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Accounting Policies of TV18 Broadcast Ltd. Company

Mar 31, 2016

A. Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except to the extent disclosed.

B. Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires judgments, estimates and assumptions to be made that effect the reported amount of assets and liabilities, disclosure of contingent liabilities and the reported amount of income and expenses during the year. Difference between the actual results and estimates are recognized in the period in which the results are known / materialize.

C. Depreciation and amortization

Depreciation has been provided on the useful life of its tangible assets as per the useful life prescribed in Schedule II to the Companies Act, 2013.

Cost of leasehold improvements is being amortized over the remaining period of lease of the premises.

Intangible assets are amortized over their estimated useful life as follows:

Computer software is being depreciated over a period of 5 years. News archives are depreciated on straight line basis over the period of 21 years as the contents of the same are continuously used in day to day programming and hence the economic benefits from the same arise for a period longer than 20 years. License pertaining to satellite rights is amortized over their estimated useful life of 5 years.

Depreciation on additions is charged proportionately from the date of acquisition/ installation.

D. Revenue recognition

i. Revenue from operations includes:

Advertisement revenue comprising:

• Revenue from sale of advertising time, which is recognized on accrual basis when advertisements are telecast in accordance with contractual obligations.

• Revenue from sponsorship contracts, which is recognized proportionately over the term of the sponsorship for services rendered.

Subscription revenue which is recognized on accrual basis in accordance with the terms of the contract with the distribution and collection agency and customers, for services rendered.

Revenue from sale of television content is recognized on transmission of audio-video content to the customer and their acceptance.

Facility and equipment rental which is accounted for on the accrual basis for the period of use of equipment by the customers.

Program revenue is recognized on dispatch of programs to customers in accordance with contractual commitments.

Revenue from media related professional and consultancy services is recognized in accordance with contracts on rendering of services.

ii. Other income

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it, is established.

E. Fixed assets Tangible assets

Tangible assets are stated at cost net of recoverable taxes, trade discounts and rebates, less accumulated depreciation and impairment loss, if any. The cost comprises purchase price, borrowing costs, and any cost directly attributable to bringing the assets to its intended use.

Subsequent expenditures related to an item of tangible asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

Capital work-in-progress: Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

Intangible assets

I intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization/ depletion and impairment loss, if any. The cost comprises purchase price, borrowing costs, and any cost directly attributable to bringing the assets to its working condition.

F. Foreign currency transactions

i. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

ii. Monetary items denominated in foreign currencies at the year-end are restated at year end rates.

iii. Non-monetary foreign currency items are carried at cost.

iv. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss, except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

G. Investments

Current investments are carried at lower of cost and quoted / fair value. Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary.

H. Employee benefits

Employee benefits include provident fund, employee state insurance scheme, gratuity fund and compensated absences.

i. Defined contribution plans: The Company''s contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.

ii. Defined benefits plans: For defined benefit plans in the form of gratuity fund the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

Gratuity for employees of a division of the Company is administered through a trust. The Company contributes to the trust, which has taken group policies with the Life Insurance Corporation of India to cover its liabilities towards employee''s gratuity of those divisions.

iii. Short-term employee benefits: The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service.

iv. Long-term employee benefits: Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the Balance Sheet date on the basis of actuarial valuation.

I. Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to the Statement of Profit and Loss in the period in which they are incurred.

J. Leases

i. Operating lease

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis over the lease term.

ii. Finance lease

• Where the Company as a less or leases assets under finance leases, such amounts are recognized as receivables at an amount equal to the net investment in the lease and the finance income is recognized based on a constant rate of return on the outstanding net investment.

K. Taxes on income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized only if there is virtual certainty that there will be sufficient future taxable income available to realize such assets. Deferred tax assets are recognized for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. Deferred tax assets and liabilities are offset, if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their reliability.

L. Impairment

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

M. Provisions, contingent liabilities and contingent assets

Provision recognized in the accounts when there is a present obligation as a result of past event(s) and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liabilities are disclosed unless the possibility of outflow of resources is remote.

Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2015

A. Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014 and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except to the extent disclosed.

B. Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires judgements, estimates and assumptions to be made that effect the reported amount of assets and liabilities, disclosure of contingent liabilities and the reported amount of income and expenses during the year. Difference between the actual results and estimates are recognized in the period in which the results are known / materialise.

C. Depreciation and amortisation

Depreciation has been provided on the useful life of its tangible assets as per the useful life prescribed in Schedule II to the Companies Act, 2013.

Cost of leasehold improvements is being amortised over the remaining period of lease of the premises.

Intangible assets are amortised over their estimated useful life as follows:

Computer software is being depreciated over a period of 5 years. News archives are depreciated on straight line basis over the period of 21 years as the contents of the same are continuously used in day to day programming and hence the economic benefits from the same arise for a period longer than 20 years. License pertaining to satellite rights is amortised over their estimated useful life of 5 years.

Depreciation on additions is charged proportionately from the date of acquisition/ installation. Assets costing less than Rs. 5,000 each are fully depreciated in the year of capitalisation.

D. Revenue recognition

i) Revenue from operations includes:

- Advertisement revenue comprising:

- Revenue from sale of advertising time, which is recognised on accrual basis when advertisements are telecast in accordance with contractual obligations.

- Revenue from sponsorship contracts, which is recognised proportionately over the term of the sponsorship for services rendered.

- Subscription revenue which is recognised on accrual basis in accordance with the terms of the contract with the distribution and collection agency and customers, for services rendered.

- Revenue from sale of television content is recognised on transmission of audio-video content to the customer and their acceptance.

- Facility and equipment rental which is accounted for on the accrual basis for the period of use of equipment by the customers.

- Program revenue is recognised on dispatch of programs to customers in accordance with contractual commitments.

- Revenue from media related professional and consultancy services is recognised in accordance with contracts on rendering of services.

ii) Other income

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

E. Fixed assets

Tangible assets

Tangible assets are stated at cost net of recoverable taxes, trade discounts and rebates, less accumulated depreciation and impairment loss, if any. The cost comprises purchase price, borrowing costs, and any cost directly attributable to bringing the assets to its intended use.

Subsequent expenditures related to an item of tangible asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

Capital work-in-progress: Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

Intangible assets

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization/ depletion and impairment loss, if any. The cost comprises purchase price, borrowing costs, and any cost directly attributable to bringing the assets to its working condition.

F. Foreign currency transactions

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

ii) Monetary items denominated in foreign currencies at the year-end are restated at year end rates.

iii) Non-monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss, except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

G. Investments

Current investments are carried at lower of cost and quoted / fair value. Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary.

H. Employee benefits

Employee benefits include provident fund, employee state insurance scheme, gratuity fund and compensated absences.

i) Defined contribution plans: The Company's contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.

ii) Defined benefits plans: For defined benefit plans in the form of gratuity fund the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

Gratuity for employees of certain division is administered through a trust. The Company contributes to the trust, which has taken group policies with the Life Insurance Corporation of India to cover its liabilities towards employee's gratuity of those divisions.

iii) Short-term employee benefits: The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service.

iv) Long-term employee benefits: Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the Balance Sheet date on the basis of actuarial valuation.

I. Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to the Statement of Profit and Loss in the period in which they are incurred.

J. Leases

i) Operating lease

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis over the lease term.

ii) Finance lease

- Where the Company as a lessor leases assets under finance leases, such amounts are recognised as receivables at an amount equal to the net investment in the lease and the finance income is recognised based on a constant rate of return on the outstanding net investment.

- Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

K. Taxes on income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realised such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets and liabilities are offset, if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

L. Impairment

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

M. Provisions, contingent liabilities and contingent assets

Provision recognized in the accounts when there is a present obligation as a result of past event(s) and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liabilities are disclosed unless the possibility of outflow of resources is remote.

Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2013

A. Basis of accounting and preparation of financial statements

The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles (GAAP) in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 to the extent applicable and in accordance with the provisions of the Companies Act, 1956 as adopted consistently by the Company.

b. Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as at the date of the financial statements and reported amounts of income and expenses during the year. Examples of such estimates include provision for doubtful debts, future obligations under employee retirement benefit plans, income taxes and useful life of tangible and intangible assets. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Actual results could differ from such estimates and the difference between the actual results and the estimates are recognised in the periods in which the results are known/ materialise.

c. Inventories

Inventories consist of blank betacam tapes and are stated at cost on First in First out (FIFO) basis. Stocks of other tapes are written off at the time of purchase.

d. Cash and cash equivalents (for purposes of Cash Flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

e. Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

f. Depreciation and amortisation

Depreciation on all assets other than leasehold improvements, computer software and plant and machinery - distribution equipment are charged on straight line basis over the estimated useful lives, using rates (including double/ triple shift depreciation rates wherever applicable) prescribed by Schedule XIV of the Companies Act, 1956.

Cost of leasehold improvements is being amortised over the remaining period of lease (including renewal options) of the premises. Computer software and plant and machinery - distribution equipment are being depreciated over a period of 5 years and 8 years respectively. These rates are higher than those prescribed in Schedule XIV of the Companies Act, 1956.

News archives are depreciated on straight line basis at the rate of 4.75% per annum. Useful life of news archives is estimated to be more than 10 years as the contents of the same are continuously used in day to day programming and hence the economic benefits from the same arise for a period longer than 10 years.

Depreciation on additions is charged proportionately from the date of acquisition/ installation. Assets costing Rs. 5,000 or less individually have been fully depreciated in the year of purchase.

g. Revenue Recognition

i. Revenue from operations includes:

- Advertisement revenue comprising:

- Revenue from sale of advertising time, which is recognised on the accrual basis when advertisements are telecast in accordance with contractual obligations.

- Revenue from sponsorship contracts, which is recognised proportionately over the term of the sponsorship.

- Subscription revenue which is recognised on accrual basis in accordance with the terms of the contract with the distribution and collection agency, for the services rendered.

- Revenue from sale of television content is recognised on transmission of audio-video content to the customer and their acceptance.

- Facility and equipment rental which is accounted for on the accrual basis for the period of use of equipment by the customers.

- Program revenue which is accounted for on dispatch of programs to customers in accordance with contractual commitments.

- Revenue from media related professional and consultancy services is recognised in accordance with contracts on rendering of services.

ii. Other income includes

- Dividends on investments which are accounted for when the right to receive dividend is established.

- Interest income which is recognized on time proportionate basis, taking into account the amount outstanding and the rate applicable.

h. Tangible Fixed Assets

Fixed assets are stated at their original cost of acquisition/installation less depreciation. All direct expenses attributable to acquisition/installation of assets are capitalised.

Capital work-in-progress: Projects under which assets are not ready for their intended use and other capital work- in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

i. Intangible assets

Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase / completion is recognised as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.

j. Foreign Currency Transactions and Translation

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences on foreign exchange transactions settled during the year are recognised in the Statement of Profit and Loss.

Monetary items denominated in foreign currency and outstanding at the balance sheet date are translated at the exchange rate prevailing at the date of balance sheet, the resultant exchange differences are recognised in the Statement of Profit and Loss.

k. Investments

Long term investments are stated at cost less provision for other than temporary diminution in carrying value of each investment. Current investments are carried at lower of cost or fair value.

l. Employee Benefits

i. The Company''s Employee''s Provident Fund scheme is a defined contribution plan. The Company''s contribution to the employees'' Provident Fund is charged to the Statement of Profit and Loss during the period in which the employee renders the related service.

ii. Short term employee benefits (Medical, Leave Travel Allowance, etc.) expected to be paid in exchange for the services rendered is recognised on undiscounted basis.

iii. The Company provides for gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment.

For defined benefit plans in the form of gratuity fund the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

iv. Benefits comprising long term compensated absences constitute other long term employee benefits. The liability for compensated absences is provided on the basis of an actuarial valuation done by an independent actuary at the year end. Actuarial gains and losses are recognised immediately in the Statement of Profit and loss.

m. Segment Information

i. Business Segments

Based on similarity of activities, risks and reward structure, organisation structure and internal reporting systems, the Company operates only in the media business segment which mainly comprises media and related operations.

ii. Geographic Segments

Secondary segmental reporting is performed on the basis of the geographical location of customers i.e. within India and overseas.

n. Leases

i. Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Operating lease charges are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

ii. Finance Lease

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. The lower of fair value of asset and present value of minimum lease rentals is capitalised as fixed assets with corresponding amount shown as lease liability. The principal component in the lease rentals is adjusted against the lease liability and the interest component is charged to Statement of Profit and Loss.

o. Earnings Per Share

The Company reports basic and diluted earnings per equity share in accordance with AS-20, Accounting Standard on Earnings Per Share. Basic earnings per equity share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding at the year end. Diluted earnings per equity share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding at the year end and except where the results would be anti-dilutive.

p. Taxes on income

Income tax comprises current tax and deferred tax. Current tax is determined in accordance with the provisions of Income Tax Act, 1961. Advance taxes and provisions for current taxes are presented in the Balance Sheet after off setting advance taxes paid and income tax provisions.

Deferred Tax charge or credit is recognised on timing differences being the difference between taxable income and accounting income that originate in one year and are capable of reversal, subject to consideration of prudence, in one or more subsequent years. Deferred Tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets on unabsorbed depreciation and carry forward of losses are not recognised unless there is a virtual certainty that there will be sufficient future taxable income available to realise such assets.

Minimum Alternate Tax (MAT) paid in accordance with Income Tax Act, 1961, which gives rise to future economic benefit in the form of adjustment from income tax liability, is recognised when it is reasonably certain that the Company will be able to set off the same and adjust it from the current tax charge for that year.

q. Impairment of assets

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

r. Provisions and Contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes.

s. Employee Stock Based Payments

Stock options granted to the employees under the stock options schemes are accounted at intrinsic value as per the accounting treatment prescribed in the guidance note on Employee share based payments issued by the Institute of Chartered Accountants of India. Accordingly, the excess of market price, determined as per the guidance note, of underlying equity shares (market value), over the exercise price of the options is recognised as deferred stock compensation expense and is charged to Statement of Profit and Loss on a straight line basis over the vesting period of the options. The amortised portion of the cost is shown under shareholders'' funds. The value of the option forfeited during the year is credited to General Reserve.

t. Barter Transactions

Barter transactions are recognised at the fair value of consideration receivable or payable. When the fair value of the transactions cannot be measured reliably, the revenue/expense is measured at the fair value of the goods/ services provided/received adjusted by the amount of cash or cash equivalent transferred.

u. Share issues expenses

Share issue expenses are adjusted on the date of issue of shares against the Securities Premium Reserve as permissible under Section 78(2) of the Companies Act, 1956, to the extent balance is available for utilisation in the Securities Premium Reserve.

v. Service tax input credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing / utilising the credits.

w. Operating Cycle

Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.


