Mar 31, 2022
BACKGROUND
Hathway Cable and Datacom Limited (âthe Companyâ) is a Public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in distribution of internet services through cable and has strategic stake in entities engaged in Cable Television business. Its equity shares are listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE Limited) in India.
Authorisation of standalone financial statements
The standalone financial statements were authorized for issue in accordance with a resolution of the Board of directors on April 12, 2022.
1.00 SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the presentation of these standalone financial statements.
(i) Compliance with Ind AS
The standalone financial statements comply in all material aspects with Indian Accounting Standards (âInd ASâ) notified under Section 133 of the Companies Act, 2013 (âthe Actâ), and relevant rules issued thereunder and relevant provisions of the Act. In accordance with proviso to the Rule 4A of the Companies (Accounts) Rules, 2014, the terms used in these financial statements are in accordance with the definitions and other requirements specified in the applicable Accounting standards.
(ii) Historical cost convention
The standalone financial statements have been prepared on a historical cost basis, except for the following:
⢠certain financial assets and liabilities (including derivative instruments) is measured at fair value; and
⢠defined benefit plans - plan assets measured at fair value
⢠Right of Use assets
All amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest crores, except where otherwise indicated.
1.03 CURRENT VERSUS NON-CURRENT CLASSIFICATION
The Company presents its assets and liabilities in the balance sheet based on current / non-current classification.
An asset is classified as current if:
(i) it is expected to be realised or intended to be sold or consumed in normal operating cycle;
(ii) it is held primarily for the purpose of trading;
(iii) it is expected to be realised within twelve months after the reporting period; or
(iv) t he cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve
months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current if:
(i) it is expected to be settled in normal operating cycle;
(ii) it is held primarily for the purpose of trading;
(iii) it is due to be settled within twelve months after the reporting period; or
(iv) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities on net basis.
All assets and liabilities have been classified as current or non-current as per Company''s normal operating cycle. Based on the nature of operations, the Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.
1.04 USE OF JUDGEMENTS, ESTIMATES & ASSUMPTIONS
While preparing standalone financial statements in conformity with Ind AS, the management makes certain estimates and assumptions that require subjective and complex judgments. These judgments affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses, disclosure of contingent liabilities at the statement of financial position date and the reported amount of income and expenses for the reporting period. Financial reporting results rely on our estimate of the effect of certain matters that are inherently uncertain. Future events rarely develop exactly as forecasted and the best estimates require adjustments, as actual results may differ from these estimates under different assumptions or conditions. The management continually evaluates these estimates and assumptions based on the most recently available information.
Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the standalone financial statements are as below:
(i) Financial instruments; (Refer note 4.11)
(ii) Useful lives of Property, Plant and Equipment and Intangible Assets; (Refer note 1.05 and 1.06)
(iii) Assets and obligations relating to employee benefits; (Refer note 4.06)
(iv) Evaluation of recoverability of deferred tax assets; (Refer note 2.06) and
(v) Contingencies (Refer note 4.02).
1.05 PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment acquired separately
(i) Property, Plant and Equipment is stated at cost, less accumulated depreciation and accumulated impairment losses. The initial cost of an asset comprises its purchase price, non-refundable taxes, any costs directly attributable to bringing the asset into the location and conditions necessary for it to be capable of operating in the manner intended by management, the initial estimate of any decommissioning obligation, if any, finance cost. The purchase price is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
(ii) 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 statement of profit and loss during the reporting period in which they are incurred.
(iii) Access devices on hand at the year-end are included in Capital Work in Progress. On installation, such devices are capitalized or treated as sale, as the case may be.
(iv) The residual values and useful lives of Property, Plant and Equipment are reviewed at each financial year end, and changes, if any, are accounted prospectively.
(v) Stores & Spares which meet the definition of Property, Plant and Equipment and satisfy the recognition criteria of Ind AS 16 are capitalized as Property, Plant and Equipment.
(vi) 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 derecognition 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 statement of profit and loss.
