: |
|||||
Quoted Equity Shares |
March 31, 2018 |
11.48 |
11.48 |
- |
- |
Unquoted Mutual Funds |
March 31, 2018 |
1,493.62 |
1,493.62 |
- |
- |
Assets for which fair values are disclosed: |
|||||
Tax free bond (unquoted) (Refer Note 35.1 ) |
March 31, 2018 |
194.85 |
- |
194.85 |
- |
Investment Properties (Refer Note 35.2) |
March 31, 2018 |
69.22 |
- |
69.22 |
- |
There have been no transfers between Level 1 and Level 2 during the period.
Note 35.1 Description of valuation techniques used and key inputs to valuation on investment in tax free bonds:
The valuation for tax free bonds are based on valuations performed by an accredited independent valuer. The valuer is a specialist in valuing these types of Bonds. The valuation model used is in accordance with a method recommended by the International Valuation Standards.
The Company has disclosed fair value of the tax free bonds using IMaCS standard methodology which captures the market condition as on given day of valuation on T 1 basis.
The Company has no restrictions on the disposal of its tax free bonds. Significant unobservable Inputs:
The Independent valuer has made detailed study based on standards methodoloy for scrip level valuation and have considered the available secondary market and primary market trades for valuation of bonds on reporting date. Outlier trades if any are identified and excluded. Widespread Polling is also considered with market participant to understand the movement in levels. In the case of liquid instruments, the valuation is arrived at based on the value bonds with similar maturity issued by similar issuers or securities are linked to a benchmark and a spread over benchmark is arrived at and the same is carried forward.
Note 35.2 Fair value disclosure on Investment properties:
The Company''s investment properties consists of office premises let out on lease. As at March 31, 2019 and March 31, 2018, the fair values of the properties are Rs. 70.39 crores and Rs. 69.22 crores respectively. These valuations are based on valuations performed by an accredited independent valuer. The valuer is a specialist in valuing these types of investment properties. The valuation model used is in accordance with a method recommended by the International Valuation Standards. The Company has no restrictions on the disposal of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements.
Reconciliation of fairvalue: |
|
Particulars |
Amount |
Opening balance as at April 1, 2017 |
75.75 |
Fair value difference |
(6.64) |
Additions |
0.11 |
Opening balance as at April 1, 2018 |
69.22 |
Fair value difference |
1.17 |
Additions |
- |
Closing balance as at March 31, 2019 |
70.39 |
Description of valuation techniques used and key inputs to valuation on investment properties:
The Company has fair valued the office premises property let out on lease using Market approach method.
Significant unobservable Inputs
The independent valuer has made detailed study of prevailing market rate for the commercial buildings in the areas wherein the office premises property is being let out by the Company. This has been adjusted for amenities, depreciation and other leasehold improvements made by the Company to the respective properties.
Note 36. Financial risk management objectives and policies
The Company''s principal financial liabilities, include trade and other payables. The Company has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management ensures that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Market Risk
Market risk is the risk that the fairvalue of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency risk and other price risk, such as equity price risk. The value of financial instruments may change as a result of changes in the foreign currency exchange rates, equity price fluctuation, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy. Financial instrument affected by market risk includes investment in equity instruments etc.
Foreign currency risk
Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities. As per the Forex policy, the Company, takes forward contract for transactions where the foreign currency risk on account of movement in exchange rate expected to be high and which is material to the Company. The impact of foreign exchange rate fluctuations is evaluated by assessing its exposure to exchange rates risks. Exposure to foreign exchange fluctuation risks is with monetary receivables / payables denominated in USD, AUD, CAD and GBP.