Mar 31, 2012

A. Transfer of news business of TEIL

i. As per the Scheme, TEIL's news business inter-alia consisting of business news channels viz. CNBC TV18 and CNBC Awaaz was demerged from TEIL and merged with TV18. The details of the assets and liabilities of TEIL being transferred to TV18 at its book value as at the appointed date is mentioned below:

ii. As per the scheme, during the intervening period (i.e. 1 April, 2010 to 31 March, 2011), TEIL shall be deemed to have been carrying on all business and activities relating to news business on behalf of the Company and all profits accruing to the transferor Company, or losses arising or incurred by them relating to the news business shall be treated as the profits or losses of the Company and accordingly credit balance of statement of profit and loss of Rs. 349,484,839 of TEIL news business for the period 1 April, 2010 to 31 March, 2011 was adjusted from the opening balance of the statement of profit and loss.

b. Merger of IBN18 Media & Software Limited and i-News.com Limited

As per the Scheme, i-News.com Limited, a subsidiary of TEIL and IBN18 Media & Software Limited, a subsidiary of the Company has merged into the Company. The details of the assets and liabilities of these companies being transferred to the Company at its book value as at the appointed date is mentioned below:

c. The Company has fair valued its assets and assets acquired as on the appointed date from TEIL and iNews under the Scheme (such assets comprise investments, deferred tax asset, miscellaneous expenditure, debtors and loans and advances) and have in accordance with the Scheme, debited Rs. 577,621,696 to the Securities Premium Reserve being the differential between the book value and the fair value.

d. Pursuant to the Scheme the deficit in the statement of profit and loss of the Company to the extent of Rs. 791,095,787 has been adjusted from the Capital Reserve and Securities Premium Reserve as follows:

2. Significant Accounting Policies

a. Basis of accounting and preparation of financial statements

The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles (GAAP) in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 to the extent applicable and in accordance with the provisions of the Companies Act, 1956 as adopted consistently by the Company.

The figures for the year ended 31 March, 2012 for the Company includes the income, expenses, assets and liabilities after considering the impact of the Scheme whereas the corresponding figures for the previous year comprised the income, expenses, assets and liabilities for the Company prior to the Scheme. Hence the figures for the current year are not strictly comparable with the corresponding previous year.

b. Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as at the date of the financial statements and reported amounts of income and expenses during the year. Examples of such estimates include provision for doubtful debts, future obligations under employee retirement benefit plans, income taxes and useful life of tangible and intangible assets. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Actual results could differ from such estimates and the difference between the actual results and the estimates are recognised in the periods in which the results are known/ materialise.

c. Inventories

Inventories consist of blank betacam tapes and are stated at cost on First in First out (FIFO) basis. Stocks of other tapes are written off at the time of purchase.

d. Cash and cash equivalents (for purposes of Cash Flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

e. Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

f. Depreciation and amortisation

Depreciation on all assets other than leasehold improvements, computer software and plant and machinery - distribution equipments are charged on straight line basis over the estimated useful lives, using rates (including double/ triple shift depreciation rates wherever applicable) prescribed by Schedule XIV of the Companies Act, 1956.

Cost of leasehold improvements is being amortised over the remaining period of lease (including renewal options) of the premises. Computer software and plant and machinery - distribution equipments are being depreciated over a period of 5 years and 8 years respectively. These rates are higher than those prescribed in Schedule XIV of the Companies Act, 1956.

News archives are depreciated on straight line basis at the rate of 4.75% per annum. Useful life of news archives is estimated to be more than 10 years as the contents of the same are continuously used in day to day programming and hence the economic benefits from the same arise for a period longer than 10 years. Depreciation on additions is charged proportionately from the date of acquisition/ installation. Assets costing Rs. 5,000 or less individually have been fully depreciated in the year of purchase.

g. Revenue Recognition

i. Revenue from operations includes:

- Advertisement revenue comprising:

- Revenue from sale of advertising time, which is recognised on the accrual basis when advertisements are telecast in accordance with contractual obligations.

- Revenue from sponsorship contracts, which is recognised proportionately over the term of the sponsorship.

- Subscription revenue which is recognised on accrual basis in accordance with the terms of the contract with the distribution and collection agency, for the services rendered.

- Facility and equipment rental which is accounted for on the accrual basis for the period of use of equipment by the customers.

- Program revenue which is accounted for on dispatch of programs to customers in accordance with contractual commitments.

- Revenue from sale of television content is recognised on transmission of audio-video content to the customer and their acceptance.

- Revenue from media related professional and consultancy services is recognised in accordance with contracts on rendering of services.

ii. Other income includes

- Dividends on investments are accounted for when the right to receive dividend is established.

- Interest income is recognized on time proportionate basis, taking into account the amount outstanding and the rate applicable.

h. Tangible Fixed Assets

Fixed assets are stated at their original cost of acquisition/installation less depreciation. All direct expenses attributable to acquisition/installation of assets are capitalised.

Capital work-in-progress:

Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

i. Intangible assets

Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase / completion is recognised as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset. j. Foreign Currency Transactions and Translation

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences on foreign exchange transactions settled during the year are recognised in the statement of profit and loss.

Monetary items denominated in foreign currency and outstanding at the balance sheet date are translated at the exchange rate prevailing at the date of balance sheet, the resultant exchange differences are recognised in the statement of profit and loss.

k. Investments

Long term investments are stated at cost less provision for other than temporary diminution in carrying value of each investment. Current investments are carried at lower of cost or fair value.

l. Employee Benefits

i. The Company's Employee's Provident Fund scheme is a defined contribution plan. The Company's contribution to the employees' provident fund is charged to the statement of profit and loss during the period in which the employee renders the related service.

ii. Short term employee benefits (Medical, Leave travel allowance, etc.) expected to be paid in exchange for the services rendered are recognised on undiscounted basis.

iii. The Company provides for gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides a

lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment.

The Company also makes contributions to funds administered and managed by the insurance companies for the amount notified by the said insurance companies.

The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the projected unit credit method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation is based on the market yields on government securities as at the balance sheet date. Actuarial gains/losses are recognised immediately in the statement of profit and loss.

The liability with respect to the Gratuity Plan is determined based on actuarial valuation done by an independent actuary at the year end and any differential between the fund amount as per the insurer and the actuarial valuation is charged to the statement of profit and loss.

iv. Benefits comprising long term compensated absences constitute other long term employee benefits. The liability for compensated absences is provided on the basis of an actuarial valuation done by an independent actuary at the year end. Actuarial gains and losses are recognised immediately in the statement of profit and loss.

m. Segment Information

i. Business Segments

Based on similarity of activities, risks and reward structure, organisation structure and internal reporting systems, the Company operates only in the media business segment which mainly comprises media and related operations.

ii. Geographic Segments

Secondary segmental reporting is performed on the basis of the geographical location of customers i.e. within India and overseas.

n. Leases

i. Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Operating lease charges are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.

ii. Finance Lease

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. The lower of fair value of asset and present value of minimum lease rentals is capitalised as fixed assets with corresponding amount shown as lease liability. The principal component in the lease rentals is adjusted against the lease liability and the interest component is charged to statement of profit and loss.

o. Earnings Per Share

The Company reports basic and diluted earnings per equity share in accordance with AS-20, Accounting Standard on Earnings Per Share. Basic earnings per equity share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding at the year end. Diluted earnings per equity share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding at the year end and except where the results would be anti-dilutive.

p. Taxes on income

Income tax comprises current tax and deferred tax. Current tax are determined in accordance with the provisions of Income Tax Act, 1961. Advance taxes and provisions for current taxes are presented in the balance sheet after off setting advance taxes paid and income tax provisions.

Deferred tax charge or credit is recognised on timing differences being the difference between taxable income and accounting income that originate in one year and are capable of reversal, subject to consideration of prudence, in one or more subsequent years. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets on unabsorbed depreciation and carry forward of losses are not recognised unless there is a virtual certainty that there will be sufficient future taxable income available to realise such assets.

Minimum alternate tax (MAT) paid in accordance with Income Tax Act, 1961, which gives rise to future economic benefit in the form of adjustment from income tax liability, is recognised when it is reasonably certain that the Company will be able to set off the same and adjust it from the current tax charge for that year.

q. Impairment of assets

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

r. Provisions and Contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes.

s. Employee Stock Based Payments

Stock options granted to the employees under the stock options schemes are accounted at intrinsic value as per the accounting treatment prescribed in the guidance note on Employee share based payments issued by the Institute of Chartered Accountants of India. Accordingly, the excess of market price, determined as per the guidance note, of underlying equity shares (market value), over the exercise price of the options is recognised as deferred stock compensation expense and is charged to statement of profit and loss on a straight line basis over the vesting period of the options. The amortised portion of the cost is shown under shareholders' funds. The value of the option forfeited during the year is credited to General Reserve.

t. Barter Transactions

Barter transactions are recognised at the fair value of consideration receivable or payable. When the fair value of the transactions cannot be measured reliably, the revenue/expense is measured at the fair value of the goods/services provided/received adjusted by the amount of cash or cash equivalent transferred.

u. Share issues expenses

Share issue expenses are adjusted on the date of issue of shares against the Securities Premium Reserve as permissible under Section 78(2) of the Companies Act, 1956, to the extent balance is available for utilisation in the Securities Premium Reserve.

v. Service tax input credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing / utilising the credits.