(vii) Depreciation on Property, Plant and Equipment is provided on straight line method. In accordance with requirements prescribed under Schedule II of Companies Act, 2013, the Company has assessed the estimated useful lives of its Property, Plant and Equipment and has adopted the useful lives and residual value as prescribed in Schedule II except for the cost of Access devices at the customer''s location which are depreciated on straight-line method over a period of eight years based on internal technical assessment.
(viii) In case of additions or deletions during the year, depreciation is computed from the month in which such assets are put to use and up to previous month of sale, disposal or held for sale as the case may be. In case of impairment, depreciation is provided on the revised carrying amount over its remaining useful life.
(ix) All assets costing up to '' 5,000/- are fully depreciated in the year of capitalisation.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
Intangible assets comprises of Network Franchisee, Bandwidth Rights, Goodwill, Customer Acquisition Cost and Softwares.
Intangible assets with finite useful lives that are acquired are recognized only if they are separately identifiable and the Company expects to receive future economic benefits arising out of them. Such assets are stated at cost less accumulated amortization and impairment losses. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less impairment losses.
Intangible Assets acquired in business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost).
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 statement of profit and loss when the asset is derecognised.
Intangible assets with finite useful lives are amortised on a straight line basis over their useful economic lives and assessed for impairment whenever there is indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at each year end. The amortisation expense on Intangible assets with finite lives and impairment loss is recognised in the Statement of Profit and Loss.
Estimated lives for current and comparative periods in relation to application of straight line method of amortisation of intangible assets (acquired) are as follows:
⢠Network Franchisee are amortised over the period of five to twenty years.
⢠Softwares are amortised over the license period and in absence of such tenor, over five years.
⢠Bandwidth Rights are amortised over the period of the underlying agreements.
⢠Customer acquisition costs are amortised over the period of five years.
The estimated useful lives, residual values, amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Carrying amount of Tangible assets, Intangible assets, Investments in Subsidiaries, Joint Ventures and Associates (which are carried at cost) are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s 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. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or Company''s assets (cash-generating units). Non- financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
1.08 NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell.
An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised at the date of de-recognition.
Non-current assets are not depreciated or amortised while they are classified as held for sale.
Non-current assets classified as held for sale are presented separately from the other assets in the balance sheet.
A discontinued operation is a component of the entity that has been disposed off or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit and loss.
Inventories are valued as follows:
Spares and maintenance items are valued at lower of cost (net of taxes recoverable) on first in first out basis or net realizable value.
Stock-in-trade comprising of access devices are valued at cost on weighted average method or at net realizable value, whichever is lower.
1.10 CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the Balance Sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of change in value.
For the purpose of statement of cash flows, cash and cash equivalents consist of cash, short-term deposits as defined above, bank overdrafts and short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value as they are considered as an integral part of the Company''s management. Bank overdrafts are shown within borrowings under current liabilities in the balance sheet.
Financial assets and financial liabilities are recognised when a 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 and ancillary costs related to borrowings) 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 the Statement of Profit and Loss.
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (âFVTOCIâ) or fair value through profit or loss (âFVTPLâ) on the basis of following:
- the entity''s business model for managing the financial assets; and
- the contractual cash flow characteristics of the financial asset.
A financial asset is classified and measured at amortised cost if both of the following conditions are met:
- the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A financial asset is classified and measured at FVTOCI if both of the following conditions are met:
- the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses and interest revenue which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
A financial asset is classified and measured at FVTPL unless it is measured at amortised cost or at FVTOCI.
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.
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
Expected Credit Losses are measured through a loss allowance at an amount equal to:
⢠The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date);or
⢠Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward-looking estimates are analysed.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL.
Gains or losses on financial liabilities held for trading are recognised in the Statement of Profit and Loss.
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
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.
The Company de-recognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset. If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Financial assets and liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
1.12 INVESTMENT IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
A subsidiary is an entity that is controlled by another entity. An investor controls an investee if and only if the investor has the following; (i) Power over the investee, (ii) exposure, or rights, to variable returns from its involvement with the investee and
(iii) the ability to use its power over the investee to affect the amount of the investor''s returns.