March 31, 2019 |
March 31, 2018 |
||||
Particulars
|
Foreign Currency
Mar 31, 2018
1. Corporate information Sun TV Network Limited (''Sun TV'' or ''the Company'') was incorporated on December 18, 1985 as Sumangali Publications Private Limited. The Company is engaged in producing and broadcasting satellite television and radio software programming in the regional languages of South India. The Company is listed on the Bombay Stock Exchange (''BSEâ) and the National Stock Exchange (''NSEâ) in India. The Company has its registered office at Murasoli Maran Towers, 73, MRC Nagar Main Road, MRC Nagar, Chennai - 600 028. The Company currently operates television channels in four South Indian languages predominantly to viewers in India, and also to viewers in Sri Lanka, Singapore, Malaysia, United Kingdom, Europe, Middle East, United States, Australia, South Africa and Canada. The Company''s flagship channel is Sun TV. The other major satellite channels of the Company are Surya TV, Gemini TV and Udaya TV. The Company is also into the business of FM Radio broadcasting at Chennai, Coimbatore and Tirunelveli. The Company also has the license to operate an Indian Premier League (âIPLâ) franchise âSun Risers Hyderabadâ. During the current year, the Company has also launched OTT platform â SUNNXTâ. These standalone financial statements are approved for issue by the Companyâs Board of Directors on May 11, 2018. As at March 31, 2018 and March 31, 2017, the fair values of the properties are Rs. 69.22 crores and Rs. 75.75 crores respectively. These valuations are based on valuations performed by an accredited independent valuer. The valuer is a specialist in valuing these types of investment properties. The valuation model used is in accordance with a method recommended by the International Valuation Standards. The Company has no restrictions on the disposal of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements Description of valuation techniques used and key inputs to valuation on investment properties: The Company has fair valued the office premises property let out on lease using Market approach method. Significant unobservable Inputs The independent valuer has made detailed study of prevailing market rate for the commercial buildings in the areas wherein the office premises property is being let out by the Company. This has been adjusted for amenities, depreciation and other leasehold improvements made by the Company to the respective properties. Fair value hierarchy disclosures for investment in tax free bonds have been provided in Note 35, other notes relating to fair value disclosure are given below. The Companies investment in tax free bonds primarily consists of bonds issued by the Government Companies. The valuation for tax free bonds are based on valuations performed by an accredited independent valuer. The valuer is a specialist in valuing these types of Bonds. The valuation model used is in accordance with a method recommended by the International Valuation Standards. The Company has no restrictions on the disposal of its tax free bonds. Description of valuation techniques used and key inputs to valuation on investment in tax free bonds: The Company has disclosed fair value of the tax free bonds using IMaCS standard methodology which captures the market condition as on given day of valuation on T 1 basis. Significant unobservable Inputs: The Independent valuer has made detailed study based on standards methodoloy for scrip level valuation and have considered the available secondary market and primary market trades for valuation of bonds on reporting date. Outlier trades if any are identified and excluded. Widespread Polling is also considered with market participant to understand the movement in levels. In the case of liquid instruments, the valuation is arrived at based on the value bonds with similar maturity issued by similar issuers or securities are linked to a benchmark and a spread over benchmark is arrived at and the same is carried foward. Trade receivables are non-interest bearing and are generally on terms of 60 to 90 days Trade receivable consists of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of the accounts receivable. Refer note given under impairment of financial assets - 2(r ) - Financial instruments for ECL model adopted by the Company. (ii) Term/Rights attached to Equity Shares The Company has one class of equity shares having a face value of Rs. 5.00 each. Each shareholder is eligible for one vote per share held. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. During the year ended March 31, 2018,The Board of Directors have declared an interim dividend of Rs. 2.50 per share (50%) each at their Board meetings held on August 11, 2017, November 10, 2017, February 9, 2018 and March 12, 2018 respectively. (March 31, 2017: Rs.10.00 /- share) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders. There is no overdue amount payable to Micro and Small Enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006 as at or during the year ended March 31, 2018 & 2017. Accordingly, no interest has been paid / payable to any Micro and Small Enterprises during the current and previous year. Terms and conditions of the above financial liabilities: Trade payables are non interest bearing and are normally settled within due dates For terms and conditions with related parties, refer to Note 32 Government grants have been received for import of plant and equipment in the nature of export promotion scheme. There are no unfulfilled conditions or contingencies attached to these grants. Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares. Note 2. Operating lease disclosures Company as a lessee â a) Lease commitment for transponders The Company has entered into operating leases on KU band Satellite transponders on non cancellable operating lease, with lease terms between 1 and 5 years. The Company has paid Rs.22.42 crores (March 31, 2017: Rs.23.14 crores) during the year towards minimum lease payment. The Operating lease agreements, are renewable on a periodic basis and can be extended upto a maximum of 5 years from their respective dates of inception. There are no price escalation clause in the agreement. b) Other operating lease commitments The Company has entered into operating lease arrangements for office premises. The leases are non-cancellable / lock in period for a period of 2 to 3 years and after which it may be renewed / cancellable based on the mutual agreement of the parties. The Company has paid Rs.0.84 crores (March 31, 2017: Rs.0.51 crores) during the year towards minimum lease payment. Future minimum rentals payable under non-cancellable operating leases as at March 31, 2018 are, as follows: Note 3. Employee benefit plans - Gratuity The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on cessation of employment at 15 days salary (last drawn salary) for each completed year of service. The fund has the form of a trust and it is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise. The scheme is funded with an insurance company (LIC) in the form of a qualifying insurance policy. The following tables summarize the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the Gratuity plan. The overall expected rate of return on assets is determined based on market prices prevailing on that date, applicable to the period over which the obligation is to be settled. