Accounting Policies of Den Networks Ltd. Company
Mar 31, 2022
1. Corporate information
DEN NETWORKS LIMITED (hereinafter referred to as ''the Company'' or ''DEN'') was incorporated in India on 10 July, 2007 and is primarily engaged in distribution of television channels through digital cable distribution network. The Company is having its registered office at Unit No.116, First Floor, C Wing Bldg. No. 2 Kailas Industrial Complex L.B.S Marg, Park Site Vikhroli(W), Mumbai- 400079.
The equity shares of the Company are listed on two of the stock exchanges in India i.e NSE and BSE.
2. Significant accounting policies2.01 Basis of preparation
(i) Statement of Compliance
The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013 (the Act) read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India.
(ii) Basis of preparation and presentation
The standalone financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102 Share based payments, leasing transactions that are within the scope of Ind AS 116 Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 Inventories or value in use in Ind AS 36 Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety,
which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the assets or liability.
2.02 Cash and cash equivalents
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) and highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
Cash flows are reported using indirect method, whereby Profit/(loss) after tax reported under Statement of Profit and loss is adjusted for the effects of transactions of noncash 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 available information.
2.04 Property, plant and equipment
All the items of property, plant and equipment are stated at historical cost net of Input tax credit less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives, using the straight-line method. The estimated useful life is taken in accordance with Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
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a. Headend and distribution equipment |
6 -15 years |
|
b. Set top boxes (STBs) |
8 years |
|
c. Computers |
3 years and 6 years |
|
d. Office and other equipment |
3 to 10 years |
|
e. Furniture and fixtures |
6 years |
|
f. Vehicles |
6 years |
|
g. Leasehold improvements |
Lower of the useful life and the remaining period of lease |
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Transition to Ind AS
The Company had elected to continue with the carrying value of all of its property, plant and equipment recognised as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Distribution network rights and non-compete fees represents amounts paid to local cable operators/distributors to acquire rights over a particular area for a specified period of time. Other intangible assets include software.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, and are recognised in profit or loss when the asset is derecognised.
Useful lives of intangible assets
Estimated useful life of the intangible assets are:
|
a. |
Distribution network rights |
5 years |
|
b. |
Software |
5 years |
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c. |
Non-compete fees |
5 years |
Transition to Ind AS
The company had elected to continue with the carrying value of all of its intangible assets recognised as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
2.06 Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cashgenerating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
The Company derives revenues primarily by providing service in respect of distribution of television channels through digital cable distribution network.
Revenue is recognized on satisfaction of performance obligation upon transfer of promised products or services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services.
Generally, control is transfer upon shipment of products to the customer or when the product is made available to the customer, provided transfer of title to the customer occurs and the Company has not retained any significant risks of ownership or future obligations with respect to the product shipped.
Service revenue comprises:
(i) Subscription income from digital and analog subscribers, placement of channels, advertisement revenue, fees for rendering management, technical and consultancy services and other related services.
(ii) Activation fees on Set top boxes (STBs) is deferred and recognized over the period of customer relationship on activation of boxes.
(iii) Amounts billed for services in accordance with contractual terms but where revenue is not recognized, have been classified as advance billing and disclosed under current liabilities.
Revenue is measured at the amount of consideration which the company expects to be entitled to in exchange for transferring distinct product or services to a customer as specified in the contract, excluding amounts collected on behalf of third parties (for example taxes and duties collected on behalf of the government). Consideration is generally due upon satisfaction of performance obligations and a receivable is recognized when it becomes unconditional.
Revenue in excess of invoicing are classified as contract assets ("unbilled revenue") while invoicing in excess of revenues are classified as contract liabilities ("unearned and deferred revenue").
Dividend income and interest income
Dividend income from investments is recognised when the shareholder''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
Interest income from a financial assets is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
2.09 Share-based payment arrangements
Share-based payment transactions of the Company
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straightline basis over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
The functional currency for the Company is determined as the currency of the primary economic environment in which it operates. For the Company, the functional currency is the local currency of the country in which it operates, which is INR.
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in Statement of Profit and Loss except to the extent of exchange differences which are regarded as an adjustment to interest costs on foreign currency borrowings that are directly attributable to the acquisition or construction of qualifying assets which are capitalised as cost of assets.
Non-monetary items that are measured in terms of historical cost in a foreign currency are recorded using the exchange rates at the date of the transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of nonmonetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognised in Other Comprehensive Income or Statement of Profit and Loss are also recognised in Other Comprehensive Income or Statement of Profit and Loss, respectively).
In case of an asset, expense or income where a non-monetary advance is paid/received, the date of transaction is the date on which the advance was initially recognised. If there were multiple payments or receipts in advance, multiple dates of transactions are determined for each payment or receipt of advance consideration.
In preparing the financial statements of the Company, transactions in currencies other than the entity''s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Treatment of exchange differences
The exchange differences on monetary items are recognised in Profit or Loss in the period in which they arise.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Investment in subsidiaries
A subsidiary is an entity controlled by the Company. Control exists when the Company has power over the entity, is exposed, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the entity. Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly affect the entity''s returns. Investments in subsidiaries are carried at cost less impairment. Cost comprises price paid to acquire the investment and directly attributable cost.
Investment in associates
An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
The investment in associates are carried at cost less impairment. The cost comprises price paid to acquire the investment and directly attributable cost.
Transition to Ind AS
The Company had elected to continue with the carrying value of all of its equity invetsments as of 1 April, 2015 (transition date) measured as per the previous GAAP and
use that carrying value as its deemed cost as of the transition date.
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely Payments of principal and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
⢠the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Interest income is recognised in profit or loss for FVTOCI debt instruments. For the purposes of recognising foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortised cost. Thus, the exchange differences on the amortised cost are recognised in profit or loss and other changes in the fair value of FVTOCI financial assets are recognised in other comprehensive income and accumulated under the heading of ''Reserve for debt instruments through other comprehensive income'' When the investment is disposed of, the cumulative gain or loss previously accumulated in this reserve is reclassified to profit or loss.
All other financial assets are subsequently measured at fair value.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the "Other income".
Investments in equity instruments at FVTOCI
On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the ''Reserve for equity instruments through other comprehensive income'' The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
⢠it has been acquired principally for the purpose of selling it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
⢠it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading.
Debt instruments that do not meet the amortised cost criteria or FVTOCI criteria (see above) are measured at FVTPL. In addition, debt instruments that meet the amortised cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at FVTPL.
A financial asset that meets the amortised cost criteria or debt instruments that meet the FVTOCI criteria may be designated
as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ''Other income''. Dividend on financial assets at FVTPL is recognised when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, lease receivables, trade receivables and other contractual rights to receive cash or other financial assets and financial guarantees not designated as at FVTPL.
For trade receivables or any contractual right to receive cash or another financial assets that result from transactions that are within the scope of Ind AS 115, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is
recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longerrecognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
2.12 Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company entity are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
a) Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
⢠it has been incurred principally for the purpose of repurchasing it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
⢠it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies, may be designated as at FVTPL upon initial recognition if:
⢠such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
⢠the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s risk management or investment strategy, and information about the grouping isprovided internally on that basis; or
⢠it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ''Other income''.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liability''s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are recognised in profit or loss. The remaining amount of change in the fair value of liability is always recognised in profit or loss. Changes in fair value attributable to a
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
a. service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
b. net interest expense or income; and
c. remeasurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item ''Employee benefits expense'' Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
Contributions from employees or third parties to defined benefit plans
Discretionary contributions made by employees or
financial liability''s credit risk that are recognised in other comprehensive income are reflected immediately in retained earnings and are not subsequently reclassified to profit or loss.
b) Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ''Finance costs''.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
c) Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in ''Other income''
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
d) Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
Retirement benefits costs and termination benefits
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions: third parties reduce service cost upon payment of these contributions to the plan.
When the formal terms of the plans specify that there will be contributions from employees or third parties, the accounting depends on whether the contributions are linked to service, as follows:
⢠If the contributions are not linked to services (e.g. contributions are required to reduce a deficit arising from losses on plan assets or from actuarial losses), they are reflected in the remeasurement of the net defined benefit liability (asset).
⢠If contributions are linked to services, they reduce service costs. For the amount of contribution that is dependent on the number of years of service, the Company reduces service cost by attributing the contributions to periods of service using the attribution method required by Ind AS 19 for the gross benefits. For the amount of contribution that is independent of the number of years of service, the Company reduces service cost in the period in which the related service is rendered / reduces service cost by attributing contributions to the employee''s periods of service inaccordance with Ind AS 19.
The Company determines reportable segment based on information reported to the Chief Operating Decision Maker (CODM) for the purposes of resource allocation and assessment of segmental performance. The CODM evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by business segments. The accounting principles used in the preparation of the financial statements are consistently applied to record revenue and expenditure in individual segments.
The Company, as a lessee, recognizes a right-of-use asset and a lease liability for its leasing arrangements, if the contract conveys the right to control the use of an identified asset. The contract conveys the right to control the use of an identified asset, if it involves the use of an identified asset and the Company has substantially all of the economic benefits from use of the asset and has right to direct the use of the identified asset.
The cost of the right-of-use asset shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs incurred. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability.
The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate.
For short-term and low value leases, the Company recognises the lease payments as an operating expense on a straightline basis over the lease term.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of exceptional items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of exceptional items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for employee share options and bonus shares, if any, as appropriate.
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from ''profit before tax'' as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
2.19.1 Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under
which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
2.19.2 Restructurings
A restructuring provision is recognised when the Company has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.
2.19.3 Contingent liabilities acquired in a business combination
Contingent liabilities (if any) acquired in a business combination are initially measured at fair value at the acquisition date. At the end of subsequent reporting periods, such contingent liabilities are measured at the higher of the amount that would be recognised in accordance with Ind AS 37 and the amount initially recognised less cumulative amortisation.
Share issue expenses are adjusted against the Securities Premium Account as permissible under Section 52 of the Companies Act, 2013, to the extent any balance is available for utilisation in the Securities Premium Account. Share issue expenses in excess of the balance in the Securities Premium Account, if any is expensed in the Statement of Profit and Loss.
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
2.22 Critical accounting judgements and key sources of estimation uncertainty
Critical accounting judgements
The following are the critical judgements, apart from those involving estimations that the directors have made in the process of applying the Company''s accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
Contingent liabilities
Assessment of whether outflow embodying economic benefits is probable, possible or remote.
Control and significant influence
Whether the Company, through voting rights and potential voting rights attached to shares held, or by way of shareholders agreements or other factors, has the ability to direct the relevant activities of the subsidiaries, or jointly direct the relevant activities of its joint ventures or exercise significant influence over associates.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Useful lives of property, plant and equipment
The Company reviews the estimated useful lives of property, plant and equipment at the end of each reporting period. There is no such change in the useful life of the assets.
Fair value measurements and valuation processes
In estimating the fair value of an asset or liability, the Company uses market-observable data to the extent it is available. Where level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. The management works closely with qualified external valuers to establish the appropriate valuation techniques and inputs to the model.
Defined benefit obligations
Key assumptions related to life expectancies, salary increases and withdrawal rates.