Mar 31, 2011

1. Background

ibn18 Broadcast Limited ("The Company" or "ibn18") was incorporated on 6 June, 2005 as Global Broadcast News Private Limited. The Company was converted into a public limited Company and a revised Certificate of Incorporation was issued to give effect to this change w.e.f. 12 December, 2005. Later, the name of the Company was changed to ibn18 Broadcast Limited (hereinafter referred as "ibn18") and a revised Certificate of Incorporation was issued to give effect to this change on 02 April, 2008. The Company is in the business of broadcasting, telecasting, relaying and transmitting general news programmes and operates the news channels "CNN IBN" (consequent to a licensing and content sharing agreement with Turner Broadcasting System Asia Pacific, Inc.). The commercial operations of the Company commenced on 17 December, 2005. Further, after merger of ibn7 undertaking of ibn18 Media & software Limited (formerly Jagran TV Private limited), ibn18 is broadcasting, telecasting, relaying and transmitting hindi general news programmes and operates the news channel "IBN7". Of the total equity share capital of the Company, 64,892,544 equity shares (Previous year 47,724,140 equity shares) of face value of Rs.2 each are held by Network 18 Media & Investments Limited (Network18) of which, 47,384,140 shares were issued to Network18 for consideration received other than cash pursuant to scheme of amalgamation between the company and SRH Broadcast News Holdings Private Limited.

Network18 Media & Investments Limited is the holding company by virtue of management control over the Company's operations.

The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles (GAAP) in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 to the extent applicable and in accordance with the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2. The Board of Directors of the Company in its meeting held on 7 July, 2010 considered and approved a Scheme of Arrangement ("the Scheme") between the Company, Network18 Media & Investments Limited ('Network18'), Television Eighteen India Limited ('TV18') and other group companies, under sections 391 to 394 read with section 78, 100 to 103 of the Companies Act, 1956. As per the Scheme, TV18's television businesses inter-alia consisting of business news channels viz. CNBC TV18 and CNBC Awaaz will be demerged and consolidated with the Company. On the same date, ibn18 Media Software Limited (ibn18 Media) a subsidiary of the Company and iNews.com Limited (iNews) will be merged into the Company and since these are either the wholly owned subsidiary or will become wholly owned subsidiary pursuant to scheme, no consideration will be payable to their shareholders. As per the Scheme, the shareholders of TV18 will be given 68 shares of the Company in lieu of 100 shares held in TV18.

The shareholders of the Company approved the Scheme on 21 December, 2010. The Scheme has been sanctioned by the Hon'ble High Court of Delhi on 26 April, 2011. The appointed date for the proposed restructuring is 1 April, 2010 and the Scheme shall be effective when the certified copies of the High Court Orders are filed with the jurisdictional Registrar of Companies, which is still pending. Accordingly no effect of the proposed restructuring has been given in these financial statements. Upon the Scheme becoming effective, the results of operations, assets and liabilities relating to the television business of TV18, shall be transferred to the Company. Further ibn18 Media and iNews will be merged with the Company.

3. Capital commitment, contingent liabilities and litigations

a. Estimated amounts of contracts remaining to be executed on capital account (net of advances) Rs.2.90 million (Previous year Rs. 0.86 million).

b. The Company has purchased capital equipment under the 'Export Promotion Capital Goods Scheme'. As per the terms of the licenses granted under the scheme, the Company has undertaken to achieve an export commitment of Rs. 740.64 million (Previous year Rs. 740.64 million) over a period of 8 years commencing from 10 August, 2005. In the event the Company is unable to execute its export obligations, the Company shall be liable to pay customs duty of Rs. 92.58 million (Previous year Rs. 92.58 million) and interest on the same at the rate of 15 per cent compounded annually. The banks have given a guarantee amounting to Rs. 115.30 million (Previous year Rs. 115.30 million) on behalf of the Company to the custom authorities for the same. The Company is hopeful of meeting the required export obligation.

c. The bank has given a guarantee amounting to Rs. 25.00 million (Previous year Rs. 25.00 million) on behalf of the Company to The Listing Department, Bombay Stock Exchange Limited.

d. The Company has given corporate guarantees of Rs. 249.00 million (Previous year Rs. 272.5 million) towards credit facility given by banks to IBN Lokmat. As at the year end Rs. 146.38 million was outstanding in respect of such loans.

e. The Company has received legal notices of claims / lawsuits filed against it relating to infringement of copyrights, objectionable contents and defamation suits in relation to the programmes produced by it, the aggregate claim being Rs. 3,124.15 million (Previous year Rs. 3,124.11 million). In the opinion of the management, no material liability is likely to arise on account of such claims/law suits and thus no provision has been made against these in financial statements.

4. Share Capital

The shareholders of the Company at the Extra Ordinary General Meeting held on 22 December, 2008 had approved the issue and allotment of 15,000,000 Convertible Warrants (Warrants) at a price of Rs.102/- each in accordance with the provisions of Chapter XIII of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 to RVT Investments Private Limited (RVT Investments), a promoter group company. The Company had allotted the aforesaid Warrants on 13 January, 2009 pursuant to which the Company received Rs. 153 Million being 10% of the total amount of Rs. 1,530 million in respect thereof.

RVT Investments had in the year ending 31 March, 2009 applied for conversion of 12,500,000 Warrants and paid Rs. 1,147.50 million towards balance amount payable (Rs. 91.80 per share). The Company had allotted 12,500,000 equity shares of face value of Rs. 2/- each upon conversion of Warrants at a premium of Rs 100/- per equity share as per the terms of issue of Warrants.

As at 1 April, 2009, 2,500,000 fully paid up Warrants amounting to Rs. 25.50 Million were outstanding for conversion into equity shares. The Company had received the share application money against these Warrants for conversion into equity shares. During the year ending 31 March, 2010, the Company had allotted 2,500,000 equity shares of face value of Rs. 2/- each upon conversion of remaining Warrants at a premium of Rs 100/- per equity share as per the terms of issue of Warrants.

5. Secured Loans

a. Cash credit from banks of Rs 674.72 million are secured as follows:

i. Cash credit facility of Rs 547.35 million are secured as follows:

- First pari passu charge on all the current assets of the company.

- Additionally secured by unconditional and irrevocable corporate guarantee of Network18 Media & Investments Limited

- Cash credit facility of Rs. 159.98 million is additionally secured by second charge on the Company's movable fixed assets.

ii. Cash credit facility of Rs. 127.37 million is secured by hypothecation of book debts.

b. The term loan of Rs. 555.02 million taken from banks is secured as follows:

i. Term loan of Rs. 40 million is secured by:

- First charge on the Company's movable assets, subject to the charges on current assets created/to be created in favour of the Company's bankers for securing borrowings for working capital requirements.

- Unconditional and irrevocable personal guarantee of a Director.

- Letter of comfort from Television Eighteen India Limited (TV18) whereby TV18 undertakes to take all necessary steps to ensure that the Company fulfils all necessary obligations under the agreement including arrangement of funds for payment to the bank in accordance with the terms and conditions of the loan agreement.

ii. Term loan of Rs. 74.03 million is secured by:

- First charge over entire fixed assets pool of IBN7 amounting to Rs 320.40 million as on 31 March 2009

- Unconditional and irrevocable corporate guarantee of Network18 Media & Investments Limited

iii. Term loan of Rs. 20.15 million is secured by:

- First charge on all movable assets including plant and machinery and equipment acquired / to be acquired out of the proceeds of the term loan of IBN7

- Unconditional and irrevocable corporate guarantee of Network18 Media & Investments Limited

iv. Term loan of Rs. 320.84 million is secured by:

- Subservient charge on all movable fixed assets (all present & future) of the Company.