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Based on the experience of the previous years, the Company expects to contribute about Rs. 2.00 crores to the gratuity fund in the next year. However, the actual contribution by the Company will be based on the actuarial valuation report received from the insurance company. The Company contributes all ascertained liabilities towards gratuity to the Sun TV Network Ltd Employees Group Gratuity Trust and the Trustees also administer the said contributions so made to the trust. As of March 31, 2018 and March 31, 2017 the plan assets have been primarily invested in insurer managed funds. The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. Note 4. Contingencies A) Contingent Liabilities a. Matters wherein management has concluded that the Companyâs liability is probable has been provided for Refer Note 38. b. Contingent liability is disclosed in case of: i) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation; and ii) a present obligation arising from past events, when no reliable estimate is possible. Contingent assets are disclosed where an inflow of economic benefits is probable. Provision, contingent liabilities, and contingent assets are reviewed at each Balance Sheet date. c. Matters wherein management is confident of succeeding in these litigations and have concluded the liability to the Company to be remote. This is based on the relevant facts of judicial precedents and as advised by legal counsel which involves various legal proceedings and claims, in different stages of process, in relation to civil and criminal matters. *The Company received demands of income tax disallowing the manner of allowance claimed by the Company for certain expenses. The Companyâs appeal in respect of various years has been allowed by both the first and the second appellate authorities in the previous years. Accordingly, management believes that based on the favourable judgment as well as relying on judicial pronouncements and other arguments, its position is likely to be accepted by the concerned authorities. ** The Company has received demand for differential customs duty aggregating to Rs. 0.50 crores on account of incorrect classification of certain assets imported during FY 2007-08. The Company has filed an appeal against the said demand, and based on its submissions at such appellate proceedings, management believes that the Companyâs claim is likely to be accepted by the authorities. @ Further to enquiries by the customs authorities on customs duty exemptions availed by the Company in the previous year, the Company has received a formal show cause / demand notice containing a provisional demand of Rs. 63.13 crores. Then the Company has filed its responses to this notice and has also deposited a sum of Rs. 60.18 crores under protest pending final resolution of the matter. The Management has been advised by senior counsels that appropriate legal remedies are available to the Company in this matter and accordingly the company confident of recovering the duty paid. ***The Company received show cause cum demand notice from the Service tax department seeking service tax on certain services and disallowances of input credit availed on certain services. The Company has filed appeals for all such show cause notices /orders received with various authorities. The Company based on the judicial pronouncements and other submissions believes its position is likely to be accepted by the authorities. C) Commitments for other contracts i) Royalty Payable to Ministry of Information and Broadcasting (âMIBâ) The Company has obtained licenses to permit them to carry FM operations in Chennai, Coimbatore and Tirunelveli. The Company is required to pay royalty of 4% of gross revenue earned from these FM Operations during the financial year or 2.5 % of One Time Entry Fees paid, whichever is higher to Ministry of Information and Broadcasting. ii) Franchise rights commitments From the 2018 I PL season, the Company is required to pay BCCI, license fees at 20% on the income earned by the franchisee for the relevant IPL Season. Note 5 Related party transactions Names of related parties Individual owning an interest in voting power of the Company that gives them control Mr. Kalanithi Maran Enterprises in which Key Management personnel or their relatives have significant influence Kal Comm Private Limited Kal Publications Private Limited Kal Cables Private Limited Sun Foundation Sun Direct TV Private Limited Murasoli Maran Family Trust Udaya FM Private Limited Kal Media Services Private Limited Sun Distribution Services Private Limited Kal Airways Private Limited Sun Business Solutions Private Limited Network Cable Solutions Private Limited Subsidiary Company Kal Radio Limited Joint Venture South Asia FM Limited Digital Radio (Mumbai) Broadcasting Limited Asia Radio Broadcast Private Limited Pioneer Radio Training Services Private Limited Digital Radio (Kolkata) Broadcasting Limited Digital Radio (Delhi) Broadcasting Limited Optimum Media Services Private Limited South Asia Multimedia Private Limited Associates Deccan Digital Networks (Hyderabad) Private Limited Metro Digital Networks (Hyderabad) Private Limited AV Digital Networks (Hyderabad) Private Limited Key Management personnel Mr. Kalanithi Maran - Executive Chairman Mr. K. Vijaykumar - Managing Director and Chief Executive Officer Mr. R. Mahesh Kumar - President Mrs. Kavery Kalanithi - Executive Director Mr. V.C. Unnikrishnan - Chief Financial Officer Mr. R. Ravi - Company Secretary Mr. S. Selvam - Non Executive Director Mr. J. Ravindran - Independent Director Mr. M.K. Harinarayanan - Independent Director Mr. Nicholas Martin Paul - Independent Director