Revenue recognition See note 2.07
Estimation uncertainty relating to the global health pandemic
The outbreak of Corona Virus (COVID 19) pandemic globally and in India is causing significant disturbance and slowdown of economic activity. In assessing the recoverability of Company''s assets such as Financial Assets and Non-financial Assets, the Company has considered internal and external information. The Company has evaluated impact of this pandemic on its business operations and based on its review and current indicators of future economic conditions, there is no significant impact on its financial statements and the Company expects to recover the carrying amount of all its assets.
Impairment testing of investments
Key assumptions related to weighted average cost of capital (WACC) and long-term growth rates.
Classification of Leases
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgement. The Company uses
significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate. The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an options to extend the lease if the Company is reasonably certain to exercise that options; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that options. In assessing whether the company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that crate an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease. The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.
Based on the nature of 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 noncurrent.
2.24 Recent Accounting pronouncements
On 23rd March, 2022, the Ministry of Corporate Affairs (MCA) has notified Companies (Indian Accounting Standards) Amendment Rules, 2022. This notification has resulted into amendments in the following existing accounting standards which are applicable to the Company from 1st April, 2022.
i. Ind AS 101- First time adoption of Indian Accounting Standards
ii. Ind AS 103 - Business Combinations
iii. Ind AS 109 - Financial Instruments
iv. Ind AS 16 - Property, Plant and Equipment
v. Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets
vi. Ind AS 41 - Agriculture
Application of above standards are not expected to have any significant impact on the Company''s financial statements.
Mar 31, 2018
NOTES TO THE FINANCIAL STATEMENTS
DEN NETWORKS LIMITED NOTES TO THE FINANCIAL STATEMENTS 1. Corporate information
DEN NETWORKS LIMITED (hereinafter referred to as ''the Company'' or ''DEN'') was incorporated in India on 10 July, 2007 and is primarily engaged in distribution of television channels through digital cable distribution network .The Company is having its registered office at 236, Okhla Industrial Area, Phase III, New Delhi - 110020.
The Company changed its status from a Private Limited Company to a Public Limited Company on 15 April, 2008 thereby changing its name to DEN Digital Entertainment Networks Limited. Subsequently, the Company changed its name to DEN Networks Limited on 27 June, 2008. The equity shares of the Company are listed on two of the stock exchanges in India i.e. National Stock Exchange and Bombay Stock Exchange.
During the financial year 2013-14, the Company had raised funds of Rs. 9,608.22 million by way of Qualified Institutional Placement (QIP) and Preferential Issue of equity shares. Further, during the previous year, the Company had raised Rs. 1,424.34 million by way of Preferential Issue of equity shares.
2. Significant accounting policies
2.01 Basis of preparation
(i) Statement of Compliance
The standalone Ind AS financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013 (the Act) read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India. Effective April 1, 2016, the Company had adopted all the Ind AS standards and the adoption was carried out in accordance with Ind AS 101 First time adoption of Indian Accounting Standards, with April 1, 2015 as the transition date. The transition was carried out from Indian Accounting Principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
(ii) Basis of preparation and presentation
The standalone Ind AS financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102 Share based payments, leasing transactions that are within the scope of Ind AS 17 Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 Inventories or value in use in Ind AS 36 Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the assets or liability.
2.02 Cash and cash equivalents
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) and highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
2.03 Cash flow statement
Cash flows are reported using indirect method, whereby Profit/(loss) after tax reported under Statement of Profit and loss is adjusted for the effects of transactions of noncash 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 available information.
2.04 Property, plant and equipment
All the items of property, plant and equipment are stated at historical cost net of cenvat credit less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives, using the straight-line method. The estimated useful life is taken in accordance with Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
amount of the asset and is recognised in profit or loss. Transition to Ind AS
The Company had elected to continue with the carrying value of all of its property, plant and equipment recognised as of
1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
2.05 Intangible assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Distribution network rights and non-compete fees represents amounts paid to local cable operators/distributors to acquire rights over a particular area for a specified period of time. Other intangible assets includes software.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from DE recognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying
Transition to Ind AS
The Company had elected to continue with the carrying value of all of its intangible assets recognised as of 1 April,
2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
2.06 Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
2.07 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
i. Rendering of services
1. Service revenue comprises subscription income from digital subscribers, placement of channels, advertisement revenue, fees for rendering management, technical and consultancy services and other related services. Income from services is recognised upon completion of services as per the terms of contracts with the customers. Period based services are accrued and recognised prorata over the contractual period.
2. Activation fees on Set top boxes (STBs) is deferred and recognised over the period of customer relationship on activation of boxes.
3. Amounts billed for services in accordance with contractual terms but where revenue is not recognised, have been classified as advance billing and disclosed under current liabilities.
ii Sale of goods (equipment)
Revenue from the sale of goods is recognised when the goods are delivered and the titles have passed, at which time all the following conditions are satisfied:
a) the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
b) the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
c) the amount of revenue can be measured reliably
d) it is probable that the economic benefits associated with the transaction will flow to the Company; and
e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
2.08 Other income
Dividend income and interest income
Dividend income from investments is recognised when the shareholder''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
Interest income from a financial assets is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
2.09 Share-based payment arrangements
Share-based payment transactions of the Company
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 37.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is premeasured, with any changes in fair value recognised in profit or loss for the year.
2.10 Foreign Currencies
The functional currency for the Company is determined as the currency of the primary economic environment in which it operates. For the Company, the functional currency is the local currency of the country in which it operates, which is INR.
In preparing the standalone Ind AS financial statements of the Company, transactions in currencies other than the entity''s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Treatment of exchange differences
The exchange differences on monetary items are recognised in Profit or Loss in the period in which they arise.
2.11 Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Investment in subsidiaries
A subsidiary is an entity controlled by the Company. Control exists when the Company has power over the entity, is exposed, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the entity. Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly affect the entity''s returns. Investments in subsidiaries are carried at cost less impairment. Cost comprises price paid to acquire the investment and directly attributable cost.
Investment in joint ventures and associates
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
The investment in joint ventures and associates are carried at cost less impairment. The cost comprises price paid to acquire the investment and directly attributable cost.
Transition to Ind AS
The Company had elected to continue with the carrying value of all of its equity investments in subsidiaries, associates and joint venture as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
- the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Interest income is recognised in profit or loss for FVTOCI debt instruments. For the purposes of recognising foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortised cost. Thus, the exchange differences on the amortised cost are recognised in profit or loss and other changes in the fair value of FVTOCI financial assets are recognised in other comprehensive income and accumulated under the heading of ''Reserve for debt instruments through other comprehensive income''. When the investment is disposed of, the cumulative gain or loss previously accumulated in this reserve is reclassified to profit or loss.
All other financial assets are subsequently measured at fair value.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the "Other income" line item.
Investments in equity instruments at FVTOCI
On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the ''Reserve for equity instruments through other comprehensive income''. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
- it has been acquired principally for the purpose of selling it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading.
Debt instruments that do not meet the amortised cost criteria or FVTOCI criteria (see above) are measured at FVTPL. In addition, debt instruments that meet the amortised cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at FVTPL.
A financial asset that meets the amortised cost criteria or debt instruments that meet the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. The Company has not designated any debt instrument as at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ''Other income'' line item. Dividend on financial assets at FVTPL is recognised when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, lease receivables, trade receivables and other contractual rights to receive cash or other financial assets and financial guarantees not designated as at FVTPL.
For trade receivables or any contractual right to receive cash or another financial assets that result from transactions that are within the scope of Ind AS 11 Construction Contracts and Ind AS 18 Revenue, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109 Financial Instruments. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
2.12 Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company entity are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
a) Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 Business Combinations applies or is held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
- it has been incurred principally for the purpose of repurchasing it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 Business Combinations applies, may be designated as at FVTPL upon initial recognition if:
- such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
- the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s risk management or investment strategy, and information about the grouping is provided internally on that basis; or
- it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 Financial Instruments permits the entire combined contract to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ''Other income'' line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liability''s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are recognised in profit or loss. The remaining amount of change in the fair value of liability is always recognised in profit or loss. Changes in fair value attributable to a financial liability''s credit risk that are recognised in other comprehensive income are reflected immediately in retained earnings and are not subsequently reclassified to profit or loss.
b) Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ''Finance costs'' line item.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
c) Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in ''Other income''
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
d) Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange between liabilities with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
2.13 Employee benefit costs
Retirement benefits costs and termination benefits
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions:
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
a. service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
b. net interest expense or income; and
c. remeasurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item ''Employee benefits expense''. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
Contributions from employees or third parties to defined benefit plans
Discretionary contributions made by employees or third parties reduce service cost upon payment of these contributions to the plan.
When the formal terms of the plans specify that there will be contributions from employees or third parties, the accounting depends on whether the contributions are linked to service, as follows:
- If the contributions are not linked to services (e.g. contributions are required to reduce a deficit arising from losses on plan assets or from actuarial losses), they are reflected in the remeasurement of the net defined benefit liability (asset).
- If contributions are linked to services, they reduce service costs. For the amount of contribution that is dependent on the number of years of service, the Company reduces service cost by attributing the contributions to periods of service using the attribution method required by Para 70 of
Ind AS 19 Employee Benefits for the gross benefits. For the amount of contribution that is independent of the number of years of service, the Company reduces service cost in the period in which the related service is rendered / reduces service cost by attributing contributions to the employees'' periods of service in accordance with Para 70 of Ind AS 19 Employee Benefits.
2.14 Segment information
The Company determines reportable segment based on information reported to the Chief Operating Decision Maker (CODM) for the purposes of resource allocation and assessment of segmental performance. The CODM evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by business segments. The accounting principles used in the preparation of the standalone Ind AS financial statements are consistently applied to record revenue and expenditure in individual segments.
2.15 Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Company as lessor :
Amounts due from lessees under finance leases are recognised as receivables at the amount of the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Company''s net investment outstanding in respect of the leases.
The Company as lessee :
Assets held under finance leases are initially recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the standalone Ind AS financial statements as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Company general policy on borrowing costs.
Rental expense from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
2.16 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.17 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of exceptional items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of exceptional items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for employee share options and bonus shares, if any, as appropriate.
2.18 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported
in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the standalone Ind AS financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other
comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
2.19 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
2.20.1 Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
2.20.2 Restructurings
A restructuring provision is recognised when the Company has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the on-going activities of the entity.
2.20.3 Contingent liabilities acquired in a business combination
Contingent liabilities (if any) acquired in a business combination are initially measured at fair value at the acquisition date. At the end of subsequent reporting periods, such contingent liabilities are measured at the higher of the amount that would be recognised in accordance with Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation recognised in accordance with Ind AS 18 Revenue.
2.20 Share issue expenses
Share issue expenses are adjusted against the Securities Premium Account as permissible under Section 52 of the Companies Act, 2013, to the extent any balance is available for utilisation in the Securities Premium Account. Share issue expenses in excess of the balance in the Securities Premium Account, if any is expensed in the Statement of Profit and Loss.
2.21 Insurance claims
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
2.22 GST input credit
GST input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is reasonable certainty in availing/ utilising the credits
2.23 Critical accounting judgements and key sources of estimation uncertainty
Critical accounting judgements
The following are the critical judgements, apart from those involving estimations that the directors have made in the process of applying the Company''s accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
Contingent liabilities
Assessment of whether outflow embodying economic benefits is probable, possible or remote. (See note 29)
Control and significant influence
Whether the Company, through voting rights and potential voting rights attached to shares held, or by way of shareholders agreements or other factors, has the ability to direct the relevant activities of the subsidiaries, or jointly direct the relevant activities of its joint ventures or exercise significant influence over associates. (See note 4)
Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Useful lives of property, plant and equipment (see note 2.04
The Company reviews the estimated useful lives of property, plant and equipment at the end of each reporting period. There is no such change in the useful life of the assets.