- Unconditional and irrevocable corporate guarantee of Network18 Media & Investments Limited, to remain valid during currency of credit facility.

v. Term loan of Rs. 100.00 million is secured by:

- Subservient charge on all movable fixed assets (all present & future) of the Company.

- Unconditional and irrevocable corporate guarantee of Network18 Media & Investments Limited, to remain valid during currency of credit facility.

- Exclusive charge over the assets purchased.

c. Other secured loans are secured by hypothecation of vehicle and plant and machinery.

6. Investments

1. Having regard to the long term investment and strategic involvement with the Company, no provision is considered necessary for diminution in the value of following investment and advance for share application paid:

a. Investments in Viacom18 Media Private Limited (Viacom18)

The Company had in earlier years subscribed to 12 million 'Investor Warrants' of USD 3.33 (Rs.148.68 approximately) per warrant aggregating to USD 40 million (Rs.1,786.00 million approximately) in Viacom18 as follows:

i. Series "A" - 4,500,000 warrants

ii. Series "B" - 4,500,000 warrants

iii. Series "C" - 3,000,000 warrants

and had paid Rs. 1 each for these warrants aggregating to Rs. 12 million.

Each warrant was convertible into one fully paid up equity share of Viacom18 on exercise of options and on payment of the balance of the stipulated warrant consideration price. The option was exercisable during a period of 12, 24 and 36 months from the date of allotment of warrants of "A", " B ", and "C" series respectively.

As at the year ended 31 March 2011, the Company has an amount of Rs 200 million outstanding towards share application money and Rs. 440.20 million outstanding towards the balance consideration payable for the subscribed and allotted warrants of Series "C" which warrants are yet to be converted by Viacom18. These amounts are disclosed under loans and advances.

The Company's total investments in the capital of Viacom18 is Rs. 6,744.23 million as at the year ended 31 March 2011.

As at 31 March 2011, Viacom18 has accumulated losses and its net worth has been partially eroded.

b. Investments in IBN Lokmat Private Limited (IBN Lokmat)

The Company had invested Rs 437.75 million in IBN Lokmat. As at 31 March 2011, IBN Lokmat has significant accumulated losses and its net worth has been substantially eroded.

c. Investment in RVT Media Private Limited (RVT Media)

The Company had invested Rs. 26.20 million (including share application money) in RVT Media. RVT Media has consolidated accumulated losses and its networth has been partially eroded.

7. Provision is considered necessary for diminution in the value of following investment:

a. Investment in ibn18 Mauritius Limited (ibn18 Mauritius)

The Company had invested Rs. 658.94 million (including amount paid for Debentures) in ibn18 Mauritius. ibn18 mauritius has significant accumulated losses and its networth has been completely eroded. Accordingly, the Company had made a provision of Rs. 658.94 million towards diminution in the value of total investment.

8. Earnings per share (EPS)

Basic earnings per equity share have been computed by dividing net profit after tax by the weighted average number of equity shares outstanding for the year ended 31 March, 2011. Diluted earnings per equity share have been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year. The details are:

9. Deferred tax

The Company has carried out its tax computation in accordance with the mandatory standard on accounting, AS 22 – 'Accounting for Taxes on Income' referred in Companies (Accounting Standards) Rules, 2006. In view of its significant accumulated losses, the Company has not provided for deferred tax assets as there is no virtual certainty that there will be sufficient future taxable income available to realise such assets. In accordance with the same no deferred tax asset / liability was required at the year end.

10. Segmental reporting

The Company is engaged in the business of production and telecast of news and current affairs programmes primarily in India. As the Company operates in a single business and geographical segment, the reporting requirements for primary and secondary segment disclosures prescribed by paragraphs 39 to 51 of Accounting Standard 17 Segment Reporting, have not been provided in these financial statements.

11. Employee Benefits

a. Description of the Gratuity plan

The gratuity liability arises on retirement, withdrawal, resignation and death of an employee. The aforesaid liability is calculated on the basis of fifteen days salary (i.e. last drawn salary plus dearness allowance) for each completed year of service subject to completion of five years service.

12. GBN Employees Stock Option Plan 2007 ("ESOP 2007")

a. The Company had established an Employee Stock Option Plan (ESOP 2007) in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which have been approved by the Board of Directors and the shareholders. A remuneration/ compensation committee comprising independent, non executive members of the Board of Directors administers the ESOPs. All options under the ESOPs are exercisable for equity shares. The Company had declared stock split of 1 equity share of face value of Rs. 10 each in 5 equity share of Rs. 2 each through postal ballot dated 19 December 2007, the results of which were declared on 25 January 2008. The Company plans to grant upto 1,700,000 (8,500,000 options pursuant to split of 1 share of face value of Rs.10 in 5 shares of face value of Rs.2 each) options to eligible employees and directors of the Company and its subsidiaries and holding company of the Company.

b. Options which have been granted under ESOP 2007 shall vest with the grantee equally over a four year period from the date of grant. The exercise period of the options is a period of two years after the vesting of the options. Each option is exercisable for one equity share of Rs. 10 each (for one equity share of Rs 2 each after split) fully paid up on payment of exercise price (as determined by the remuneration/compensation committee) of share determined with respect to the date of grant. The Company has granted 5,020,642 options upto 31 March, 2011.

d. The Finance Act 2009 has abolished Fringe Benefit Tax (FBT) on Employees' Stock Option Plan, hence there is no charge in these financial statements.

13. Related Party disclosures

a. Related parties and their relationships Holding Company

i. Network18 Media & Investments Limited (Network18) (formerly Network18 Fincap Limited)

Subsidiary Companies

i. RVT Media Private Limited (RVT Media)

ii. ibn18 Media and Software Limited (ibn18 Media) (Formerly Jagran TV Private Limited (Jagran TV)

iii. ibn18 (Mauritius) Ltd w.e.f 1 April, 2009

iv AETN18 Media Private Limited (AETN18) w.e.f 22 November, 2010

Joint Venture

i. IBN Lokmat News Private Limited (IBN Lokmat)

ii. Viacom18 Media Private Limited (Viacom18) w.e.f 1 April, 2009

Fellow Subsidiaries

i. Television Eighteen India Limited (TV18)

ii. Network18 India Holdings Private Limited (N-18 Holding)

iii. Setpro18 Distribution Limited (Setpro18), formerly Setpro 18 Distribution Private Limited

iv. Television Eighteen Mauritius Limited, Mauritius (TEML) [Subsidiary of TV18]

v. NewsWire18 Limited (Newswire), formerly News Wire18 India Private Limited till 27 February, 2009 [Subsidiary of TV18]

vi. RVT Investments Private Limited (RVT) [Subsidiary of TV18]

vii. Infomedia 18 Limited (Infomedia) w.e.f 21 August, 2008 [Subsidiary of TV18]

viii. Web18 Holdings Limited, Cayman Islands (Web18 Holding) [Subsidiary of TEML]

ix. BK Holdings Limited, Mauritius (BKH) [Subsidiary of TEML]

x. TV18 UK Limited (TV18 UK) [Subsidiary of TEML]

xi. E-18 Limited, Cyprus (E-18, Cyprus) [Subsidiary of Web18 Holding]

xii. e-Eighteen.com Limited (E-18) [Subsidiary of E-18, Cyprus]

xiii. Television Eighteen Commoditiescontrol.com Limited (TECCL) [Subsidiary of E-18, Cyprus]

xiv. Web18 Software Services Limited (Web18) [Subsidiary of E-18, Cyprus]

xv. Care Websites Private Limited (Care) w.e.f. 14 February, 2008 [Subsidiary of E-18, Cyprus]

xvi. Moneycontrol Dot Com India Limited (MCD) [subsidiary of E-18]

xvii. TV18 Home Shopping Network Limited (TV18 HSN)

xviii.Bigtree Entertainment Private Limited (Bigtree)

xix. Digital18 Media Limited (Digital18) w.e.f. 01 July, 2010

Individual exercising control

i. Raghav Bahl (RB)

Key management personnel and their relatives

i. Sameer Manchanda (SM) upto 22 October, 2010

ii. Rajdeep Sardesai (RS)

iii. Sagarika Ghose (SG)

Entity under significant influence

i. SGA News Limited (SGA News) upto 18 August, 2010

ii. Greycells 18 Media Limited (Greycells)

iii. Digital18 Media Limited (Digital18) upto 30 June, 2010

14. Barter Transactions

During the year ending 31 March, 2011, the Company had entered into barter transactions, which were recorded at the fair value of consideration receivable or payable. The Income from operations for the year ended 31 March, 2011 has been net of, to reflect revenue from barter transactions of Rs. 102.32 million and expenditure of Rs. 93.93 million being the fair value of barter transactions provided and received.