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.
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.
The Company''s investments in its subsidiaries, associates and joint ventures are accounted at cost and reviewed for impairment at each reporting date in accordance with the policy described in note 1.07 above.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an company incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
1.14 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a current pre-tax rate. The increase in the provision due to the passage of time is recognised as interest expense.
Contingent liabilities are disclosed in the case of:
⢠a present obligation arising from the past events, when it is not probable that an outflow of resources will be required to settle the obligation;
⢠a present obligation arising from the past events, when no reliable estimate is possible;
⢠a possible obligation arising from past events, unless the probability of outflow of resources is remote.
Contingent Assets is disclosed when inflow of economic benefits is probable.
1.15 GRATUITY AND OTHER POST-EMPLOYMENT BENEFITS
(i) Short-term obligations
Short term employee benefits are recognised as an expense at an undiscounted amount in the Statement of Profit and Loss of the year in which the related services are rendered.
The Company operates the following post-employment schemes:
⢠defined benefit plans such as gratuity; and
⢠defined contribution plans such as provident fund
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised at amount net of taxes in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in Statement of Profit and Loss as past service cost.
The Company pays provident fund contributions to publicly administered provident funds. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
The liabilities for leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in Statement of Profit and Loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
The Company recognises a liability and an expense for bonuses. The Company recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
(i) Income from rendering of services and sale of products
The Company derives revenues primarily from Broadband business comprising of Internet services and other allied services.
Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expect to receive in exchange for those products or services. Subscription revenue is recognized ratably over the period in which the services are rendered.
To recognize revenues, the Company applies the following five step approach:
1. identify the contract with a customer;
2. identify the performance obligations in the contract;
3. determine the transaction price;
4. allocate the transaction price to the performance obligations in the contract; and
5. recognize revenues when a performance obligation is satisfied
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Company presents revenues net of indirect taxes in its Statement of Profit and Loss.
A receivable represents the Company''s right to an amount of consideration that is unconditional.
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier), which we refer to as Unearned Revenue.
Contract liabilities are recognised as revenue when the Company performs under the contract.
Other Operating Income comprises of fees for rendering management, technical and consultancy services. Income from such services is recognized upon satisfaction of performance obligation as per the terms of underlying agreements.
Interest income from financial assets is recognised using the effective interest rate method.
Dividends are recognised in the Statement of Profit and Loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
Share of profit / loss from Partnership firm is recognised in the Statement of Profit and Loss in respect of the financial year of the Partnership firm ending on or before the balance sheet date, on the basis of its audited accounts.
Current Tax:
Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the relevant tax laws and based on the expected outcome of assessments / appeals.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the Statement of Profit and Loss.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax is provided using the balance sheet approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside the statement of profit and loss is recognised outside the Statement of Profit and Loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
The break-up of the major components of the deferred tax assets and liabilities as at balance sheet date has been arrived at after setting off deferred tax assets and liabilities where the Company have a legally enforceable right to set-off assets against liabilities.
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders is adjusted for after income tax effect of interest and other financing cost associated with dilutive potential equity shares and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
As a lessee
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 recognizes the lease payments as an operating expense on a straight-line basis over the lease term.
1.20 FOREIGN CURRENCY TRANSLATIONS
(i) Functional and presentation currency
The Company''s standalone financial statements are prepared in INR, which is also the Company''s functional and presentation currency.
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in statement of profit and loss. Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of Profit and Loss, within finance costs. All other foreign exchange gains and losses are presented in the Statement of Profit and Loss on a net basis within other gains / (losses).
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
1.21 FINANCIAL GUARANTEE CONTRACT
The Company on case to case basis elects to account for financial guarantee contracts as financial instruments or as an insurance contract, as specified in Ind AS 109 on Financial Instruments and Ind AS 104 on Insurance Contracts. The Company has regarded its financial guarantee contracts as insurance contracts on contract by contract basis. At the end of each reporting period the Company performs liability adequacy test, (i.e. it assesses the likelihood of a pay-out based on current undiscounted estimates of future cash flows) on financial guarantee contracts regarded as insurance contracts, and the deficiency is recognized in the Statement of Profit and Loss.