Fair value measurements and valuation processes (see note 2.11)
In estimating the fair value of an asset or liability, the Company uses market-observable data to the extent it is available.
Mar 31, 2017
1.01 Basis of preparation
(i) Statement of Compliance
The financial statements have been prepared in accordance with Indian Accounting Standards (âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015.
Upto the year ended 31 March, 2016, the Company prepared its financial statements in accordance with the requirements of Indian GAAP, which includes Standards notified under the Companies (Accounting Standards) Rules, 2006. These are the Companyâs first Ind AS financial statements. The date of transition to Ind AS is 1 April, 2015. Refer note 2.02 for the details of the first-time adoption exemptions availed by the Company.
(ii) Basis of preparation and presentation
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the assets or liability.
1.02 First-time adoption - mandatory exceptions, optional exemptions
Overall principle
The Company has prepared the opening balance sheet as per Ind AS as of 1 April, 2015 (the transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities. However, this principle is subject to certain exceptions and certain optional exemptions availed by the Company as detailed below.
Derecognition of financial assets and financial liabilities
The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after 1 April, 2015 (the transition date).
Accounting for changes in parentâs ownership in a subsidiary that does not result in a loss of control
The Company has accounted for changes in a parentâs ownership in a subsidiary that does not result in a loss of control in accordance with Ind AS 110, prospectively from the date of transition.
Classification of debt instruments
The Company has determined the classification of debt instruments in terms of whether they meet the amortised cost criteria or the FVTOCI criteria based on the facts and circumstances that existed as of the transition date.
Impairment of financial assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.
Assessment of embedded derivatives
The Company has assessed whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative on the basis of the conditions that existed at the later of the date it first became a party to the contract and the date when there has been a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract.
Deemed cost for property, plant and equipment, and intangible assets
The Company has elected to continue with the carrying value of all of its property, plant and equipment, and intangible assets recognised as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
Deemed cost for equity investments in subsidiaries, associates and joint ventures
The Company has elected to continue with the carrying value of all of its equity investments in subsidiaries, associates and joint ventures as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
Determining whether an arrangement contains a lease
The Company has applied Appendix C of Ind AS 17 âDetermining whether an Arrangement contains a Leaseâ to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.
Treatment of exchange differences
The exchange differences arising on settlement / restatement of long-term foreign currency monetary items are accounted for in Statement of Profit and Loss.
The Company has availed the exemption and continues the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP, i.e 31 March, 2016.
1.03 Cash and cash equivalents
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) and highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
1.04 Cash flow statement
Cash flows are reported using indirect method, whereby Profit/(loss) after tax reported under Statement of Profit and loss 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 available information.
1.05 Property, plant and equipment
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as of 1 April, 2015 (transition date) measured as per the previous GAAP as their deemed cost as of the transition date.
All the items of property, plant and equipment are stated at historical cost net of cenvat credit less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives, using the straight-line method. The estimated useful life is taken in accordance with Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
1.06 Intangible assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Distribution network rights and non compete fees represents amounts paid to local cable operators/distributors to acquire rights over a particular area for a specified period of time. Other intangible assets includes software and license fees for internet services.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.
Useful lives of intangible assets
Estimated useful life of the intangible assets are:
Deemed cost on transition to Ind AS
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
1.07 Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
1.08 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
i. Rendering of services
1. Service revenue comprises subscription income from digital and analog subscribers, placement of channels, advertisement revenue, fees for rendering management, technical and consultancy services and other related services. Income from services is recognised upon completion of services as per the terms of contracts with the customers. Period based services are accrued and recognised pro-rata over the contractual period.
2. Activation fees on Set top boxes (STBs) is deferred and recognised over the period of customer relationship on activation of boxes.
3. Amounts billed for services in accordance with contractual terms but where revenue is not recognised, have been classified as advance billing and disclosed under current liabilities.
4. Revenue from prepaid internet service plans, which are active at the end of accounting period, is recognised on time proportion basis.
ii. Sale of goods (equipment)
Revenue from the sale of goods is recognised when the goods are delivered and the titles have passed, at which time all the following conditions are satisfied:
a) the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
b) the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
c) the amount of revenue can be measured reliably
d) it is probable that the economic benefits associated with the transaction will flow to the Company; and
e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.09 Other income
Dividend income and interest income
Dividend income from investments is recognised when the shareholderâs right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
Interest income from a financial assets is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
1.10 Share-based payment arrangements
Share-based payment transactions of the Company
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 39.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss for the year.
1.11 Foreign Currencies
The functional currency for the Company is determined as the currency of the primary economic environment in which it operates. For the Company, the functional currency is the local currency of the country in which it operates, which is INR.
In preparing the financial statements of the Company, transactions in currencies other than the entityâs functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Treatment of exchange differences
The exchange differences on monetary items are recognised in Profit or Loss in the period in which they arise.
1.12 Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Investment in subsidiaries
A subsidiary is an entity controlled by the Company. Control exists when the Company has power over the entity, is exposed, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the entity. Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly affect the entityâs returns. Investments in subsidiaries are carried at cost less impairment. Cost comprises price paid to acquire the investment and directly attributable cost.
Investment in joint ventures and associates
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
The investment in joint ventures and associates are carried at cost less impairment. The Cost comprises price paid to acquire the investment and directly attributable cost.
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
- the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Interest income is recognised in profit or loss for FVTOCI debt instruments. For the purposes of recognising foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortised cost. Thus, the exchange differences on the amortised cost are recognised in profit or loss and other changes in the fair value of FVTOCI financial assets are recognised in other comprehensive income and accumulated under the heading of âReserve for debt instruments through other comprehensive incomeâ. When the investment is disposed of, the cumulative gain or loss previously accumulated in this reserve is reclassified to profit or loss.
All other financial assets are subsequently measured at fair value.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the âOther incomeâ line item.
Investments in equity instruments at FVTOCI
On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the âReserve for equity instruments through other comprehensive incomeâ. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
- it has been acquired principally for the purpose of selling it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading.
Debt instruments that do not meet the amortised cost criteria or FVTOCI criteria (see above) are measured at FVTPL. In addition, debt instruments that meet the amortised cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at FVTPL.
A financial asset that meets the amortised cost criteria or debt instruments that meet the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. The Company has not designated any debt instrument as at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the âOther incomeâ line item. Dividend on financial assets at FVTPL is recognised when the Companyâs right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, lease receivables, trade receivables and other contractual rights to receive cash or other financial assets and financial guarantees not designated as at FVTPL.
For trade receivables or any contractual right to receive cash or another financial assets that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
1.13 Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company entity are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Companyâs own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
a) Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
- it has been incurred principally for the purpose of repurchasing it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies, may be designated as at FVTPL upon initial recognition if:
- such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
- the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Companyâs risk management or investment strategy, and information about the grouping is provided internally on that basis; or
- it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the âOther incomeâ line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liabilityâs credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are recognised in profit or loss. The remaining amount of change in the fair value of liability is always recognised in profit or loss. Changes in fair value attributable to a financial liabilityâs credit risk that are recognised in other comprehensive income are reflected immediately in retained earnings and are not subsequently reclassified to profit or loss.
b) Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the âFinance costsâ line item.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
c) Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in âOther incomeâ.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
d) Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
1.14 Employee benefit costs Retirement benefits costs and termination benefits
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions:
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
a. service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
b. net interest expense or income; and
c. remeasurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item âEmployee benefits expenseâ. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Companyâs defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
Contributions from employees or third parties to defined benefit plans
Discretionary contributions made by employees or third parties reduce service cost upon payment of these contributions to the plan.
When the formal terms of the plans specify that there will be contributions from employees or third parties, the accounting depends on whether the contributions are linked to service, as follows:
- If the contributions are not linked to services (e.g. contributions are required to reduce a deficit arising from losses on plan assets or from actuarial losses), they are reflected in the remeasurement of the net defined benefit liability (asset).
- If contributions are linked to services, they reduce service costs. For the amount of contribution that is dependent on the number of years of service, the Company reduces service cost by attributing the contributions to periods of service using the attribution method required by Ind AS 19.70 for the gross benefits. For the amount of contribution that is independent of the number of years of service, the Company reduces service cost in the period in which the related service is rendered / reduces service cost by attributing contributions to the employeesâ periods of service in accordance with Ind AS 19.70.
1.15 segment information
The Company determines reportable segment based on information reported to the Chief Operating Decision Maker (CODM) for the purposes of resource allocation and assessment of segmental performance. The CODM evaluates the Companyâs performance and allocates resources based on an analysis of various performance indicators by business segments. The accounting principles used in the preparation of the financial statements are consistently applied to record revenue and expenditure in individual segments.
1.16 Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Company as lessor :
Amounts due from lessees under finance leases are recognised as receivables at the amount of the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Companyâs net investment outstanding in respect of the leases.
The Company as lessee :
Assets held under finance leases are initially recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the financial statements as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Company general policy on borrowing costs.
Rental expense from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
1.17 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
1.18 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of exceptional items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of exceptional items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for employee share options and bonus shares, if any, as appropriate.
1.19 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before taxâ as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Companyâs current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
1.20 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
1.20.1 Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
1.20.2 Restructurings
A restructuring provision is recognised when the Company has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.
1.20.3 Contingent liabilities acquired in a business combination
Contingent liabilities (if any) acquired in a business combination are initially measured at fair value at the acquisition date. At the end of subsequent reporting periods, such contingent liabilities are measured at the higher of the amount that would be recognised in accordance with Ind AS 37 and the amount initially recognised less cumulative amortisation recognised in accordance with Ind AS 18 Revenue.
1.21 Share issue expenses
Share issue expenses are adjusted against the Securities Premium Account as permissible under Section 52 of the Companies Act, 2013, to the extent any balance is available for utilisation in the Securities Premium Account. Share issue expenses in excess of the balance in the Securities Premium Account, if any is expensed in the Statement of Profit and Loss.
1.22 Insurance claims
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
1.23 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 reasonable certainty in availing/ utilising the credits.
1.24 Critical accounting judgements and key sources of estimation uncertainty
Critical accounting judgements
The following are the critical judgements, apart from those involving estimations that the directors have made in the process of applying the Companyâs accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
Contingent liabilities
Assessment of whether outflow embodying economic benefits is probable, possible or remote. (See note 31)
Control and significant influence
Whether the Company, through voting rights and potential voting rights attached to shares held, or by way of shareholders agreements or other factors, has the ability to direct the relevant activities of the subsidiaries, or jointly direct the relevant activities of its joint ventures or exercise significant influence over associates. (See notes 4,5 and 6)
Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Useful lives of property, plant and equipment (see note 2.05)
The Company reviews the estimated useful lives of property, plant and equipment at the end of each reporting period. There is no such change in the useful life of the assets.
Fair value measurements and valuation processes (see note 2.12)
In estimating the fair value of an asset or liability, the Company uses market-observable data to the extent it is available. Where level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. The management works closely with qualified external valuers to establish the appropriate valuation techniques and inputs to the model.