15. Transfer Pricing

As per the Transfer Pricing Rules of the Income tax Act, 1961 every company is required to get a transfer pricing study conducted to determine whether the international transactions with associated enterprises were undertaken at an arm's length basis for each financial year end. Transfer pricing study for the transactions during the year ended 31 March, 2011 is currently in progress and hence adjustments if any which may arise there from have not been taken into account in these financial statements for the year ended 31 March, 2011 and will be effective in the financial statements for the year ended 31 March, 2012. However in the opinion of the Company's management, adjustments, if any, are not expected to be material.

16. Disclosures as per Micro, Small and Medium Enterprises Development Act, 2006 (MSMED)

Based on the information available with the Company, the balance due to micro and small enterprises as defined under the MSMED Act, 2006 is Rs. Nil (Previous year Rs. Nil) and no interest has been paid or is payable under the terms of the MSMED Act, 2006.

17. Foreign exchange forward contracts

The Company does not use foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions.

18. Previous year's amounts have been reclassified/ regrouped to conform to the current year's presentation.


Mar 31, 2010

The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles (GAAP) in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 to the extent applicable and in accordance with the provisions of the Companies Act, 1956 as adopted consistently by the Company. The signifcant accounting policies adopted in presentation of the financial statements are:

a. Revenue Recognition

i. Income from media operations includes:

- Advertisement revenue comprising:

- Revenue from sale of advertising time, which is recognised on the accrual basis when advertisements are telecast in accordance with contractual obligations.

- Revenue from sponsorship contracts, which is recognised proportionately over the term of the sponsorship.

- Subscription revenue which is recognised on accrual basis in accordance with the terms of the contract with the distribution and collection agency.

- Facility and equipment rental is accounted for on the accrual basis for the period of use of equipment by the customers. ii. Dividends on investments are accounted for when the right to receive dividend is established.

iii. Interest income is recognized on time proportionate basis, taking into account the amount outstanding and the rate applicable.

b. Fixed Assets

Fixed assets are stated at their original cost of acquisition/installation less depreciation. All direct expenses attributable to acquisi- tion/installation of assets are capitalised.

c. Depreciation

Depreciation on all assets other than leasehold improvements and computer software is charged on straight line basis over the estimated useful lives, using rates (including double/triple shift depreciation rates wherever applicable) prescribed by Schedule XIV of the Companies Act, 1956. Cost of leasehold improvements is being amortised over the remaining period of lease (including renewal options) of the premises.

Computer software is depreciated over a period of 5 years. These rates are higher than those prescribed in Schedule XIV of the Companies Act, 1956.

Depreciation on additions is charged proportionately from the date of acquisition/ installation. Assets costing Rs. 5,000 or less individually have been fully depreciated in the year of purchase.

d. Impairment of assets

At each balance sheet date, the Company reviews the carrying amounts of its fxed assets to determine whether there is any indica- tion that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss.

Recoverable amount is the higher of an asset’s net selling price and value in use. In assessing value in use, the estimated future cash fows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that refects the current market assessments of time value of money and the risks specifc to the asset. Reversal of impairment loss is recognised immediately as income in the proft and loss account.

e. Inventories

Inventories consist of blank betacam tapes and are stated at cost on First in First out (FIFO) basis. Stocks of other tapes are written off at the time of purchase.

f. Investments

Long term investments are stated at cost less ‘other than temporary’ diminution in the value of such investments. Current invest- ments are carried at lower of cost or fair value.

g. Employee Benefts

i. The Company’s employee’s provident fund scheme is a defned contribution plan. The Company’s contribution to the em- ployees’ provident fund is charged to the proft and loss account during the period in which the employee renders the related service.

ii. Short term employee benefts (Medical, Leave travel allowance, etc.) expected to be paid in exchange for the services rendered are recognised on undiscounted basis.

iii. The Company provides for gratuity, a defned benefit retirement plan (the "Gratuity Plan") covering eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the tenure of employment.

The present value of the obligation under such defned beneft plan is determined based on actuarial valuation using the pro- jected unit credit method, which recognises each period of service as giving rise to additional unit of employee beneft entitle- ment and measures each unit separately to build up the fnal obligation. The obligation is measured at the present value of the estimated future cash fows. The discount rate used for determining the present value of the obligation is based on the market yields on government securities as at the balance sheet date. Actuarial gains/losses are recognised immediately in the proft and loss account.

iv. Benefts comprising long term compensated absences constitute other long term employee benefts. The liability for compen- sated absences is provided on the basis of an actuarial valuation done by an independent actuary at the year end. Actuarial gains and losses are recognised immediately in the proft and loss account.

h. Foreign Currency Translation

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences on foreign exchange transactions settled during the year are recognised in the proft and loss account.

Monetary items denominated in foreign currency and outstanding at the balance sheet date are translated at the exchange rate prevailing at the date of balance sheet, the resultant exchange differences are recognised in the proft and loss account.

i. Taxation

Income tax comprises current tax, deferred tax and fringe beneft tax. Current tax and fringe beneft tax are determined in accor- dance with the provisions of Income Tax Act, 1961. Advance taxes and provisions for current taxes are presented in the balance sheet after offsetting advance taxes paid and income tax provisions.

Deferred tax charge or credit is recognised on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal, subject to consideration of prudence, in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

j. Earnings Per Share

The Company reports basic and diluted earnings per equity share in accordance with AS-20, Accounting Standard on Earnings Per Share. Basic earnings per equity share is computed by dividing net proft after tax by the weighted average number of equity shares outstanding during the year ending 31 March, 2010. Diluted earnings per equity share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year ending 31 March 2010 and except where the results would be anti-dilutive.

k. Borrowing Costs

Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset when it is probable that they will result in future economic benefts to the enterprise and the costs can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred.

l. Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reporting balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and reporting amounts of income and expenses during the year. Examples of such estimates include provision for doubtful debts, future obligations under employee retirement beneft plans, income taxes, foreseeable estimated contract losses and useful life of fxed and intangible assets. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Actual results could differ from such esti- mates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

m. Employee Stock Option Scheme (ESOS)

Stock options granted to the employees under the stock options schemes are accounted at intrinsic value as per the accounting treat- ment prescribed by the guidance note on Employee share based payments issued by the Institute of Chartered Accountants of India. Accordingly, the excess of market price, determined as per the guidance note, of underlying equity shares (market value), over the exercise price of the options is recognised as deferred stock compensation expense and is charged to proft and loss account on a straight line basis over the vesting period of the options. The amortised portion of the cost is shown under reserves and surplus.

n. Provisions and Contingencies

A provision is recognised when the Company has a present obligation as a result of a past event, when it is probable that an outfow of resources embodying economic benefts will be required to settle the obligation and reliable estimate can be made of the amount of the obligation. A contingent liability is recognised where there is a possible obligation or a present obligation that may, but prob- ably will not, require an outfow of resources.

o. Leases

i. Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefts of ownership of the leased asset are classifed as operating leases. Operating lease charges are recognised as an expense in the proft and loss account on a straight-line basis over the lease term.

ii. Finance Lease

Leases under which the Company assumes substantially all the risks and rewards of ownership are classifed as fnance leases. The lower of fair value of asset and present value of minimum lease rentals is capitalised as fxed assets with corresponding amount shown as lease liability. The principal component in the lease rentals is adjusted against the lease liability and the inter- est component is charged to proft and loss account.

p. Barter Transactions

Barter transactions are recognised at the fair value of consideration receivable or payable. When the fair value of the transactions cannot be measured reliably, the revenue/expense is measured at the fair value of the goods/services provided/received adjusted by the amount of cash or cash equivalent transferred.

q. Segment Information

i. Business Segments

Based on similarity of activities, risks and reward structure, organisation structure and internal reporting systems, the Company operates in the media business segment mainly comprising media and related operations.

ii. Geographic Segments

Secondary segmental reporting is performed on the basis of the geographical location of customers i.e. within India and overseas.