1.22 BUSINESS COMBINATIONS AND GOODWILL
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Company elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree''s identifiable net assets. Acquisition costs which are administrative in nature are expensed out.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company''s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed off, the goodwill associated with the operation disposed off is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed off in this circumstance is measured based on the relative values of the operation disposed off and the portion of the cash-generating unit retained.
Common control business combinations include transactions, such as transfer of subsidiaries or businesses, between entities within a group.
Business combinations involving entities or businesses under common control are accounted for using the pooling of interests method. Under pooling of interest method, the assets and liabilities of the combining entities are reflected at their carrying amounts, the only adjustments that are made are to harmonise accounting policies.
The financial information in the standalone financial statements in respect of prior periods are restated as if the business combination had occurred from the beginning of the preceding period in the standalone financial statements, irrespective of the actual date of the combination. However, if business combination had occurred after that date, the prior period information is restated only from that date.
The difference, if any, between the amount recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve and presented separately from other capital reserves with disclosure of its nature and purpose in the notes.
Mar 31, 2018
background
Hath way Cable and Datacom Limited (âthe Companyâ) is a Public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in distribution of internet services through cable and has strategic stake in entities engaged in Cable Television business. Its equity shares are listed on National Stock Exchange of India Limited (NSE) & Bombay Stock Exchange Limited (BSE) in India.
Authorization of standalone financial statements
The standalone financial statements were authorized for issue in accordance with a resolution of the directors on May 28, 2018
Too significant accounting policies
T his note provides a list of the significant accounting policies adopted in the presentation of these standalone financial statements.
rum BASIS OF PREPARATION
(i) Compliance with ind As
The standalone financial statements comply in all material aspects with Indian Accounting Standards (âInd ASâ) notified under Section 133 of the Companies Act, 2013 (âthe Actâ), and relevant rules issued there under and relevant provisions of the Act. In accordance with proviso to the Rule 4A of the Companies (Accounts) Rules, 2014, the terms used in these financial statements are in accordance with the definitions and other requirements specified in the applicable Accounting standards.
(ii) historical cost convention
The standalone financial statements have been prepared on a historical cost basis, except for the following:
- certain financial assets and liabilities (including derivative instruments) is measured at fair value; and
- defined benefit plans - plan assets measured at fair value
ROUNDING of amounts
All amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest crores, except where otherwise indicated.
current VERSUS NON-CURRENT CLASSIFICATION
The Company presents its assets and liabilities in the balance sheet based on current / non-current classification.
An asset is classified as current if:
(i) it is expected to be realized or intended to be sold or consumed in normal operating cycle;
(ii) it is held primarily for the purpose of trading;
(iii) it is expected to be realized within twelve months after the reporting period; or
(iv) the cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current if:
(i) it is expected to be settled in normal operating cycle;
(ii) it is held primarily for the purpose of trading;
(iii) it is due to be settled within twelve months after the reporting period; or
(iv) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities on net basis.
All assets and liabilities have been classified as current or non-current as per Company''s normal operating cycle. Based on the nature of operations, the Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.
use of judgments, estimates & assumptions
While preparing standalone financial statements in conformity with the Ind AS, the management makes certain estimates and assumptions that require subjective and complex judgments. These judgments affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses, disclosure of contingent liabilities in the statement of financial position date and the reported amount of income and expenses for the reporting period. Financial reporting results rely on our estimate of the effect of certain matters that are inherently uncertain. Future events rarely develop exactly as forecasted and the best estimates require adjustments, as actual results may differ from these estimates under different assumptions or conditions. The management continually evaluates these estimates and assumptions based on the most recently available information.
Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the standalone financial statements are as below:
Key assumptions
(i) Financial instruments; (Refer Note 4.11)
(ii) Useful lives of Property, Plant and Equipment and Intangible Assets; (Refer Note 1.05 and 1.06)
(iii) Assets and obligations relating to employee benefits; (Refer Note 4.06)
(iv) Expected customer relationship period (i.e. expected life of the customer); (Refer Note 1.16)
(v) Evaluation of recoverability of deferred tax assets; (Refer Note 2.06) and
(vi) Contingencies (Refer Note 4.02).
ntra property, plant and equipment
Property, Plant and Equipment acquired separately
(i) Property, Plant and Equipment is stated at cost, less accumulated depreciation and accumulated impairment losses. The initial cost of an asset comprises its purchase price, non-refundable taxes, any costs directly attributable to bringing the asset into the location and conditions necessary for it to be capable of operating in the manner intended by management, the initial estimate of any decommissioning obligation, if any, finance cost. The purchase price is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
(ii) Subsequent costs are included in the asset''s carrying amount or recognized 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 derecognized when replaced. All other repairs and maintenance are charged to statement of profit and loss during the reporting period in which they are incurred.
(iii) Access devices on hand at the year-end are included in Capital Work in Progress. On installation, such devices are capitalized or treated as sale, as the case may be.
(iv) The residual values and useful lives of Property, Plant and Equipment are reviewed at each financial year end, and changes, if any, are accounted prospectively.
(v) Stores & Spares which meet the definition of Property Plant and Equipment and satisfy the recognition criteria of Ind AS 16 are capitalized as Property, Plant and Equipment.
Derecognition of Property, Plant & Equipment
(vi) An item of Property, Plant and Equipment is derecognized 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 derecognition of an item of Property, Plant and Equipment is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognized in statement of profit and loss.
Depreciation on Property, Plant & Equipment
(vii) Depreciation on Property, Plant & Equipment is provided on straight line method. In accordance with requirements prescribed under Schedule II of Companies Act, 2013, the Company has assessed the estimated useful lives of its Property, Plant & Equipment and has adopted the useful lives and residual value as prescribed in Schedule II except for the cost of Access devices at the customer''s location which are depreciated on straight-line method over a period of eight years based on internal technical assessment.
(viii) In case of additions or deletions during the year, depreciation is computed from the month in which such assets are put to use and up to previous month of sale, disposal or held for sale as the case may be. In case of impairment, depreciation is provided on the revised carrying amount over its remaining useful life.
(ix) All assets costing up to '' 5,000/- are fully depreciated in the year of capitalization.
Deemed cost for Property, Plant and Equipment
The Company had elected to continue with the carrying value of all of its Property, Plant and Equipment recognized as of the date of transition to Ind AS measured as per the previous GAAP and use that carrying value as it''s deemed cost as of the transition date.
a INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangibles are not capitalized and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
Intangible Assets acquired separately
Intangible assets comprises of Network Franchisee, Bandwidth Rights, Goodwill and Softwareâs.
Intangible assets with finite useful lives that are acquired are recognized only if they are separately identifiable and the Company expects to receive future economic benefits arising out of them. Such assets are stated at cost less accumulated amortization and impairment losses. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated amortization and impairment losses.â
Intangible Assets acquired in business combination
Intangible Assets acquired in business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost).
Derecognition of intangible assets
An intangible asset is derecognized 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 recognized in statement of profit and loss when the asset is derecognized. Amortization of intangible assets
Intangible assets with finite useful lives are amortized on a straight line basis over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at each year end. The amortization expense on Intangible assets with finite lives and impairment loss is recognized in the Statement of Profit and Loss.
Estimated lives for current and comparative periods in relation to application of straight line method of amortization of intangible assets (acquired) are as follows:
- Network Franchisee are amortized over the period of five to twenty years.
- Softwareâs are amortized over the license period and in absence of such tenor, over five years.
- Bandwidth Rights are amortized over the period of the underlying agreements.
The estimated useful lives, residual values, amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Deemed cost for Intangible assets
The Company had elected to continue with the carrying value of all of its Intangible assets recognized as of the date of transition to Ind AS measured as per the previous GAAP and use that carrying value as it''s deemed cost as of the transition date.