Defined benefit obligations
Key assumptions related to life expectancies, salary increases and withdrawal rates (see note 36).
Revenue recognition (see note 2.08)
Impairment testing of investments (see note 2.12)
Key assumptions related to weighted average cost of capital (WACC) and long-term growth rates.
1.25 Operating Cycle
Based on the nature of 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.
1.26 standards issued but not yet effective:
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, âStatement of cash flowsâ and Ind AS 102, âShare-based payment.â The amendments are applicable to the Company from 1 April, 2017.
Amendment to Ind As 7:
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.
The Company is evaluating the requirements of the amendment and its impact on its cash flows, which are not expected to be material.
Amendment to Ind As 102:
The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.
It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the âfair valuesâ, but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement.
Mar 31, 2015
2.1 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, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of the
Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956
Act"), as applicable. 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.
2.2 use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
2.3 Cash and cash equivalents (for purpose 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) and highly liquid
investments that are readily convertible into known amounts of cash and
which are subject to insignificant risk of changes in value.
2.4 Cash flow statement
Cash flows are reported using indirect method, whereby profit/ (loss)
before 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 available
information.
2.5 Depreciation and amortization
Depreciable amount for assets is the cost of an asset, or other amount
substituted for cost, less its estimated residual value.
Depreciation on tangible fixed assets has been provided on the straight
line method as per the useful life prescribed in Schedule II to the
Companies Act, 2013 except in respect of the following categories of
assets, in whose case the life of the assets has been assessed as under
based on technical advice, taking into account the nature of the asset,
the estimated usage of the asset, the operating conditions of the
asset, past history of replacement, anticipated technological changes,
manufacturers warranties and maintenance support, etc.:
Headend and distribution 6 to 15 years
equipment
Set Top Boxes (STBs) 8 years
Office and other 3 to 10 years
equipment
Furniture and fixtures 6 years
Vehicles 6 years
Leasehold improvements Lower of the useful
life and the period of
the lease
Fixed assets acquired 5 years as estimated
through business by an approved valuer
purchase
Intangible assets are amortised over their estimated useful life on
straight line method as follows:
Goodwill 5 years
Distribution network 5 years
rights
Software 5 years
License fee for internet Over the period of
service License Agreement
Non -compete fees 5 years
The estimated useful life of the intangible assets and the amortisation
period are reviewed at the end of each financial year and the
amortisation period is revised to reflect the changed pattern, if any.
2.6 Revenue recognition
i. Income from operations
1. Service revenue comprises subscription income from digital and
analog subscribers, placement of channels, advertisement revenue, fees
for rendering management, technical and consultancy services and other
related services. Income from services is recognised upon completion of
services as per the terms of contracts with the customers. Period based
services are accrued and recognised pro-rata over the contractual
period.
2. Activation fees on STBs is recognized on activation of boxes once
issued to customers.
3. Amounts billed for services in accordance with contractual terms but
where revenue is not recognised, have been classified as advance billing
and disclosed under current liabilities.
4. Revenue from prepaid internet service plans, which are active at
the end of accounting period, is recognised on time proportion basis.
ii. Sale of equipment
Revenue for sale of equipment is recognised on delivery to customers
which coincide with transfer of significant risks and rewards of
ownership of the equipment. The time of transfer and the amount is
determined based on the arrangement between the parties involved.
In case of VAT collected on sales, exclusive method is followed, where
sales and expenditure will not include VAT. VAT collected is disclosed
under current liabilities and not routed through Statement of Profit
and Loss.
2.7 other income
1. Profit on sale of investments in mutual funds is recorded on
transfer of risk and rewards from the Company and is determined as the
difference between the sales price and the carrying value of the
investment.
2. Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
2.8 Tangible assets
Fixed assets are carried at cost less accumulated depreciation /
amortisation and impairment losses, if any. The cost of fixed assets
comprises its purchase price net of any trade discounts and rebates,
any import duties and other taxes (other than those subsequently
recoverable from the tax authorities), any directly attributable
expenditure on making the asset ready for its intended use and other
incidental expenses. Subsequent expenditure on fixed assets after its
purchase / completion is capitalised only if such expenditure results
in an increase in the future benefits from such 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.
2.9 intangible assets
1. Intangible assets acquired in business acquisitions are stated at
fair value as determined by the management of the Company on the basis
of valuation by expert valuers, less accumulated amortisation.
2. Other intangible assets are stated at cost of acquisition less
accumulated amortisation. The actual cost capitalised includes
purchase price, and all other attributable costs of bringing the assets
to working condition for intended use.
2.10 Foreign currency transactions and translations
a. Initial recognition
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction or at rates that closely approximate the rate at the date
of the transaction.
b. Measurement at the balance sheet date
Foreign currency monetary items of the Company, outstanding at the
balance sheet date are restated at the year-end rates. Non- monetary
items of the Company are carried at historical cost.
c. Treatment of exchange differences
Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company are
recognised as income or expense in the Statement of Profit and Loss.
d. Exchange difference on long-term foreign currency monetary items
The exchange differences arising on settlement / restatement of
long-term foreign currency monetary items are capitalised as part of
the depreciable fixed assets to which the monetary item relates and
depreciated over the remaining useful life of such assets. If such
monetary items do not relate to acquisition of depreciable fixed
assets, the exchange difference is amortised over the maturity period /
upto the date of settlement of such monetary items, whichever is
earlier, and charged to the Statement of Profit and Loss.
2.11 Investments
Trade investments are investments made to enhance the Company's
business interests. Investments are classified either as long term or
current investments, based on management's intention at the time of
purchase. Long-term investments are stated at cost less provision for
other than temporary diminution in the carrying value, as determined
separately for each investment. Current investments are stated at the
lower of cost and fair value. The comparison of cost and fair value is
done separately in respect of each category of investments.
2.12 Employee benefits
Employee benefits include provident fund, employee state insurance
scheme, gratuity and compensated absences.
a. 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.
b. Defined benefit plans
For defined benefit plans in the form of gratuity, 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.
c. Short term employee benefits
The undiscounted amount of short term employee benefits expected to be
paid in exchange of services rendered by employees are recognised
during the year when the employee renders the services. These benefits
include salaries, bonus, leave travel allowance and performance
incentives.
d. 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 less the
fair value of the plan assets out of which the obligations are expected
to be settled.
2.13 Employee share based payments
The Company has formulated Employee Stock Option Schemes (ESOS) in
accordance with the SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and SEBI (Share Bared Employee
Benefits) Regulations 2014. The Schemes provide for grant of options to
employees of the Company and its subsidiaries to acquire equity shares
of the Company that vest in a graded manner and that are to be
exercised within a specified period. In accordance with the SEBI
Guidelines; the excess, if any of the closing market price on the day
prior to the grant of the options under ESOS over the exercise price is
amortised on a straight-line basis over the vesting period.
The Company has constituted Employee Stock Option Plan 2010 ("ESOP
2010") and Employee Stock Option Plan 2014 ("ESOP 2014"). Employee
Stock Options granted on or after 1 April, 2005 are accounted under the
'Intrinsic Value Method' stated in the Guidance Note on Employee Share
Based Payments issued by the Institute of Chartered Accountants of
India.
2.14 Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to
the interest cost. Costs in connection with the borrowing of funds to
the extent not directly related to the acquisition of qualifying assets
are charged to the Statement of Profit and Loss over the tenure of the
loan.
2.15 Segment information
a. Business segments
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit / loss amounts are evaluated regularly by the Executive
Management in deciding how to allocate resources and in assessing
performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment.
Revenue, expenses, assets and liabilities which relate to the Company
as a whole and are not allocable to segments on reasonable basis have
been included under "unallocated revenue / expenses / assets /
liabilities". (See also note 27)
b. Geographical segments
Secondary segmental reporting is performed on the basis of the
geographical location of customers i.e. within India and overseas.
2.16 Leases
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.
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.
2.17 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the profit
/ (loss) after tax (including the post tax effect of extraordinary
items, if any) as adjusted for dividend, interest and other charges to
expense or income (net of any attributable taxes) relating to the
dilutive potential equity shares, by the weighted average number of
equity shares considered for deriving basic earnings per share and the
weighted average number of equity shares which could have been issued
on the conversion of all dilutive potential equity shares. Potential
equity shares are deemed to be dilutive only if their conversion to
equity shares would decrease the net profit per share from continuing
ordinary operations. Potential dilutive equity shares are deemed to be
converted as at the beginning of the period, unless they have been
issued at a later date. The dilutive potential equity shares are
adjusted for the proceeds receivable had the shares been actually
issued at fair value (i.e. average market value of the outstanding
shares). Dilutive potential equity shares are determined independently
for each period presented. The number of equity shares and potentially
dilutive equity shares are adjusted for share splits / reverse share
splits and bonus shares, as appropriate.
2.18 Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the applicable tax rates and the
provisions of the Income Tax Act, 1961 and other applicable tax laws.
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 substantively enacted as at the reporting date. Deferred
tax liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses and items
relating to capital losses, deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that there
will be sufficient future taxable income available to realise the
assets. 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.
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 highly
probable that future economic benefit associated with it will flow to
the Company.
2.19 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. If the carrying amount of the assets exceed the estimated
recoverable amount, an impairment is recognised for such excess amount.
The impairment loss is recognised as an expense in the Statement of
Profit and Loss, unless the asset is carried at revalued amount, in
which case any impairment loss of the revalued asset is treated as a
revaluation decrease to the extent a revaluation reserve is available
for that asset.
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 (other than a revalued 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, to the extent the
amount was previously charged to the Statement of Profit and Loss. In
case of revalued assets such reversal is not recognised.
2.20 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. Contingent assets are not recognised in
the financial statements.
2.21 Share issue expenses
Share issue expenses are adjusted against the Securities Premium
Account as permissible under Section 52 of the Companies Act, 2013, to
the extent any balance is available for utilisation in the Securities
Premium Account. Share issue expenses in excess of the balance in the
Securities Premium Account is expensed in the Statement of Profit and
Loss.
2.22 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
reasonable certainty in availing/ utilizing the credits.
2.23 operating Cycle
Based on the nature of 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.
Of the above:
a. 72,475,520 equity shares of Rs. 10 each were issued in 2009-10 as
bonus shares in the ratio of 4:1 for every one equity share by
utilisation of securities premium.
b. In 2009-10, the Company issued bonus shares for 39,993,000 .001%
Cumulative Convertible Preference Shares of Rs. 10 each in the ratio of
one share for every ten .001% Cumulative Convertible Preference Shares
held by its shareholders by utilisation from the securities premium
account resulting into total of 43,992,300 .001% Cumulative Convertible
Preference Shares. These shares were subsequently converted into
13,361,361 fully paid up equity shares of Rs. 10 each in 2009-10.
c. 4,019,606 fully paid up equity shares of Rs. 10 each at premium of
Rs. 185 were issued in 2009-10 against consideration payable towards
investments made in subsidiary companies.
f. As at 31st March, 2015 11,053,394 shares (As at 31st March, 2014;
1,693,404 shares) were reserved for issuance as follows:
(i) 1,680,000 shares (As at 31st March, 2014, 450,000 shares) of Rs. 10
each towards outstanding employee stock options granted under Employee
Stock Option Plan 2010 and 4,450,000 shares (As at 31st March, 2014 Nil
shares) of Rs. 10 each towards outstanding employee stock options
granted under Employee Stock Option Plan-B 2014. (Refer Note 37)
(ii) 463,404 shares (As at 31st March, 2014; 1,693,404 shares) of Rs.