Mar 31, 2009

The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles (GAAP) in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 to the extent applicable and in accordance with the provisions of the Companies Act, 1956 as adopted consistently by the Company. The significant accounting policies adopted in presentation of the financial statements are:

a. Revenue Recognition

i. Income from media operations includes:

- Advertisement revenue comprising:

- Revenue from sale of advertising time, which is recognised on the accrual basis when advertisements are telecast in accordance with contractual obligations.

- Revenue from sponsorship contracts, which is recognised proportionately over the term of the sponsorship.

- Subscription revenue which is recognised on accrual basis in accordance with the terms of the contract with the distribution and collection agency.

- Facility and equipment rental is accounted for on the accrual basis for the period of use of equipment by the customers. ii. Dividends on investments are accounted for when the right to receive dividend is established.

b. Fixed Assets

Fixed assets are stated at their original cost of acquisition/installation less depreciation. All direct expenses attributable to acquisition/ installation of assets are capitalised.

c. Depreciation

Depreciation on all assets other than leasehold improvements and computer software is charged on straight line basis over the estimated useful lives, using rates (including double/triple shift depreciation rates wherever applicable) prescribed by Schedule XIV of the Companies Act, 1956.

Cost of leasehold improvements is being amortised over the remaining period of lease (including renewal options) of the premises.

Computer software is depreciated over a period of 5 years. These rates are higher than those prescribed in Schedule XIV of the Companies Act, 1956.

Depreciation on additions is charged proportionately from the date of acquisition/ installation. Assets costing less than Rs. 5,000 individually have been fully depreciated in the year of purchase.

d. Impairment of assets

At each balance sheet date, the Company reviews the carrying amounts of its fixed assets to determine whether there is any indication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss.

Recoverable amount is the higher of an asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that refects the current market assessments of time value of money and the risks specifc to the asset.

Reversal of impairment loss is recognised immediately as income in the profit and loss account.

e. Inventories

Inventories consist of blank betacam tapes and are stated at cost on First in First out (FIFO) basis. Stocks of other tapes are written off at the time of purchase.

f. Investments

Long term investments are stated at cost less other than temporary diminution in the value of such investments. Current investments are carried at lower of cost or fair value.

g. Employee Benefits

i. The Company’s employee’s provident fund scheme is a defined contribution plan. The Company’s contribution to the employees’ provident fund is charged to the profit and loss account during the period in which the employee renders the related service.

ii. Short term employee benefits (Medical, Leave travel allowance, etc.) expected to be paid in exchange for the services rendered are recognised on undiscounted basis.

iii. The Company provides for gratuity, a defined benefit retirement plan (the “Gratuity Plan”) covering eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the tenure of employment.

The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the projected unit credit method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation is based on the market yields on government securities as at the balance sheet date. Actuarial gains/losses are recognised immediately in the profit and loss account.

iv. Benefits comprising long term compensated absences constitute other long term employee benefits. The liability for compensated absences is provided on the basis of an actuarial valuation done by an independent actuary at the year end. Actuarial gains and losses are recognised immediately in the profit and loss account.

h. Taxation

Income tax comprises current tax, deferred tax and fringe benefit tax. Current tax and fringe benefit tax are determined in accordance with the provisions of Income Tax Act, 1961. Advance taxes and provisions for current taxes are presented in the balance sheet after offsetting advance taxes paid and income tax provisions.

Deferred tax charge or credit is recognised on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal, subject to consideration of prudence, in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

i. Earnings Per Share

The Company reports basic and diluted earnings per equity share in accordance with AS-20, Accounting Standard on Earnings Per Share. Basic earnings per equity share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding during the year ending 31 March, 2009. Diluted earnings per equity share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year ending 31 March 2009 except where the results would be anti-dilutive.

j. Borrowing Costs

Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset when it is probable that they will result in future economic benefits to the enterprise and the costs can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred.

k. Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reporting balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and reporting amounts of income and expenses during the year. Examples of such estimates include provision for doubtful debts, future obligations under employee retirement benefit plans, income taxes, foreseeable estimated contract losses and useful life of fixed and intangible assets. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Actual results could differ from such estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

l. Employee Stock Option Scheme (ESOS)

Stock options granted to the employees under the stock options schemes are accounted at intrinsic value as per the accounting treatment prescribed by the guidance note on Employee share based payments issued by the Institute of Chartered Accountants of India. Accordingly, the excess of market price, determined as per the guidance note, of underlying equity shares (market value), over the exercise price of the options is recognised as deferred stock compensation expense and is charged to profit and loss account on a straight line basis over the vesting period of the options. The amortised portion of the cost is shown under reserves and surplus.

m. Provisions and Contingencies

A provision is recognised when the Company has a present obligation as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and reliable estimate can be made of the amount of the obligation. A contingent liability is recognised where there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.

n. Leases

i. Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Operating lease charges are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.

ii. Finance Lease

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases.

The lower of fair value of asset and present value of minimum lease rentals is capitalised as fixed assets with corresponding amount shown as lease liability. The principal component in the lease rentals is adjusted against the lease liability and the interest component is charged to profit and loss account.

o. Barter Transactions

Barter transactions are recognised at the fair value of consideration receivable or payable. When the fair value of the transactions cannot be measured reliably, the revenue/expense is measured at the fair value of the goods/services provided/received adjusted by the amount of cash or cash equivalent transferred.

p. Segment Information

i. Business Segments

Based on similarity of activities, risks and reward structure, organisation structure and internal reporting systems, the Company operates in the media business segment mainly comprising media and related operations.

ii. Geographic Segments

Secondary segmental reporting is performed on the basis of the geographical location of customers i.e. within India and overseas

1. Scheme of arrangement between Jagran TV Private Limited, BK Fincap Private Limited and ibn18 Broadcast Limited

The Companys Scheme of Arrangement has been approved by the Honorable High Court of Delhi on 15 September, 2008 and filed with the Registrar of Companies on 22 November, 2008. The scheme was to:

- merge IBN 7 News Undertaking of Jagran TV Private Limited (JTV) into ibn18 with effect from 1 October, 2007 (Appointed date); and

- merge B K Fincap Private Limited (BK Fincap) with ibn18 with effect from 2 October, 2007 (Appointed date).