Mr. R. Ravivenkatesh - Independent Director Relatives of Key Management personnel Mrs. Mallika Maran Ms. Kaviya Kalanithi Maran Terms & Conditions of Transactions with Related Party The sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. For the year ended March 31, 2018, the company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2017: INR Nil). Based on the internal reporting provided to the chief operating decision maker, Media and Entertainment is the only operating segment for the company. Non-current assets for this purpose consist of property, plant and equipment, investment properties, intangible assets, capital work in progress and other non current assets (other than financial instruments). Note 6. Fair values Set out below, is a comparison by class of the carrying amounts and fair value of the Company''s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values: The management assessed that the fair value of cash and cash equivalents, trade receivables, trade payables, Financial guarantee and other current and non current financial liabilities and financial assets approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The method and assumptions used to estimate the fair values is the fair values of financial instruments traded in active markets are based on quoted market prices at the balance sheet date. Note 7. Fair value hierarchy The following table provides the fair value measurement hierarchy of the Company''s assets and liabilities: The Company''s principal financial liabilities, include trade and other payables. The Company has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations. The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs senior management ensures that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below. Market Risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency risk and other price risk, such as equity price risk. The value of financial instruments may change as a result of changes in the foreign currency exchange rates, equity price fluctuation, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable acuracy. Financial instrument affected by market risk includes investment in equity instruments etc. Foreign currency risk Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities. As per the Forex policy, the Company, takes forward contract for transactions where the foreign currency risk on account of movement in exchange rate expected to be high and which is material to the Company. The impact of foreign exchange rate fluctuations is evaluated by assessing its exposure to exchange rates risks. Exposure to foreign exchange fluctuation risks is with monetary receivables / payables denominated in USD, AUD, CAD and GBP. Foreign currency sensitivity The following tables demonstrate the sensitivity to a reasonably possible change in foreign exchange rates, with all other variables held constant. The impact on the Companyâs profit before tax is due to changes in the fair value of monetary assets and liabilities. The sensitivity analysis in the following sections relate to the position as at March 31, 2018 and March 31, 2017 and as forecasted for volatile currencies. Credit risk Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk is equal to the carrying amount of financial assets as of March 31, 2018 and March 31, 2017 respectively. Liquidity risk The Company''s prime source of liquidity is cash and cash equivalents and the cash flow generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived. As of March 31, 2018, the Company had a working capital of Rs. 2,481.20 crores (March 31, 2017 - Rs. 1,890.53 crores) including cash and cash equivalents of Rs. 275.23 crores (March 31, 2017 - Rs. 655.16 crores ) and current investment of Rs.1,505.10 crores (March 31, 2017 - Rs. 545.48 crores). As of March 31, 2018 and March 31, 2017 there are no material liability which is outstanding. Accordingly, no liquidity risk is perceived. The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual undiscounted payments. Note 8. Capital management For the purpose of the Companyâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Companyâs capital management is to maximise the shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Companyâs policy for capital management aims to enhance capital efficiency by the long-term improvement of its value through business growth, while maintaining a sound financial structure. Indicators for monitoring the capital management include total equity attributable to owners of the parent and ROE (ratio of net profit to total equity attributable to owners of the parent). The Company''s policy is to keep the ROE between 33% to 38%. The Company has achieved the same over past 2 years. No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2018 and March 31, 2017.
Mar 31, 2017
1. Corporate information Sun TV Network Limited (âSun TVâ or âthe Companyâ) was incorporated on December 18, 1985 as Sumangali Publications Private Limited. The Company is engaged in producing and broadcasting satellite television and radio software programming in the regional languages of South India. The Company is listed on the Bombay Stock Exchange (âBSEâ) and the National Stock Exchange (âNSEâ) in India. The Company has its registered office at Murasoli Maran Towers, 73, MRC Nagar Main Road, MRC Nagar, Chennai - 600 028. The Company currently operates television channels in four South Indian languages predominantly to viewers in India, and also to viewers in Sri Lanka, Singapore, Malaysia, United Kingdom, Europe, Middle East, United States, Australia, South Africa and Canada. The Companyâs flagship channel is Sun TV. The other major satellite channels of the Company are Surya TV, Gemini TV and Udaya TV. The Company is also into the business of FM Radio broadcasting at Chennai, Coimbatore and Tirunelveli. The Company also has the license to operate an Indian Premier League (âIPLâ) franchise âSun Risers Hyderabadâ. The financial statements are approved for issue by the Companyâs Board of Directors on May 26, 2017. Note 2. Investment Properties As at March 31, 2017, March 31, 2016 and April 01, 2015 the fair values of the properties are Rs.75.75 crores Rs. 67.41 crores and Rs.58.18 crores respectively. These valuations are based on valuations performed by an accredited independent valuer. The valuer is a specialist in valuing these types of investment properties. The valuation model used is in accordance with a method recommended by the International Valuation Standards. The Company has no restrictions on