10 each towards outstanding employee stock options available for grant
under Employee Stock Option 2010, 4,995 shares (As at 31st March, 2014
Nil shares) of Rs. 10 each towards outstanding employee stock options
available for grant under Employee Stock Option Plan-B 2014 and
4,454,995 shares (As at 31st March, 2014 Nil shares) of Rs. 10 each
towards outstanding employee stock options available for grant under
Employee Stock Option Plan-A 2014.
g. Other disclosures
The Company has one class of equity shares having a par value of Rs. 10
per share. Each equity shareholder is eligible for one vote per share
held and dividend as and when declared by the Company Interim Dividend
is paid as and when declared by the Board. Final dividend is paid after
obtaining shareholders' approval. Dividends are paid in Indian Rupees.
In the event of liquidation, the equity shareholders are eligible to
receive the remaining assets of the Company after distribution of all
preferential amount in proportion to their shareholding.
Mar 31, 2014
1 Basis of preparation
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 notified under
Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which
continue to be applicable in respect of Section 133 of the Companies
Act, 2013 ("the 2013 Act")in terms of General Circular 15/ 2013 dated
13 September 2013 of the Ministry of Corporate Affairs) and the
relevant provisions of the 1956 Act/ 2013 Act, as applicable. 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.
2 Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management of the Company to make estimates and
assumptions that affect the reported balances of assets and liabilities
(including contingent liabilities) at the date of the financial
statements and reported amounts of income and expenses during the year.
Such estimates includes provision for income tax, future obligations
under employment retirement benefit plans, provision for doubtful debts
and advances and estimated useful life of tangible and intangible
assets. Actual results could differ from these estimates. Any revision
to accounting estimates is recognised prospectively in the current and
future periods.
3 Cash and cash equivalents (for purpose 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) and highly liquid
investments that are readily convertible into known amounts of cash and
which are subject to insignificant risk of changes in value.
4 Cash flow statement
Cash flows are reported using indirect method, whereby loss before tax
is adjusted for the effects of transactions of non-cash nature and any
deferrals and accruals of past or future cash receipts or payments. The
cash flows from regular revenue generating, investing and financing
activities of the Company are segregated based on available
information.
5 Depreciation and amortisation
Depreciation on fixed assets except leasehold improvements is provided
on the straight-line method over their estimated useful lives, as
determined by the management, at the rates which are equal to or higher
than the rates prescribed under Schedule XIV of the Companies Act,
1956. Depreciation is charged on a pro-rata basis for assets
purchased/sold during the year. Assets costing Rs. 5,000 or less are
fully depreciated in the year of purchase.
6 Revenue recognition
i. Income from operations
1. Service revenue comprises subscription income from digital and
analog subscribers, placement of channels, advertisement revenue, fees
for rendering management, technical and consultancy services and other
related services. Income from services is recognised upon completion of
services as per the terms of contracts with the customers. Period based
services are accrued and recognised pro-rata over the contractual
period.
2. Activation fees on STBs is recognized on activation of boxes once
issued to customers.
3. Amounts billed for services in accordance with contractual terms but
where revenue is not recognised, have been classified as advance
billing and disclosed under current liabilities.
ii. Sale of equipment
Revenue for sale of equipment is recognized on delivery to customers
which coincide with transfer of significant risks and rewards of
ownership of the equipment. The time of transfer and the amount is
determined based on the arrangement between the parties involved.
In case of VAT collected on sales, exclusive method is followed, where
sales and expenditure will not include VAT. VAT collected is disclosed
under current liabilities and not routed through Statement of Profit
and Loss.
7 Other income
1. Profit on sale of investments in mutual funds is recorded on
transfer of title from the Company and is determined as the difference
between the sales price and the carrying value of the investment.
2. Interest on the deployment of surplus funds is recognised using the
time-proportion method, based on interest rates implicit in the
transaction.
3. Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
8 Tangible assets Tangible assets
1. Fixed assets are stated at the cost of acquisition less accumulated
depreciation and impairment losses, if any. The actual cost capitalised
includes purchase price, and all other attributable costs of bringing
the assets to working condition for intended use.
2. Assets are capitalised on the date when they are ready for intended
use.
3. Projects under which tangible fixed assets are not yet ready for
their intended use are carried at cost, comprising direct cost, related
incidental expenses and attributable interest.
9 Intangible assets
1. Intangible assets acquired in business acquisitions are stated at
fair value as determined by the management of the Company on the basis
of valuation by expert valuers, less accumulated amortisation.
2. Other intangible assets are stated at cost of acquisition less
accumulated amortisation. The actual cost capitalised includes
purchase price, and all other attributable costs of bringing the assets
to working condition for intended use.
10 Foreign currency transactions and translations
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction. Realised gains and losses on
foreign exchange transactions settled during the year are recognised in
the Statement of Profit and Loss.
Long-term foreign currency monetary items outstanding at the balance
sheet date are translated at the rates prevailing on that date and
resultant gains/losses on foreign exchange translations are capitalised
as part of the depreciable fixed assets to which the monetary item
relates and depreciated over the remaining useful life of such assets.
In case of forward contracts for foreign exchange, the difference
between the forward rate and the exchange rate at the date of
transaction are recognised over the life of the contract.
11 Investments
Trade investments are investments made to enhance the Company''s
business interests. Investments are classified either as long term or
current investments, based on management''s intention at the time of
purchase. Long-term investments are stated at cost less provision for
other than temporary diminution in the carrying value, as determined
separately for each investment. Current investments are stated at the
lower of cost and fair value. The comparison of cost and fair value is
done separately in respect of each category of investments.
12 Employee benefits
1. Short term employee benefits
The undiscounted amount of short term employee benefits expected to be
paid in exchange of services rendered by employees is recognised during
the period when the employee renders the services. These benefits
include salaries, bonus, leave travel allowance and performance
incentives.
2. Long term employee benefits
a. Provident fund and other state plans
Company''s contributions towards recognised Provident Fund, Employee
State Insurance Fund and Employees Pension Scheme under defined
contribution plans are recognised in the Statement of Profit and Loss
during the period when services are rendered by the employees.
b. Gratuity
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.
c. Compensated absences
The employees of the Company are entitled to compensated absences. The
employees can carry forward a portion of unutilised accrued compensated
absence and utilize it in future periods or receive cash compensation
for the unutilised accrued compensated absence. The Company records an
obligation for compensated absences in the period in which the employee
renders the service that increase this entitlement. The Company
measures the expected cost of compensated absence as the additional
amount that the Company expects to pay as a result of the unused
entitlement that has accumulated at the balance sheet date.
Liability with regard to compensated absences and gratuity is accrued
based on actuarial valuations at the balance sheet date, carried out by
an independent actuary. Actuarial valuation is carried out 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 as income or expense.
13 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 statement of profit and loss on a straight line basis over
the period of the options. The amortised portion of the cost is shown
under reserve and surplus.
14 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction
or production of a qualifying asset are capitalised as part of cost of
the asset. A qualifying asset is one that necessarily takes substantial
period of time to get ready for intended use. Other borrowing costs are
recognised as an expense in the period in which they are incurred.
15 Segment information
1. Business segments
Based on similarity of activities, risks and reward structure,
organisation structure and internal reporting systems, the Company
operates in the distribution & placement of television channels and
related services.
2. Geographical segments
Secondary segmental reporting is performed on the basis of the
geographical location of customers i.e. within India and overseas.
16 Leases
1. Finance leases
Leases under which the Company assumes substantially all the risks and
rewards of ownership are classified as finance leases. Assets taken on
finance lease are capitalised at the inception of the lease at the
lower of the fair value or the present value of minimum lease payments
and a liability is created for an equivalent amount. Each lease rental
paid is allocated between the liability and interest cost, so as to
obtain a constant periodic rate of interest on outstanding liability
for each period.
2. Operating leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Lease payments under operating leases are recognised
as expense in the statement of profit and loss on a straight line basis
over the lease term.
17 Earnings per share
Basic earnings per share is computed by dividing the profit after tax
by the weighted average number of equity shares outstanding during the
year. Diluted earnings per share is computed by dividing the profit
after tax as adjusted for dividend, interest and other charges to
expense or income (net of any attributable taxes) relating to the
dilutive potential equity shares, by the weighted average number of
equity shares considered for deriving basic earnings per share and the
weighted average number of equity shares which could have been issued
on the conversion of all dilutive potential equity shares.
18 Taxation
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 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. 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. Deferred tax assets are reviewed for the
appropriateness of their carrying values at each balance sheet date.
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 arising in future periods and is
recognised when it is probable that the Company will be able to set off
the same and is accordingly adjusted from the current tax charge for
that year.
Provision for wealth tax is made based on tax liability computed after
considering tax allowances and exemptions available in accordance with
the provisions of the Wealth tax Act, 1957.
19 Impairment of assets
At each balance sheet date, the Company reviews the carrying amount 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 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
statement of profit and loss.
20 Provisions and contingencies
A provision is recognised when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and in respect of which
reliable estimate can be made. A disclosure of a contingent liability
is made when there is a possible obligation the existence of which will
be confirmed only by the occurance or non-occurance of one or more
uncertain future events or a present obligation that may, but probably
will not, require an outflow of resources or when a reliable estimate
of the amount of obligation cannot be made. Where there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
21 Share issue expenses
Share issue expenses are adjusted against the Securities premium
account as permissible under Section 78(2) of the Companies Act, 1956,
to the extent balance is available for utilisation in the Securities
Premium Account.
22 Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is ccounted and when there is
reasonable certainty in availing/ utilizing the credits.
23 Operating Cycle
Based on the nature of 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, 2013
1.1 Basis of preparation
The financial statements are prepared and presented 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 relevant provisions ofthe Companies Act,
1956, as adopted consistently by the Company.
1.2 Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management of the Company to make estimates and
assumptions that affect the reported balances of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of income and expenses during
the year. Examples of such estimates includes provision for income tax,
future obligations under employment retirement benefit plans, provision
for doubtful debts and advances and estimated useful life oftangible
and intangible assets. Actual results could differ from these
estimates. Any revision to accounting estimates is recognised
prospectively in the current and future periods.
1.3 Cash and cash equivalents (for purpose 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
subjectto insignificant risk of changes in value.
1.4 Cash flow statement
Cash flows are reported using indirect method, whereby net profit
before tax is adjusted forthe effects of transactions of non- cash
nature and any deferrals and accruals of past or future cash receipts
or payments. The cash flows from regular revenue generating, investing
and financing activities of the Company are segregated based on
available information.
1.5 Depreciation and amortisation
Depreciation on fixed assets except leasehold improvements is provided
on the straight-line method over their estimated useful lives, as
determined by the management, at the rates which are equal to or higher
than the rates prescribed under Schedule XIV of the Companies Act,
1956. Depreciation is charged on a pro-rata basis for assets
purchased/sold during the year. Assets costing Rs.5,000 or less are
fully depreciated in the year of purchase.