IMPAIRMENT OF ASSETS
Carrying amount of Tangible assets, Intangible assets, Investments in Subsidiaries, Joint Ventures and Associates (which are carried at cost) are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s 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. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or Company''s assets (cash-generating units). Non- financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
WO! NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell.
An impairment loss is recognized for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset is recognized at the date of de-recognition.
Non-current assets are not depreciated or amortized while they are classified as held for sale.
Non-current assets classified as held for sale are presented separately from the other assets in the balance sheet.
A discontinued operation is a component of the entity that has been disposed off or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinate plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit and loss.
WO! INVENTORIES
Inventories are valued as follows:
Spares and maintenance items are valued at lower of cost (net of taxes recoverable) on first in first out basis and net realizable value.
Stock-in-trade comprising of access devices are valued at cost on weighted average method or at net realizable value, whichever is lower.
cash and cash equivalents
Cash and cash equivalents in the Balance Sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of change in value.
For the purpose of statement of cash flows, cash and cash equivalents consist of cash, short-term deposits as defined above, bank overdrafts and short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value as they are considered as an integral part of the Company''s management. Bank overdrafts are shown within borrowings under current liabilities in the balance sheet.
financial instruments
Financial assets and financial liabilities are recognized when a Company becomes a party to the contractual provisions of the instruments.
Initial Recognition and Measurement - Financial Assets and Financial Liabilities
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 and ancillary costs related to borrowings) 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 recognized immediately in the Statement of Profit and Loss.
Classification and subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income (âFVTOCIâ) or fair value through profit or loss (âFVTPLâ) on the basis of following:
- the entity''s business model for managing the financial assets; and
- the contractual cash flow characteristics of the financial asset.
Amortized Cost:
A financial asset is classified and measured at amortized cost if both of the following conditions are met:
- the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
FVTOCI:
A financial asset is classified and measured at FVTOCI if both of the following conditions are met:
- the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
FVTPL:
A financial asset is classified and measured at FVTPL unless it is measured at amortized cost or at FVTOCI.
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.
Impairment of Financial Assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables.
Classification and subsequent measurement: Financial Liabilities
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Financial Liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL.
Gains or losses on financial liabilities held for trading are recognized in the Statement of Profit and Loss.
Other Financial Liabilities:
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortized cost using the effective interest method.
The effective interest method is a method of calculating the amortized 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.
Derecognition of Financial Assets and Financial Liabilities:
The Company de-recognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset. If the Company enters into transactions whereby it transfers assets recognized on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognized.
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
Offsetting Financial Instruments:
Financial assets and liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
investment in subsidiaries, joint ventures and associates
A subsidiary is an entity that is controlled by another entity. An investor controls an investee if and only if the investor has the following; (i) Power over the investee, (ii) exposure, or rights, to variable returns from its involvement with the investee and
(iii) the ability to use its power over the investee to affect the amount of the investor''s returns.
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
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.
The Company''s investments in its subsidiaries, associates and joint ventures are accounted at cost and reviewed for impairment at each reporting date in accordance with the policy described in note 1.07 above.
borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an company incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
provisions, contingent liabilities and contingent assets
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.
Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a current pretax rate. The increase in the provision due to the passage of time is recognized as interest expense.
Contingent liabilities are disclosed in the case of:
- a present obligation arising from the past events, when it is not probable that an outflow of resources will be required to settle the obligation;
- a present obligation arising from the past events, when no reliable estimate is possible;
- a possible obligation arising from past events, unless the probability of outflow of resources is remote.
Contingent Assets is disclosed when inflow of economic benefits is probable.
GRATUITY AND OTHER POST-EMPLOYMENT BENEFITS (i) short-term obligations
Short term employee benefits are recognized as an expense at an undiscounted amount in the Statement of profit & loss of the year in which the related services are rendered.
(ii) Post-employment obligations
The Company operates the following post-employment schemes:
- defined benefit plans such as gratuity; and
- defined contribution plans such as provident fund
Gratuity obligations
The liability or asset recognized in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized at amount net of taxes in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in Statement of Profit and Loss as past service cost.