the disposal of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements Fair value hierarchy disclosures for investment properties have been provided in Note 37. Description of valuation techniques used and key inputs to valuation on investment properties: The Company has fair valued the office premises property let out on lease using Market approach method. Significant unobservable Inputs The independent valuer has made detailed study of prevailing market rate for the commercial buildings in the areas wherein the office premises property is being let out by the Company. This has been adjusted for amenities, depriciation and other lease hold improvement made by the Company to the respective properties. The valuations for tax free bonds are based on valuations performed by an accredited independent valuer. The valuer is a specialist in valuing these types of Bonds. The valuation model used is in accordance with a method recommended by the International Valuation Standards. The Company has no restrictions on the disposal of its tax free bonds Fair value hierarchy disclosures for investments in tax free bonds have been provided in Note 37. Description of valuation techniques used and key inputs to valuation on investment in tax free bonds: The Company has fair valued the tax free bonds using IMaCS standard methodology which captures the market condition has on the given day of valuation on T 1 basis. Significant unobservable Inputs The independent valuer has made detailed study based on standard methodology for scrip level valuation and have considered the available secondary market and primary market trades for valuation of bonds on reporting date. Outlier trades if any are identified and excluded. Widespread Polling is also conducted with market participant to understand the movement in levels. In the case of illiquid instruments, the valuation is arrived at based on the value bonds with similar maturity issued by similar issuers or securities are linked to a benchmark and a spread over benchmark is arrived at and the same is carried forward. (i) Term/Rights attached to Equity Shares The Company has one class of equity shares having a face value of Rs.5.00 each. Each shareholder is eligible for one vote per share held. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. During the year ended March 31, 2017, the amount of per share dividend recognized as distributions to equity shareholders was Rs. 10.00 /- share (March 31, 2016: Rs.15.50 /- share) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders. 3. Trade payables There is no overdue amount payable to Micro and Small Enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006. Further, the company has not paid any interest to any Micro and Small Enterprises during the current and previous year. Terms and conditions of the above financial liabilities: Trade payables are non interest bearing and are normally settled within due dates For terms and conditions with related parties, refer to Note 34 Government grants have been received for import of Property, plant & equipment ( PP&E ) in the nature of export promotion scheme. There are no unfulfilled conditions or contingencies attached to these grants. The company is in the process of making necessary applications to obtain related redemption letters from the DGFT. Government grants have been received for import of Property, plant & equipment ( PP&E ) in the nature of export promotion scheme. There are no unfulfilled conditions or contingencies attached to these grants. The company is in the process of making necessary applications to obtain related redemption letters from the DGFT. During the previous year, Companyâs aircraft sustained damage due to floods in Chennai. The determination of the financial effects thereof was pending as of March 31, 2016 in view of highly technical nature of the assessment involved. Subsequently in the current year, upon completion of such technical assessment, this aircraft has been assessed as being beyond economic repair and declared a total loss. Accordingly, the carrying value of the aircraft as at the date of the incident of Rs. 242.03 crores has been recorded as impairment loss in the previous year. The Company has recognised insurance claim of Rs. 260 crores received from the insurers.The impairment loss on account ofthe damage to the aircraft and related proceeds receivable from the insurance company, as discussed above, have been recorded and disclosed as exceptional item. The major components of income tax expense for the years ended March 31, 2017 and March 31, 2016 are: Reconciliation of tax expense and the accounting profit multiplied by Indiaâs domestic tax rate for March 31, 2016 and March 31, 2017 : The tax on the Companyâs profit before tax differs from the theoretical amount that would arise using the standard rate of corporation tax in India (34.608%) as follows: Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares. Note 4. Significant accounting judgements, estimates and assumptions The preparation of the Companyâs Standalone Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. Judgements In the process of applying the Companyâs accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the Standalone Financial Statements: Amortisation of intangibles Acquired Satellite Rights for the broadcast of feature films and other long-form programming such as multi-episode television serials are stated at cost. Future revenues cannot be estimated with any reasonable accuracy as these are susceptible to a variety of factors, such as the level of market acceptance of television products, programming viewership, advertising rates etc., and accordingly cost related to film is fully expensed on the date of first telecast of the film and the cost related to program broadcasting rights / multi episodes series are amortized based on the telecasted episodes. Estimates and assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the Standalone Financial Statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur. Provision for taxes The Companyâs tax expense for the year is the sum of the total current and deferred tax charges. The calculation of the total tax expense necessarily involves a degree of estimation and judgement in respect of certain items. A deferred tax asset is recognised when it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. Defined benefit plans (gratuity benefits) The cost of the defined benefit gratuity plan and other post-employment leave encashment benefit and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. Further details about defined benefit obligations are given in note 32. Note 5. Employee benefit plans - Gratuity The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The fund has the form of a trust and it is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise. The scheme is funded with an insurance company in the form of a qualifying insurance policy. The following tables summarize the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the Gratuity plan. The overall expected rate of return on assets is determined based on market prices prevailing on that date, applicable to the period over which the obligation is to be settled. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The Company contributes all ascertained liabilities towards gratuity to the Sun TV Network Limited Employees Group Gratuity Trust. Trustees administer contributions made to the trust. As of March 31, 2017, March 31, 2016 and April 1, 2015, the plan assets have been primarily invested in insurer managed funds. A quantitative sensitivity analysis for significant assumption as at March 31, 2017 is as shown below: The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. Note 6. Commitments and Contingencies a) Leases Operating lease commitments â Company as lessee The Company has entered into operating leases on KU band Satellite transponder on non cancellable operating lease, with lease terms between 1 and 10 years renewable on periodic basis. The Company has paid Rs.23.14 crores (March 31, 2016: Rs.21.63 crores) during the year towards minimum lease payment The operating lease arrangements, are renewable on a periodic basis and can be extended upto a maximum of 5 years from their respective dates of inception. There are no price escalation clause in the agreement. Future minimum rentals payable under non-cancellable operating leases as at March 31, 2017 are, as follows: b) Contingent Liabilities i) Matters wherein management has concluded the Companyâs liability to be probable and have accordingly provided for in the books. Refer Note 45. ii) Matters wherein management has concluded the Companyâs liability to be possible and have accordingly disclosed below iii) Matters wherein management is confident of succeeding in these litigations and have concluded the liability to the Company to be remote. This is based on the relevant facts of judicial precedents and as advised by legal counsel which involves various legal proceeding and claims, in different stages of process, in relation to civil and criminal matters. * The Company received demands of income tax disallowing the manner of allowance claimed by the Company for certain expenses. The Companyâs appeal in respect of various years has been allowed by both the first and the second appellate authorities in the previous years. Accordingly, management believes that based on the favourable judgment as well as relying on judicial pronouncements and other arguments, its position is likely to be accepted by the revenue authorities. ** The Company has received demand for differential customs duty aggregating to Rs. 0.50 crores on account of incorrect classification of certain assets imported during FY 2007-08. The Company has gone on appeal against the said demand, and based on its arguments at such appellate proceedings, management believes that the Companyâs claim is likely to be accepted by the authorities. @ Further to enquiries by the customs authorities on customs duty exemptions availed by the Company in the earlier year, the Company has received a formal show cause notice containing a provisional demand of Rs. 63.13 crores. Then the Company has filed its responses to this notice and has also deposited a sum of Rs. 60.18 crores under protest pending final resolution of the matter. The Management has been advised by senior counsels that appropriate legal remedies are available to the Company in this matter and is accordingly confident of recovering the duty paid. ***The Company received show cause notice from the Service tax department seeking service tax on certain services and disallowances of input credit availed on certain services. The Company has filed appeals for all such show cause notices /orders received with various authorities. The Company based on the judicial pronouncements and other arguments believes its position is likely to be accepted by the authorities. b) Royalty Payable to Ministry of Information and Broadcasting (âMIBâ) The Company has obtained licenses to permit them to carry FM operations in Chennai, Coimbatore and Tirunelveli. The Company is required to pay royalty of 4% of gross revenue earned from these FM Operations during the financial year or 2.5 % of One Time Entry Fees paid, whichever is higher to Ministry of Information and Broadcasting. c) Franchise rights commitments As per the terms of the franchise agreement entered into by the Company with the BCCI, the Company has a commitment to pay BCCI, Rs. 85.05 crores per annum from 2014 season to 2017 season. From the 2018 IPL season, the Company is required to pay license fees at 20% on the Franchise Income earned during the relevant year from the operation of the IPL franchise to BCCI. In the current year the Company has paid an amount aggregating to Rs. 25.52 crores as franchise license fee for the 2017 IPL season. d) Financial guarantees The Company during the year has extended Financial Guarantee to South Asia FM Limited (Joint Venture) for their bank borrowing of Rs.29.50 crores ( March 31, 2016: Nil, April 1, 2015: Nil). The Company has offered its Fixed Deposit of Rs.32.00 crores as a collateral security against such borrowings of the investee. The carrying amounts of the related financial guarantee contracts were Rs.2.91 crores at March 31, 2017 (Also refer note 13 and note 16.) Note 7 Related party transactions Names of related parties Individual owning an interest in voting power of the Company that gives them control Mr. Kalanithi Maran Enterprises in which Key Management personnel or their relatives have significant influence Kal Comm Private Limited Kal Cables Private Limited Sun Direct TV Private Limited Udaya FM Private Limited Sun Distribution Services Private Limited Sun Business Solutions Private Limited Kal Publications Private Limited D.K. Enterprises Private Limited Sun Foundation Murasoli Maran Family Trust Kal Media Services Private Limited Kal Airways Private Limited Subsidiary Companies Kal Radio Limited Joint Venture South Asia FM Limited Asia Radio Broadcast Private Limited Digital Radio (Kolkata) Broadcasting Limited Optimum Media Services Private Limited Digital Radio (Mumbai) Broadcasting Limited Pioneer Radio Training Services Private Limited Digital Radio (Delhi) Broadcasting Limited South Asia Multimedia Private Limited Associates Deccan Digital Networks (Hyderabad) Private Limited Metro Digital Networks (Hyderabad) Private Limited AV Digital Networks (Hyderabad) Private Limited Key Management personnel Mr. Kalanithi Maran - Executive Chairman Mr. K Vijaykumar - Managing Director and Chief Executive Officer Mr. R Mahesh Kumar - President Mrs. Kavery Kalanithi - Executive Director Mr.V C Unnikrishnan - Chief Financial Officer Mr. R. Ravi - Company Secretary Mr. S. Selvam - Non Executive Director Mr. J. Ravindran - Independent Director Mr. M.K. Harinarayanan - Independent Director Mr. Nicholas Martin Paul - Independent Director Mr. R.Ravivenkatesh - Independent Director Relatives of Key Management personnel Mrs. Mallika Maran Ms. Kaviya Kalanithi Maran Terms & Conditions of Transactions with Related Party The sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. For the year ended March 31, 2017, the company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2016: Nil, April 1, 2015: Nil). Based on internal reporting provided to the chief operating decision maker, Media and Entertainment is the only operating segment for the company. Non-current assets for this purpose consist of property, plant and equipment, investment properties, intangible assets, capital work in progress and other non current assets (other than financial instruments). Note 8. Fair values Set out below, is a comparison by class of the carrying amounts and fair value of the Companyâs financial instruments, other than those with carrying amounts that are reasonable approximations of fair values: The management assessed that the fair value of cash and cash equivalents, trade receivables, trade payables, Financial guarantee and other current and non current financial liabilities and financial assets approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The method and assumptions used to estimate the fair values is the fair values of financial instruments traded in active markets are based on quoted market prices at the balance sheet date. The following table provides the fair value measurement hierarchy of the Companyâs assets and liabilities: Note 9. Financial risk management objectives and policies The Companyâs principal financial liabilities, include trade and other payables. The Company has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations. The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs senior management ensures that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below. Market Risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency risk and other price risk, such as equity price risk. The Value of financial instrument may change as a result of changes in the foreign currency exchange rates, equity price fluctuation, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy .Financial instrument affected by market risk includes invesment in equity instruments etc. Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities.As per the Forex policy, the Company, takes forward contract for transactions where the foreign currency risk on account of movement in exchange rate expected to be high and which is material to the Company. The impact of foreign exchange rate fluctuations is evaluated by assessing its exposure to exchange rates risks. Major exposure to foreign exchange fluctuation risks is with Monetary receivables / payables denominated in USD. Foreign currency sensitivity The following tables demonstrate the sensitivity to a reasonably possible change in foreign exchange rates, with all other variables held constant. The impact on the Companyâs profit before tax is due to changes in the fair value of monetary assets and liabilities.The sensitivity analysis in the following sections relate to the position as at March 31, 2017, March 31, 2016 and April 1, 2015. Credit risk Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk is equal to the carrying amount of financial assets as of March 31, 2017, March 31, 2016 & April 1, 2015 respectively. Liquidity risk The Companyâs prime source of liquidity is cash and cash equivalents and the cash flow generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived. As of March 31, 2017, the Company had a working capital of Rs.1,890.53 crores (March 31, 2016 - Rs. 1,915.21 crores ; April 1, 2015 - Rs. 1,562.52 crores) including cash and cash equivalents of Rs. 655.16 crores (March 31, 2016 - Rs. 552.93 crores ; April 1, 2015 - Rs. 393.21 crores) and current investment of Rs. 545.48 crores (March 31, 2016 -Rs. 230.59 crores ; April 1, 2015 - Rs. 244.92 crores). As of March 31, 2017, March 31, 2016 & April 1, 2015, there are no material liability which is outstanding. Accordingly, no liquidity risk is perceived. Collateral A collateral on the Fixed Deposit of the Company (amounting to Rs.32.50 crores ) has been made against the loan of Rs. 29.50 crores taken by the Companyâs investee (Joint Venture). Refer note 33 (d). Note 10. Capital management For the purpose of the Companyâs capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Companyâs capital management is to maximise the shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Companyâs policy for capital management aims to enhance capital efficiency by the long-term improvement of its value through business growth, while maintaining a sound financial structure. Indicators for monitoring the capital management include total equity attributable to owners of the parent and ROE (ratio of net profit to total equity attributable to owners of the parent). The Companyâs policy is to keep the ROE between 35% to 38%. The Company has achieved the same over past 2 years. Note 11. Provisional Attachment order from Enforcement Directorate During the year, the Honâble Special Court hearing the related proceedings in connection with an investigation not involving the Company, passed an order, as a result of which, the provisional attachment stands released. During the previous year, certain Freehold Land and Buildings of the Company aggregating Rs. 266 crores had been provisionally attached vide an order of the Enforcement Directorate, Ministry of Finance, Government of India, (âEnforcement Directorateâ), under the prevention of Money Laundering Act, 2002 (âPMLAâ). Whilst the appeal process in this matter is pending, Company continues to be in possession of the said properties / deposits / mutual fund investments, the management is confident of a successful outcome from the same and accordingly is of the view that no accounting adjustments are considered necessary in this standalone financial statements in this regard. Note 12. First-time adoption of Ind AS These financial statements, for the year ended 31 March 2017, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP) and Companies Account (Amendment) rules, 2016, as amended. Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31 March 2017, together with the comparative period data as at and for the year ended 31March 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Companyâs opening balance sheet was prepared as at 1 April 2015, the Companyâs date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1 April 2015 and the financial statements as at and for the year ended 31 March 2016. Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions : 1 Ind AS 16 - Property, plant and equitment are opted to be carried as recognised in its previous GAAP financials as deemed cost at the transition date. The Company has elected to continue with the carrying value as at 1st April, 2015 for all of its investment properties, Intangible assets and property plant & equipment as recognised in its Previous GAAP financial as deemed cost at the transition date. 2 Ind AS 103 - Business Combinations has not been applied to amalgamation / merger, which are are considered businesses under Ind AS that occurred before date of transition i.e April 1, 2015. The Company has used this exemption for the merger of Gemini TV Private Limited and the Satellite Television Business of Udaya TV Private Limited in earlier years. Estimates The estimates at April 1, 2015 and at March 31, 2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from Impairment of financial assets based on expected credit loss model where application of Indian GAAP did not require estimation. The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2015 (i.e. the date of transition to Ind-AS) and as of March 31, 2016. Effect of the Transition to Ind AS Reconciliations of the Companyâs balance sheets prepared under Indian GAAP and Ind AS as of April 1, 2015 and March 31, 2016 are also presented in Note 42. Reconciliations of the Companyâs income statements for the year ended March 31, 2016 prepared in accordance with Indian GAAP and Ind AS in Note 43. Notes: (a) Deferred credit terms with customers Under Indian GAAP, the Company accounted for revenue from operations at its transaction value. Under Ind AS, where the inflow of cash is deferred, revenue is determined at its fair value by discounting all future receipts using an imputed rate of interest. The difference between the transaction value and discounted value is recognized as interest income on EIR basis. (b) Multiple arrangements Under Indian GAAP, the Company has accounted for various components of a multiple-element arrangement as a single contract at its transaction value. However, under Ind AS, the Group has identified separately each components of a combined transaction and recognized revenue on each component at its fair value. (c) Investments carried at FVTPL Under Indian GAAP, the Company accounted for investments in unquoted mutual funds as investment measured at the lower of cost and market value. Under Ind AS, the Group has measured such investments at fair value. The difference between fair value and Indian GAAP carrying amount has been recognized in statement of profit and loss account as fair value gain/loss. (d) Actuarial gain/loss on defined benefit plans Under Indian GAAP, the Company recognized actuarial gains/losses and expected rate of return on defined benefit plans in the income statement. Under Ind AS, the Company has recognized the actuarial gains/losses and the return on assets (excluding interest) relating to retirement benefit plans in other comprehensive income. However, this has no impact on total comprehensive income and total equity. (e) Impairment of financial assets Under Indian GAAP, provisioning on trade receivables was made on incurred loss model. Under Ind AS, the provision has been created based on the expected credit loss model. (f) Government Grants Under Indian GAAP, the Company has accounted for fixed assets net of the import duty exemption provided. Under Ind AS, the Government grant is to be separately identified and recognised as deferred revenue and fixed assets is to be accounted at the gross value including the duty saved portion. The income is to be recognised over the life of the respective assets and depreciation is to be charged on the grossed value of fixed assets. (g) Other financial assets Under Indian GAAP, the Company measures the rental deposits paid to the lessor and rental deposits received from customers at transaction value. Under Ind AS, the deposits have been measured at fair value and the difference between the fair value and the transaction cost has been recorded as prepaid lease rent / deferred revenue. (h) Deferred tax Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP. On transitional adjustments, the corresponding deferred taxes have been recognized. (i) Other comprehensive income Under Indian GAAP, the Company has not presented other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit or loss to profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS. (j) Investment Properties Under Indian GAAP, investment properties were presented as part Property, plant and equipment. Under Ind AS, investment properties are required to be separately presented on the face of the Balance Sheet. (k) Statement of cash flows The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows. Note 13. Disclsoure On Specified Bank Notes (SBNs) During the year, the Company had specified bank notes(SBNs) and other denomination note as defined in the MCA notification G.S.R. 308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBNs) held and transacted during the period from November 8, 2016 to December 30, 2016, the denomination wise SBNs and other notes as per the notification is given below: For the purposes of this clause, the term âSpecified Bank Notesâ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016. Note 14. As required by Accounting Standard (Ind - AS-37) âProvisions, Contingent Liabilities and Contingent Assetsâ the details of Provisions are set out as under.
Mar 31, 2016
Mar 31, 2015
Mar 31, 2014
Mar 31, 2013
Mar 31, 2012
Mar 31, 2011
Mar 31, 2010
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