The management''s estimate ofthe useful life ofthe various fixed assets
is as follows:
a. Headend & distribution equipment (6-15 years)
b. Settop boxes (STBs) (8 years)
c. Computers (6years)
d. Office & other equipment (3 to 10years)
e. Furniture & fixtures (6years)
g. Vehicles (6 years)
h. Software (5years)
i. Leasehold improvements (Lower of the useful life orthe period ofthe
lease.)
j. License fee for internet service (Overthe period of license
agreement)
h. Fixed assets acquired through business purchase (5 years as
estimated by an approved valuer)
I. Intangible assets (5 years)
1.6 Revenue recognition
i. Income from operations
1. Service revenue comprises income from subscription, placement of
channels, advertisement revenue, fees for rendering management,
technical and consultancy services and other related services. Income
from services is recognised upon completion of services as per the
terms of contracts with the customers. Period based services are
accrued and recognised pro-rata overthe contractual period.
2. Activation fees on STBs is recognized on activation of boxes once
issued to customers.
3. Amounts billed for services in accordance with contractual terms
but where revenue is not recognised, have been classified as advance
billing and disclosed under current liabilities.
ii. Sale of equipment
Revenue for sale of equipments is recognized on delivery to customers
which coinside with transfer of significant risks and rewards of
ownership of the equipment have been passed to the buyer. The time of
transfer and the amount is determined based on the arrangement between
the parties involved.
In case of VAT collected on sales, exclusive method is followed, where
sales and expenditure will not include VAT, VAT collected is disclosed
under current liabilities and not routed through statement of profit
and loss as mentioned in Guidance Note of State Value Added Tax by
ICAI.
1.7 Other income
1. Profit on sale of investment in mutual funds is recorded on
transfer of title from the Company and is determined as the difference
between the sales price and the carrying value ofthe investment.
2. Interest on the deployment of surplus funds is recognised using the
time- proportion method, based on interest rates implicit in the
transaction.
3. Dividend and interest income are recognised when the right to
receive the same is established.
1.8 Tangible assets
1. Fixed assets are stated at the cost of acquisition less accumulated
depreciation. The actual cost capitalised includes purchase price, and
all other attributable costs of bringing the assets to working
condition for intended use.
2. Assets are capitalised on the date when they are ready for intended
use. Set top boxes are capitalised at the end of the month of
activation.
3. Projects under which tangible fixed assets are not yet ready
fortheir intended use are carried at cost, comprising direct cost,
related incidental expenses and attributable interest.
1.9 Intangible assets
1. Intangible assets acquired in business acquisitions are stated at
fair value as determined by the management of the Company on the basis
of valuation by expert valuers, less accumulated amortisation.
2. Other intangible assets are stated at cost of acquisition less
accumulated amortisation. The actual cost capitalised includes purchase
price, and all other attributable costs of bringing the assets to
working condition for intended use.
1.10 Foreign currency transactions and translations
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction. Realised gains and losses 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 rates prevailing on that date
and resultant gains/losses on foreign exchange translations are
recognised in the statement of profit and loss.
In case of forward contracts for foreign exchange, the difference
between the forward rate and the exchange rate at the date of
transaction are recognised overthe life ofthe contract.
1.11 Investments
Trade investments are investments made to enhance the Company''s
business interests. Investments are classified either as long term or
current investments, based on management''s intention at the time of
purchase. Long-term investments are stated at cost less provision for
other than temporary diminution in the carrying value, as determined
separately for each investment. Current investments are stated at the
lower of cost or fair value. The comparison of cost and fair value is
done separately in respect of each category of investments.
1.12 Employee benefits
1. Short term employee benefits
The undiscounted amount of short term employee benefits expected to be
paid in exchange of services rendered by employees is recognised during
the period when the employee renders the services. These benefits
include salaries, bonus, leave travel allowance and performance
incentives.
2. Long term employee benefits
a. Provident fund and other state plans
Company''s contributions towards recognised Provident Fund, Employee
State Insurance Fund and Employees Pension Scheme under defined
contribution plans are recognised in the statement of profit and loss
during the period in which the employee renders the related service.
b. Gratuity
The Company''s gratuity is, a defined benefit plan. In accordance with
''The Payment of Gratuity Act, 1972'', the plan provides for a lump sum
payment to vested employees, at retirement, death, incapacitation, or
termination of employment, of an amount based on the respective
employee''s last drawn salary and tenure of employment with the Company.
c. Compensated absences
The employees ofthe Company are entitled to compensated absences. The
employees can carry forward a portion of unutilised accrued compensated
absence and utilize it in future periods or receive cash compensation
for the unutilised accrued compensated absence. The Company records an
obligation for compensated absences in the period in which the employee
renders the service that increase this entitlement. The Company
measures the expected cost of compensated absence as the additional
amount that the Company expects to pay as a result of the unused
entitlement that has accumulated at the balance sheet date.
Liability with regard to compensated absences and gratuity is accrued
based on actuarial valuations at the balance sheet date, carried out by
an independent actuary. Actuarial valuation is carried out 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 ofthe 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 as income or expense.
1.13 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 statement of profit and loss on a straight line basis over
the period of the options. The amortised portion ofthe cost is shown
under reserve and surplus.
1.14 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction
or production of a qualifying asset are capitalised as part of cost of
the asset. A qualifying asset is one that necessarily takes substantial
period of time to get ready for intended use. Other borrowing costs are
recognised as an expense in the period in which they are incurred.
1.15 Segment information
1. Business segments
Based on similarity of activities, risks and reward structure,
organisation structure and internal reporting systems, the Company
operates in the distribution & placement of television channels and
related services.
2. Geographical segments
Secondary segmental reporting is performed on the basis of the
geographical location of customers i.e. within India and overseas.
2.16 Leases
1. Finance leases
Leases under which the Company assumes substantially all the risks and
rewards of ownership are classified as finance leases. Assets taken on
finance lease are capitalised at the inception of the lease at the
lower of the fair value or the present value of minimum lease payments
and a liability is created for an equivalent amount. Each lease rental
paid is allocated between the liability and interest cost, so as to
obtain a constant periodic rate of interest on outstanding liability
for each period.
2. Operating leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership ofthe leased asset are classified as
operating leases. Lease payments under operating leases are recognised
as expense in the statement of profit and loss on a straight line basis
overthe lease term.
1.17 Earnings pershare
In determining earnings per share, the Company considers the net profit
after tax and includes the post tax effect of any extraordinary/
exceptional item. Basic earnings per share are computed using the
weighted average number of equity shares outstanding during the year.
Diluted earnings per share are computed using the weighted average
number of equity shares outstanding during the year and dilutive equity
equivalent shares outstanding at the year end, except where the results
would be anti dilutive.
1.18 Taxation
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 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. 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. Deferred tax assets are reviewed for the
appropriateness of their carrying values at each balance sheet date.
Minimum alternate tax (MAT) paid in accordance with IncomeTaxAct, 1961,
which gives rise to future economic benefit in the form of adjustment
from income tax liability, is recognised when it is certain that the
Company will be able to set off the same and adjusted from the current
tax charge for that year.
Provision for wealth tax is made based on tax liability computed after
considering tax allowances and exemptions available in accordance with
the provisions ofthe Wealth tax Act, 1957.
1.19 Impairmentof assets
At each balance sheet date, the Company reviews the carrying amount 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
higherofan 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 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
statement of profit and loss
1.20 Provisions and contingencies
A provision is recognised when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and in respect of which
reliable estimate can be made. A disclosure of a contingent liability
is made when there is a possible obligation or a present obligation
that may, but probably will not, require an outflow of resources. Where
there is a possible obligation or a present obligation in respect of
which the likelihood of outflow of resources is remote, no provision or
disclosure is made.
1.21 Share issue expenses
Share issue expenses and redemption premium are adjusted against the
Securities premium account as permissible under Section 78(2) ofthe
Companies Act, 1956, to the extent balance is available for utilisation
in the Securities Premium Account. The balance of share issue expenses
is carried as an asset and is amortised over a period of 5 years from
the date ofthe issue of shares.
1.22 Insurance claims
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that there is no uncertainty
in receiving the claims.
1.23 Servicetaxinputcredit
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/ utilizing the credits.
1.24 Operating Cycle
Based on the nature of 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 currentand non-current.
Mar 31, 2012
1.1 Basis of preparation
The financial statements are prepared and presented 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 relevant provisions of the Companies Act,
1956, as adopted consistently by the Company. These financial
statements have been prepared for the year ended 31 March, 2012.
1.2 Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management of the Company to make estimates and
assumptions that affect the reported balances of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of income and expenses during
the year. Examples of such estimates includes provision for income tax,
future obligations under employment retirement benefit plans, provision
for doubtful debts and advances and estimated useful life of tangible
and intangible assets. Actual results could differ from these
estimates. Any revision to accounting estimates is recognised
prospectively in the current and future periods.
1.3 Cash and cash equivalents (for purpose 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.
1.4 Cash flow statement
Cash flows are reported using indirect method, whereby net profit
before tax is adjusted for the effects of transactions of non-cash
nature and any deferrals and accruals of past or future cash receipts
or payments. The cash flows from regular revenue generating, investing
and financing activities of the Company are segregated based on
available information.
1.5 Depreciation and amortisation
Depreciation on fixed assets except leasehold improvements is provided
on the straight-line method over their estimated useful lives, as
determined by the management, at the rates which are equal to or higher
than the rates prescribed under Schedule XIV of the Companies Act,
1956. Depreciation is charged on a pro-rata basis for assets
purchased/sold during the year. Assets costing Rs.5,000 or less are
fully depreciated in the year of purchase.
The management's estimate of the useful life of the various fixed
assets is as follows:
Headend & distribution equipment 6 -15 years
Set top boxes 8 Years
Computers 6 Years
Office & other equipment 3 to 10 years
Furniture & fixtures 6 Years
Vehicles 6 Years
Software 5 Years
Leasehold improvements are amortised over the lower of the useful life
or the period of the lease.
License fee for internet service is amortised over the period of
license agreement.
Fixed assets acquired through business purchase are depreciated over
the useful life of 5 years as estimated by an approved valuer.
Intangible assets comprising distribution network rights and goodwill
are amortized on a straight line method over their estimated useful
lives, determined by management to be 5 years.
1.6 Revenue recognition
i. Income from operations
1. Service revenue comprises income from subscription, placement of
channels, advertisement revenue, fees for rendering management,
technical and consultancy services and other related services. Income
from services is recognised upon completion of services as per the
terms of contracts with the customers. Period based services are
accrued and recognised pro- rata over the contractual period.
2. Activation Fees on Set Top Boxes (STB) is recognized as revenue at
the end of the month of activation of boxes, on issue of STBs to the
customers.
3. Revenue billed but not recognised at the end of the year has been
disclosed as advance billing under current liabilities.
ii. Sale of equipment
Revenue is recognized when the significant risks and rewards of
ownership of the equipment have been passed to the buyer. The time of
transfer and the amount is determined based on the arrangement between
the parties involved.
In case of VAT collected on sales, exclusive method is followed, where
sales and expenditure will not include VAT, VAT collected is disclosed
under current liabilities and not routed through profit and loss
account as mentioned in Guidance Note of State Value Added Tax by ICAI.