Defined contribution plans
The Company pays provident fund contributions to publicly administered provident funds. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
(iii) other long-term employee benefit obligations
The liabilities for leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in statement of profit and loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
(iv) Bonus Plans
The Company recognizes a liability and an expense for bonus. The Company recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
Income from Rendering of services
Revenue from Operations is recognized on accrual basis based on underlying subscription plan or agreements with the concerned subscribers / parties.
Revenue from prepaid Internet Service plans, which are active at the end of accounting period, is recognized on time proportion basis. In other cases of Internet Service plans, entire revenue is recognized in the period of sale.
Income from services does not include Service Tax (ST) / Goods and Service Tax (GST).
Consultancy Income:
Revenue from consulting services is recognized when the services are completed.
Rental income:
The Company''s policy for recognition of revenue from operating leases is described in note below on Leases.
The Company collects GST, Value added Taxes (VAT), ST and Entertainment Tax on behalf of the government and, therefore, it is not an economic benefit flowing to the Company. Hence, it is excluded from revenue.
Sale of goods
Revenue from the sale of goods is recognized when significant risks and rewards of ownership of the goods have passed to the buyer. Revenue from sale of goods is measured at the fair value of consideration received or receivable. Amount disclosed as revenue are net of returns and allowances, trade discounts and volume rebates but does not include VAT, Central Sales Tax (CST) and GST.
The Company collects VAT and GST on behalf of the Government and, therefore, these are not economic benefits flowing to the Company and hence not included in revenue.
The Company recognizes revenue when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the entity.
other operating Income
Other Operating Income comprises of fees for rendering management, technical and consultancy services. Income from such services is recognized upon achieving milestones as per the terms of underlying agreements.
Interest Income
Interest income from debt instruments is recognized using the effective interest rate method.
Dividend Income
Dividends are recognized in the Statement of Profit and Loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
share of profit / loss from Partnership firms
Share of profit / loss from Partnership firm is recognized in the Statement of Profit and Loss in respect of the financial year of the Partnership firm ending on or before the balance sheet date, on the basis of its audited accounts.
TAXES on income Current Tax:
Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the relevant tax laws and based on the expected outcome of assessments / appeals.
Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax:
Deferred tax is provided using the balance sheet approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside the statement of profit and loss is recognized outside the statement of profit and loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.
The break-up of the major components of the deferred tax assets and liabilities as at balance sheet date has been arrived at after setting off deferred tax assets and liabilities where the Company have a legally enforceable right to set-off assets against liabilities.
earnings per share (EPs)
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders is adjusted for after income tax effect of interest and other financing cost associated with dilutive potential equity shares and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.
As a Lessee Operating Lease
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to statement of profit and loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
As a Lessor
Lease income from operating leases where the Company is a lessor is recognized in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
CT20 FOREIGN CURRENCY TRANSLATIONS (i) Functional and presentation currency
The Company''s standalone financial statements are prepared in INR, which is also the Company''s functional and presentation currency.
(ii) Transactions and balances Monetary items:
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in statement of profit and loss. Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of Profit and Loss, within finance costs. All other foreign exchange gains and losses are presented in the Statement of Profit and Loss on a net basis within other gains / (losses).
Non - Monetary items:
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
financial guarantee contract
The Company on case to case basis elects to account for financial guarantee contracts as financial instruments or as an insurance contract, as specified in Ind AS 109 on Financial Instruments and Ind AS 104 on Insurance Contracts. The Company has regarded its financial guarantee contracts as insurance contracts on contract by contract basis. At the end of each reporting period the Company performs liability adequacy test, (i.e. it assesses the likelihood of a pay-out based on current undiscounted estimates of future cash flows) on financial guarantee contracts regarded as insurance contracts, and the deficiency is recognized in profit or loss.
BUSINESS COMBINATIONS AND GOODWILL
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Company elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquirerâs identifiable net assets. Acquisition costs which are administrative in nature are expensed out.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company''s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed off, the goodwill associated with the operation disposed off is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed off in this circumstance is measured based on the relative values of the operation disposed off and the portion of the cash-generating unit retained.