Consequent upon these mergers, BK Fincap Private Limited stands dissolved and Jagran TV Private Limited continue to exist to carry on the other activities.

a. Merger of ibn7 News Undertaking of JTV into ibn18 (Scheme A)

i. News Business Undertaking of JTV comprising the business activities of running the ‘IBN7’ channel along with all related assets, liabilities and employees has been transferred on a going concern basis at book value to the company from the appointed date of 1 October 2007. The company without any further payment has issued 24.23 fully paid up equity shares of face value of Rs. 10 each (121.15 fully paid up equity shares of face value of Rs. 2 each) to shareholders of Jagran TV Private Limited for every 100 Equity shares of face value of Rs. 10 each held in Jagran TV Private Limited.

ii. The scheme became effective on approval by the Honorable High Court of Delhi and its filing with the Registrar of Companies on 22 November, 2008. The following assets and liabilities of ibn 7 News Undertaking were transferred to the Company at book value as on the appointed date:

iii. As per the scheme, during the intervening period, JTV shall be deemed to have been carrying on all business and activities relating to the merged undertaking on behalf of the ibn18 and all profits accruing to the Transferor Company, or losses arising or incurred by them relating to the merged undertaking shall be treated as the profits or losses of the ibn18.

iv. Debit balance of profit and loss account of Rs. 93,094,889 of IBN 7 News Undertaking for the period 1 October, 2007 to 31 March, 2008 was adjusted from the opening balance of the profit and loss account of the previous year.

v. Share application money pending allotment inter-se between the Company and IBN 7 News Undertaking amounting to Rs. 20,000,000 appearing in the books of accounts of the Company and division stands cancelled.

b. Merger of BK Fincap Private Limited

i. BK Fincap Private Limited which is a holding company of JTV, along with all related assets, liabilities and employees has been merged on a going concern basis at book value to the company from the appointed date of 2 October, 2007. In consonance to the above mentioned scheme, ibn18 has issued 1,662.76 fully paid up equity shares of face value of Rs. 10 each (8,313.80 fully paid up equity shares of face value of Rs. 2 each) to shareholders of BK Fincap Private Limited for every 100 Equity shares of face value of Rs. 10 each held in BK Fincap Private Limited.

ii. The scheme became effective on approval by the Honorable High Court of Delhi and its filing with the Registrar of Companies on 22 November, 2008. On the scheme becoming effective, the following assets and liabilities of BK Fincap Private Limited were transferred to the Company at book value:

iii. Share application money pending allotment inter-se between the Company and BK Fincap amounting to Rs. 115,000,000 appearing in the books of accounts of the respective Companies stands cancelled.

iv. Pursuant to the Scheme of Arrangement, the amount representing the difference between:

- Assets and liabilities transferred pursuant to the amalgamation of BK Fincap and consequent cancellation of New Equity shares on Demerger issued to BK Fincap, and

- Aggregate value of New Equity Shares on Amalgamation and cancellation of investment by ibn18 in the equity shares of BK Fincap; shall be debited to the Securities Premium Account of ibn18.

v. Debit balance of profit and loss account of Rs. 36,268 of BK Fincap for the period 2 October, 2007 to 31 March, 2008 was adjusted from the opening balance of the profit and loss account of the previous year.


Mar 31, 2008

The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles (GAAP) in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 to the extent applicable and in accordance with the provisions of the Companies Act, 1956 as adopted consistently by the Company. The significant accounting policies adopted in presentation of the financial statements are:

a. Revenue Recognition

i. Income from media operations includes:

- Advertisement revenue comprising:

- Revenue from sale of advertising time, which is recognised on the accrual basis when advertisements are telecast in accordance with contractual obligations.

- Revenue from sponsorship contracts, which is recognised proportionately over the term of the sponsorship.

- Subscription revenue which is recognised on accrual basis in accordance with the terms of the contract with the distribution and collection agency.

- Facility and equipment rental is accounted for on the accrual basis for the period of use of equipment by the customers.

ii. Dividends on investments are accounted for when the right to receive dividend is established.

b. Fixed Assets

Fixed assets are stated at their original cost of acquisition/installation less depreciation. All direct expenses attributable to acquisition/installation of assets are capitalised.

c. Depreciation

Depreciation on all assets other than leasehold improvements and computer software is charged on straight line basis over the estimated useful lives, using rates (including double/ triple shift depreciation rates wherever applicable) prescribed by Schedule XIV of the Companies Act, 1956.

Cost of leasehold improvements is being amortised over the remaining period of lease (including renewal options) of the premises. Computer software is depreciated over a period of 5 years. These rates are higher than those prescribed in Schedule XIV of the Companies Act, 1956.

Depreciation on additions is charged proportionately from the date of acquisition/ installation. Assets costing less than Rs. 5,000 individually have been fully depreciated in the year of purchase.

d. Impairment of assets

At each balance sheet date, the Company reviews the carrying amounts of its fixed assets to determine whether there is any indication that those assets suffered ah impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss.

Recoverable amount is the higher of an assets net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset. Reversal of impairment loss is recognised immediately as income in the profit and loss account.

e. Inventories

Inventories consist of blank videotapes and are stated at cost on First in First out (FIFO) basis. Stocks of other tapes are written off at the time of purchase.

f. Investments

Long term investments are stated at cost less other than temporary diminution in the value of such investments. Current investments are carried at lower of cost or fair value.

g. Employee Benefits

i. The Companys employees provident fund scheme is a defined contribution plan. The Companys contribution to the employees provident fund is charged to the profit and loss account during the period in which the employee renders the related service.

ii. Short term employee benefits (Medical, Leave travel allowance, etc.) expected to be paid in exchange for the services rendered are recognised on undiscounted basis.

iii. The Company provides for gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employees salary and the tenure of employment.

The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the projected unit credit method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cashflows. The discount rate used for determining the present value of the obligation is based on the market yields on government securities as at the balance sheet date. Actuarial gains/losses are recognised immediately in the profit and loss account.

iv. Benefits comprising long term compensated absences constitute other long term employee benefits. The liability for compensated absences is provided on the basis of an actuarial valuation done by an independent actuary at the year end. Actuarial gains and losses are recognised immediately in the profit and loss account.

h. Foreign Currency Translation

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences on foreign exchange transactions settled during the year are recognised in the profit and loss account.

Monetary items denominated in foreign currency and outstanding at the balance sheet date are translated at the exchange rate prevailing at the date of balance sheet, the resultant exchange differences are recognised in the profit and loss account.

i. Taxation

Income tax comprises current tax, deferred tax and fringe benefit tax-Current tax and fringe benefit tax are determined in accordance with the provisions of Income Tax Act, 1961. Advance taxes and provisions for current taxes are presented in the balance sheet after off setting advance taxes paid and income tax provisions.

Deferred tax charge or credit is recognised on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal, subject to consideration of prudence, in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

j. Earnings Per Share

The Company reports basic and diluted earnings per equity share in accordance with AS-20, Accounting Standard on Earnings Per Share. Basic earnings per equity share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding during the year ending 31 March, 2008. Diluted earnings per equity share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year ending 31 March, 2008 except where the results would be anti-dilutive.

k. Borrowing Costs

Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset when it is probable that they will result in future economic benefits to the enterprise and the costs can be measured reliably.

Other borrowing costs are recognised as an expense in the period in which they are incurred.

I. Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reporting balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and reporting amounts of income and expenses during the year. Examples of such estimates include provision for doubtful debts, future obligations under employee retirement benefit plans, income taxes, foreseeable estimated contract losses and useful life of fixed and intangible assets. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Actual results could differ from such estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

m. Employee Stock Option Scheme (ESOS)

Stock options granted to the employees under the stock options schemes are accounted at intrinsic value as per the accounting treatment prescribed by the guidance note on Employee share based payments issued by the Institute of Chartered Accountants of India. Accordingly, the excess of market price, determined as per the guidance note, of underlying equity shares (market value), over the exercise price of the options is recognised as deferred stock compensation expense and is charged to profit and loss account on a straight line basis over the vesting period of the options. The amortised portion of the cost is shown under reserves and surplus.

n. Provisions and Contingencies

A provision is recognised when the Company has a present obligation as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and reliable estimate can be made of the amount of the obligation. A contingent liability is recognised where there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.

o. Leases

i. Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Operating lease charges are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.

ii. Finance Lease

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases.

The lower of fair value of asset and present value of minimum lease rentals is capitalised as fixed assets with corresponding amount shown as lease liability. The principal component in the lease rentals is adjusted against the lease liability and the interest component is charged to profit and loss account.

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