1.7 Other income
1. Profit on sale of investment in mutual funds is recorded on
transfer of title from the Company and is determined as the difference
between the sales price and the carrying value of the investment.
2. Interest on the deployment of surplus funds is recognised using the
time-proportion method, based on interest rates implicit in the
transaction.
3. Dividend and interest income are recognised when the right to
receive the same is established.
1.8 Tangible assets
1. Fixed assets are stated atthe cost of acquisition less accumulated
depreciation. The actual cost capitalised includes purchase price, and
all other attributable costs of bringing the assets to working
condition for intended use.
2. Assets are capitalised on the date when they are ready for intended
use. Set top boxes are capitalised at the end of the month of
activation.
3. Fixed assets under construction, advances paid towards acquisition
of fixed assets and cost of assets not ready for intended use at the
balance sheet date, are disclosed as capital work in progress.
1.9 Intangible assets
1. Intangible assets acquired in business acquisitions are stated at
fair value as determined by the management of the Company on the basis
of valuation by expert valuers, less accumulated amortisation.
2. Other intangible assets are stated at cost of acquisition less
accumulated amortisation. The actual cost capitalised includes
purchase price, and all other attributable costs of bringing the assets
to working condition for intended use.
1.10 Foreign currency transactions and translations
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction. Realised gains and losses 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 rates prevailing on that date
and resultant gains/losses on foreign exchange translations are
recognised in the profit and loss account.
In case of forward contracts for foreign exchange, the difference
between the forward rate and the exchange rate at the date of
transaction are recognised over the life of the contract.
1.11 Investments
Trade investments are investments made to enhance the Company's
business interests. Investments are classified either as long term or
current investments, based on management's intention at the time of
purchase. Long-term investments are stated at cost less provision for
other than temporary diminution in the carrying value, as determined
separately for each investment. Current investments are stated at the
lower of cost or fair value. The comparison of cost and fair value is
done separately in respect of each category of investments.
1.12 Employee benefits
1. Short term employee benefits
The undiscounted amount of short term employee benefits expected to be
paid in exchange of services rendered by employees is recognised during
the period when the employee renders the services. These benefits
include salaries, bonus, leave travel allowance and performance
incentives.
2. Long term employee benefits
a. Provident fund and other state plans
Company's contributions towards recognised Provident Fund, Employee
State Insurance Fund and Employees Pension Scheme under defined
contribution plans are recognised in the profit and loss account during
the period in which the employee renders the related service.
b. Gratuity
The Company's gratuity is, a defined benefit plan. In accordance with
'The Payment of Gratuity Act, 1972', the plan provides for a lump sum
payment to vested employees, at retirement, death, incapacitation, or
termination of employment, of an amount based on the respective
employee's last drawn salary and tenure of employment with the Company.
c. Compensated absences
The employees of the Company are entitled to compensated absences. The
employees can carry forward a portion of unutilised accrued compensated
absence and utilize it in future periods or receive cash compensation
for the unutilised accrued compensated absence. The Company records an
obligation for compensated absences in the period in which the employee
renders the service that increase this entitlement. The Company
measures the expected cost of compensated absence as the additional
amount that the Company expects to pay as a result of the unused
entitlement that has accumulated at the balance sheet date.
Liability with regard to compensated absences and gratuity is accrued
based on actuarial valuations at the balance sheet date, carried out by
an independent actuary. Actuarial valuation is carried out 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 as income or
expense.
1.13 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
period of the options. The amortised portion of the cost is shown under
reserve and surplus.
1.14 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction
or production of a qualifying asset are capitalised as part of cost of
the asset. A qualifying asset is one that necessarily takes substantial
period of time to get ready for intended use. Other borrowing costs are
recognised as an expense in the period in which they are incurred.
1.15 Segment information
1. Business segments
Based on similarity of activities, risks and reward structure,
organisation structure and internal reporting systems, the Company
operates in the distribution & placement of television channels and
related services.
2. Geographical segments
Secondary segmental reporting is performed on the basis of the
geographical location of customers i.e. within India and overseas.
1.16 Leases
1. Finance leases
Leases under which the Company assumes substantially all the risks and
rewards of ownership are classified as finance leases. Assets taken on
finance lease are capitalised at the inception of the lease at the
lower of the fair value or the present value of minimum lease payments
and a liability is created for an equivalent amount. Each lease rental
paid is allocated between the liability and interest cost, so as to
obtain a constant periodic rate of interest on outstanding liability
for each period.
2. Operating leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Lease payments under operating leases are recognised
as expense in the profit and loss account on a straight line basis over
the lease term.
1.17 Earnings per share
In determining earnings per share, the Company considers the net profit
after tax and includes the post tax effect of any extraordinary/
exceptional item. Basic earnings per share are computed using the
weighted average number of equity shares outstanding during the year.
Diluted earnings per share are computed using the weighted average
number of equity shares outstanding during the year and dilutive equity
equivalent shares outstanding at the year end, except where the results
would be anti dilutive.
1.18 Taxation
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 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. 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. Deferred tax assets are reviewed for the
appropriateness of their carrying values at each balance sheet date.
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 certain
that the company will be able to set off the same and adjusted from the
current tax charge for that year.
Provision for wealth tax is made based on tax liability computed after
considering tax allowances and exemptions available in accordance with
the provisions of the Wealth tax Act, 1957.
1.19 Impairment of assets
At each balance sheet date, the Company reviews the carrying amount 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 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.
1.20 Provisions and contingencies
A provision is recognised when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and in respect of which
reliable estimate can be made. A disclosure of a contingent liability
is made when there is a possible obligation or a present obligation
that may, but probably will not, require an outflow of resources. Where
there is a possible obligation or a present obligation in respect of
which the likelihood of outflow of resources is remote, no provision or
disclosure is made.
1.21 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/ utilizing the credits.
Mar 31, 2011
A. Basis of preparation
The financial statements are prepared and presented 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 relevant provisions of the Companies Act,
1956, as adopted consistently by the Company. These financial
statements have been prepared for the year ended 31 March, 2011.
b. Use of estimates
The preparation of financial statements requires the management of the
company to make estimates and assumptions that affect the reported
balances of assets and liabilities, and disclosure of contingent assets
and liabilities at the date of the financial statements and reported
amounts of income and expenses during the year. Examples of such
estimates includes provisions for income taxes, future obligations
under employment retirement benefit plans, provision for doubtful debts
and advances and estimated useful life of tangible and intangible
assets. Actual results could differ from these estimates. Any revision
to accounting estimates is recognised prospectively in the current and
future periods.
c. Revenue recognition
i. Income from operations
1. Service revenue comprises income from subscription, placement of
channels, advertisement revenue, fees for rendering management,
technical and consultancy services and other related services. Income
from services is recognised upon completion of services as per the
terms of contracts with the customers. Period based services are
accrued and recognised pro-rata over the contractual period.
2. Activation Fees on Set Top Boxes (STB) is recognized as revenue at
the end of the month of activation of boxes, on issue of STBs to the
customers.
3. Revenue billed but not recognised at the end of the year has been
disclosed as deferred revenue under current liabilities.
ii. Sale of equipment
Revenue is recognized when the significant risks and rewards of
ownership of the equipment have been passed to the buyer. The time of
transfer and the amount is determined based on the arrangement between
the parties involved.
In case of VAT collected on sales, exclusive method is followed, where
sales and expenditure will not include VAT, VAT collected is disclosed
under current liabilities and not routed through profit and loss
account as mentioned in Guidance Note of State Value Added Tax by ICAI.
iii. Others
1. Profit on sale of investment in mutual funds is recorded on transfer
of title from the Company and is determined as the difference between
the sales price and the carrying value of the investment.
2. Interest on the deployment of surplus funds is recognised using the
time-proportion method, based on interest rates implicit in the
transaction.
3. Dividend and interest income are recognised when the right to
receive the same is established.
d. Barter Transactions
Barter transactions are recognised at the fair value of consideration
received or paid. 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.
e. Fixed Assets i. Tangible Assets
1. Fixed assets are stated at the cost of acquisition less accumulated
depreciation. The actual cost capitalised includes purchase price, and
all other attributable costs of bringing the assets to working
condition for intended use.
2. Assets are capitalised on the date when they are ready for intended
use. Set top boxes are capitalised at the end of the month of
activation.
3. Fixed assets under construction, advances paid towards acquisition
of fixed assets and cost of assets not ready for intended use at the
balance sheet date, are disclosed as capital work in progress.
ii. Intangible Assets
a. Intangible assets acquired in business acquisitions are stated at
fair value as determined by the management of the Company on the basis
of valuation by expert valuers, less accumulated amortisation.
b. Other intangible assets are stated at cost of acquisition less
accumulated amortisation. The actual cost capitalised includes purchase
price, and all other attributable costs of bringing the assets to
working condition for intended use.
f. Depreciation and Amortisation
Depreciation on fixed assets except leasehold improvements is provided
on the straight-line method over their estimated useful lives, as
determined by the management, at the rates which are equal to or higher
than the rates prescribed under Schedule XIV of the Companies Act,
1956. Depreciation is charged on a pro-rata basis for assets
purchased/sold during the year. Assets costing Rs. 5,000 or less are
fully depreciated in the year of purchase.
The management's estimate of the useful life of the various fixed
assets is as follows:
Headend and distribution equipment 6 to 15 years
Set top boxes 8 years
Computers 6 years
Office & other equipment 3 to 10 years
Furniture & fixtures 6 years
Vehicles 6 years
Software 5 years
Leasehold improvements are amortised over the lower of the useful life
or the period of the lease.
License fee for internet service is amortised over the period of
license agreement.
Fixed assets acquired through business purchase are depreciated over
the useful life of 5 years as estimated by an approved valuer.
Intangible assets comprising distribution network rights and goodwill
are amortized on a straight line method over their estimated useful
lives, determined by management to be 5 years.
g. 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 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.
h. Leases
i. Finance Leases
Leases under which the company assumes substantially all the risks and
rewards of ownership are classified as finance leases. Assets taken on
finance lease are capitalised at the inception of the lease at the
lower of the fair value or the present value of minimum lease payments
and a liability is created for an equivalent amount. Each lease rental
paid is allocated between the liability and interest cost, so as to
obtain a constant periodic rate of interest on outstanding liability
for each period.
ii. Operating Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Lease payments under operating leases are recognised
as expense in the profit and loss account on a straight line basis over
the lease term.
i. Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction
or production of a qualifying asset are capitalised as part of cost of
the asset. A qualifying asset is one that necessarily takes substantial
period of time to get ready for intended use. Other borrowing costs are
recognised as an expense in the period in which they are incurred.
j. Investments
Trade investments are investments made to enhance the company's
business interests. Investments are classified either as long term or
current investments, based on management's intention at the time of
purchase. Long-term investments are stated at cost less provision for
other than temporary diminution in the carrying value, as determined
separately for each investment. Current investments are stated at the
lower of cost or fair value. The comparison of cost and fair value is
done separately in respect of each category of investments.
k. Foreign Exchange Transactions
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction. Realised gains and losses
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 rates prevailing on that date
and resultant gains/losses on foreign exchange translations are
recognised in the profit and loss account.
In case of forward contracts for foreign exchange, the difference
between the forward rate and the exchange rate at the date of
transaction are recognised over the life of the contract.
l. Taxation
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 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. 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. Deferred tax assets are reviewed for the
appropriateness of their carrying values at each balance sheet date.
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 certain
that the company will be able to set off the same and adjusted from the
current tax charge for that year.
Provision for wealth tax is made based on tax liability computed after
considering tax allowances and exemptions available in accordance with
the provisions of the Wealth tax Act, 1957.
m. Employee Benefits
i. Short Term Employee Benefits
The undiscounted amount of short term employee benefits expected to be
paid in exchange of services rendered by employees is recognised during
the period when the employee renders the services. These benefits
include salaries, bonus, leave travel allowance and performance
incentives.
ii. Long Term Employee Benefits
-Provident Fund and other State Plans
Company's contributions towards recognised Provident Fund, Employee
State Insurance Fund and Employees Pension Scheme under defined
contribution plans are recognised in the profit and loss account during
the period in which the employee renders the related service.
-Gratuity
The Company's gratuity is, a defined benefit plan. In accordance with
'The Payment of Gratuity Act, 1972', the plan provides for a lump sum
payment to vested employees, at retirement, death, incapacitation, or
termination of employment, of an amount based on the respective
employee's last drawn salary and tenure of employment with the Company.
-Compensated Absences
The employees of the Company are entitled to compensated absences. The
employees can carry forward a portion of unutilised accrued compensated
absence and utilize it in future periods or receive cash compensation
for the unutilised accrued compensated absence. The Company records an
obligation for compensated absences in the period in which the employee
renders the service that increase this entitlement. The Company
measures the expected cost of compensated absence as the additional
amount that the Company expects to pay as a result of the unused
entitlement that has accumulated at the balance sheet date.
Liability with regard to compensated absences and gratuity is accrued
based on actuarial valuations at the balance sheet date, carried out by
an independent actuary. Actuarial valuation is carried out 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 as income or expense.
n. Earnings Per Share
In determining earnings per share, the company considers the net profit
after tax and includes the post tax effect of any extraordinary/
exceptional item. Basic earnings per share are computed using the
weighted average number of equity shares outstanding during the year.
Diluted earnings per share are computed using the weighted average
number of equity shares outstanding during the year and dilutive equity
equivalent shares outstanding at the year end, except where the results
would be anti dilutive.
o. 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 distribution & placement of television channels and
related services.
ii. Geographical Segments
Secondary segmental reporting is performed on the basis of the
geographical location of customers i.e. within India and overseas.
p. 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
period of the options. The amortised portion of the cost is shown under
reserve and surplus.
q. Provisions and Contingencies
A provision is recognised when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and in respect of which
reliable estimate can be made. A disclosure of a contingent liability
is made when there is a possible obligation or a present obligation
that may, but probably will not, require an outflow of resources. Where
there is a possible obligation or a present obligation in respect of
which the likelihood of outflow of resources is remote, no provision or
disclosure is made.
r. Cash Flow Statement
Cash flows are reported using indirect method, whereby net profit
before tax is adjusted for the effects of transactions of non-cash
nature and any deferrals and accruals of past or future cash receipts
or payments. The cash flows from regular revenue generating, investing
and financing activities of the Company are segregated.
Mar 31, 2010
A. Basis of preparation
The financial statements are prepared and presented under the
historical cost convention, on the accrual basis of accounting and in
accordance with the Generally Accepted Accounting Principles (ÃGAAPÃ)
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 relevant provisions of the Companies Act,
1956, as adopted consistently by the Company.
b. Use of estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements and the
results of operations during the reporting period. Examples of such
estimates include estimates of income taxes, future obligations under
employment retirement benefit plans, provision for doubtful debts and
advances and estimated useful life of tangible and intangible assets.
Actual results could differ from these estimates. Any revision to
accounting estimates is recognised prospectively in the current and
future periods.
c. Revenue recognition
i. Income from operations
- Service revenue comprises income from subscription, placement of
channels, advertisement revenue and other services. It also comprises
fees for rendering management, technical and consultancy services.
Income from services is recognised upon completion of services as per
the terms of contracts with the customers. Period based services are
accrued and recognised pro-rata over the contractual period.
- Activation Fees on Set Top Boxes (STB) is recognized as revenue at
the end of the month of activation of boxes, on issue of STBs to the
customers.
- Revenue billed but not recognised at the end of the year has been
disclosed as deferred revenue under current liabilities.
ii. Sale of equipment
Revenue is recognized when the significant risks and rewards of
ownership of the equipments have been passed to the buyer. The time of
transfer of and the amount is determined based on the arrangement
between the parties involved.
In case of VAT collected on sales, exclusive method is followed, where
sales and expenditure will not include VAT, VAT collected is disclosed
under current liabilities and not routed through profit and loss
account as mentioned in Guidance Note of State Value Added Tax by ICAI.
iii. Others
- Profit on sale of investment in mutual funds is recorded on transfer
of title from the Company and is determined as the difference between
the sales price and the then carrying value of the investment.
- Interest on the deployment of surplus funds is recognised using the
time-proportion method, based on interest rates implicit in the
transaction.
- Dividend and interest income are recognised when the right to receive
the same is established.
d. Barter transactions
Barter transactions are recognised at the fair value of consideration
received or paid. 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.
e. Fixed assets
i. Tangible assets
- Fixed assets are stated at the cost of acquisition less accumulated
depreciation. The actual cost capitalized includes purchase price, and
all other attributable costs of bringing the assets to working
condition for intended use.
- Assets are capitalised on the date when they are ready for intended
use. Set top boxes are capitalized at the end of the month of
activation.
- Fixed assets under construction, advances paid towards acquisition of
fixed assets and cost of assets not ready for intended use at the
balance sheet date, are disclosed as capital work in progress.
ii. Intangible assets
- Intangible assets acquired in business acquisitions are stated at
fair value as determined by the management of the Company on the basis
of valuation by expert valuers, less accumulated amortisation.
- Other intangible assets are stated at cost of acquisition less
accumulated amortisation. The actual cost capitalized includes purchase
price, and all other attributable costs of bringing the assets to
working condition for intended use.
f. Depreciation and amortisation
Depreciation on fixed assets except leasehold improvements is provided
on the straight-line method over their estimated useful lives, as
determined by the management, at the rates which are equal to or higher
than the rates prescribed under Schedule XIV of the Companies Act,
1956. Depreciation is charged on a pro-rata basis for assets
purchased/sold during the year. Assets costing less than Rs. 5,000 are
fully depreciated in the year of purchase.
The managements estimate of the useful life of the various fixed
assets is as follows:
Headend & distribution equipment 6 to 15 years
Set top boxes 8 years
Computers 6 years
Office & other equipment 3 to 10 years
Furniture & fixtures 6 years
Vehicles 6 years
Software 5 years
Leasehold improvements are amortised over the lower of the useful life
or the period of the lease.
License fee for internet service is amortised over the period of
license agreement.
Fixed assets acquired through business purchase are depreciated over
the useful life of 5 years as estimated by an approved valuer.
Intangible assets comprising distribution network rights and goodwill
are amortized on a straight line method over their estimated useful
lives, determined by management to be 5 years.
g. 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 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.
h. Leases
i. Finance leases
Leases under which the Company assumes substantially all the risks and
rewards of ownership are classified as finance leases. Assets taken on
finance lease are capitalised at the inception of the lease at the
lower of the fair value or the present value of minimum lease payments
and a liability is created for an equivalent amount. Each lease rental
paid is allocated between the liability and interest cost, so as to
obtain a constant periodic rate of interest on outstanding liability
for each period.
ii. Operating leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Lease payments under operating leases are recognised
as expense in the profit and loss account on a straight line basis over
the lease term.
i. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction
or production of a qualifying asset are capitalized as part of cost of
the asset. A qualifying asset is one that necessarily takes substantial
period of time to get ready for intended use. Other borrowing costs are
recognized as an expense in the period in which they are incurred.
j. Investments
Trade investments are investments made to enhance the Companys
business interests. Investments are classified either as long term or
current investments, based on managements intention at the time of
purchase. Long-term investments are stated at cost less provision for
other than temporary diminution in the carrying value, as determined
separately for each investment. Current investments are stated at the
lower of cost or fair value. The comparison of cost and fair value is
done separately in respect of each category of investments.
k. Foreign exchange transactions
Transactions in foreign currencies are recorded at the exchange rates
prevailing at the date of the transaction. Realised gains and losses 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 rates prevailing on that date and resultant gains/losses on foreign
exchange translations are recognised in the profit and loss account.
l. Taxation
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 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. Deferred tax assets on unabsorbed depreciation and carry
forward of losses are not recognized unless there is a virtual
certainty that there will be sufficient future taxable income available
to realize such assets. Deferred tax assets are reviewed for the
appropriateness of their carrying values at each balance sheet date.
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 certain
that the Company will be able to set off the same and adjusted from the
current tax charge for that year.
Provision for wealth tax is made based on tax liability computed after
considering tax allowances and exemptions available in accordance with
the provisions of the Wealth tax Act, 1957.
m. Employee benefits
i. Short term employee benefits
The undiscounted amount of short term employee benefits expected to be
paid in exchange of services rendered by employees is recognised during
the period when the employee renders the services. These benefits
include salaries, bonus and performance incentives.
ii. Long term employee benefits
- Provident fund and other state plans
The Companys contributions towards recognised Provident Fund, Employee
State Insurance Fund and Employees Pension Scheme under defined
contribution plans are recognised in the profit and loss account during
the period in which the employee renders the related service.
- Gratuity
The Company provides for gratuity, a defined benefit retirement plan.
In accordance with The Payment of Gratuity Act, 1972, the plan
provides for a lump sum payment to vested employees, at retirement,
death, incapacitation, or termination of employment, of an amount based
on the respective employees last drawn salary and tenure of employment
with the Company.
- Compensated absences
The employees of the Company are entitled to compensated absences. The
employees can carry forward a portion of unutilized accrued compensated
absence and utilize it in future periods or receive cash compensation
for the unutilized accrued compensated absence. The Company records an
obligation for compensated absences in the period in which the employee
renders the service that increase this entitlement. The Company
measures the expected cost of compensated absence as the additional
amount that the Company expects to pay as a result of the unused
entitlement that has accumulated at the balance sheet date.
Liability with regard to compensated absences and gratuity is accrued
based on actuarial valuations at the balance sheet date, carried out by
an independent actuary. Actuarial valuation is carried out 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 as income or expense.
n. Earnings per share
In determining earnings per share, the Company considers the net profit
after tax and includes the post tax effect of any extraordinary/
exceptional item. Basic earnings per share are computed using the
weighted average number of equity shares outstanding during the year.
Diluted earnings per share are computed using the weighted average
number of equity shares outstanding during the year and dilutive equity
equivalent shares outstanding at the year end, except where the results
would be anti dilutive.
o. 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 distribution & placement of television channels and
related services.
ii. Geographical segments
Secondary segmental reporting is performed on the basis of the
geographical location of customers i.e. within India and overseas.
p. Provisions and contingencies
A provision is recognised when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and in respect of which
reliable estimate can be made. A disclosure of a contingent liability
is made when there is a possible obligation or a present obligation
that may, but probably will not, require an outflow of resources. Where
there is a possible obligation or a present obligation in respect of
which the likelihood of outflow of resources is remote, no provision or
disclosure is made.
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