Common control business combinations include transactions, such as transfer of subsidiaries or businesses, between entities within a group.
Business combinations involving entities or businesses under common control are accounted for using the pooling of interests method. Under pooling of interest method, the assets and liabilities of the combining entities are reflected at their carrying amounts, the only adjustments that are made are to harmonies accounting policies.
The financial information in the standalone financial statements in respect of prior periods are restated as if the business combination had occurred from the beginning of the preceding period in the standalone financial statements, irrespective of the actual date of the combination. However, if business combination had occurred after that date, the prior period information is restated only from that date.
The difference, if any, between the amount recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve and presented separately from other capital reserves with disclosure of its nature and purpose in the notes.
b) Rights, Preference and restrictions attached to shares;
Terms/ Rights attached to Equity shares
The Company has issued only one class of equity shares having face value of '' 2 (March 31, 2017 : '' 2) per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts in proportion to the number of equity shares held by the shareholders.
Description of the nature and purpose of each reserve within equity is as follows:-
(a) Retained Earnings :
Retained earnings are the losses that the Company has incurred till date.
(b) securities Premium :
Securities premium reserve is used to record the premium on issue of shares. The reserve is utilized in accordance with the provisions of the Act.
contingent liabilities
a) The Company has challenged levy of license fees for pure Internet services before Telecom Disputes Settlement & Appellate Tribunal (TDSAT). On merit of the case, TDSAT has granted stay till disposal of petition. The Company is contingently liable to the extent of Rs, 114.58 (March 31, 2017 : Rs, 71.45). The Company has paid an amount of Rs, 5.36 under protest.
b) The minority shareholders of the erstwhile joint venture company, Hath way Rajesh Multichannel Pvt. Ltd., filed an arbitration petition against the Company before the High Court, Bombay, which was referred to a sole arbitrator in August 2016. The minority shareholders, in their statement of claim have sought, amongst other reliefs, payment of Rs, 54.98 (March 31, 2017: Rs, 54.98) towards costs of STBs, charges under various heads allegedly wrongly debited by the Company etc. The Company has refuted the claims and has made counter claim of Rs, 91.17 (March 31, 2017: Rs, 91.17) towards inter-alia outstanding content cost, loans, payments and damages/ compensation for the loss of financial and management credibility, goodwill etc. The matter is currently pending.
Pursuant to Business Transfer Agreement dated March 24, 2017, the Company has transferred its Cable Television business which inter alia includes claims against the Company not acknowledged as debts, by way of slump sale to its wholly owned subsidiary Hath way Digital Private Limited (HDPL). Accordingly, the details of such claims, litigation etc. relating to Cable Television business transferred to HDPL are not disclosed hereinabove
Mar 31, 2017
1.00 SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the presentation of these standalone financial statements.
1.01 BASIS OF PREPARATION
(i) Compliance with Ind AS
The standalone financial statements comply in all material aspects with Indian Accounting Standards (âInd ASâ) notified under Section 133 of the Companies Act, 2013 (âthe Actâ), and relevant rules issued thereunder. In accordance with proviso to the Rule 4A of the Companies (Accounts) Rules, 2014, the terms used in these financial statements are in accordance with the definitions and other requirements specified in the applicable Accounting standards.
The standalone financial statements up to year ended March 31, 2016 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) (â previous GAAPâ) and other relevant provisions of the Act.
These standalone financial statements are the first standalone financial statements of the Company under Ind AS. Refer note 4.25 for an explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows. The date of transition to Ind AS is April 1, 2015.
(ii) Historical cost convention
The standalone financial statements have been prepared on a historical cost basis, except for the following:
- certain financial assets and liabilities (including derivative instruments) is measured at fair value;
- assets held for sale - measured at fair value less cost to sell; and
- defined benefit plans - plan assets measured at fair value
1.02 ROUNDING OF AMOUNTS
All amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest crores, except where otherwise indicated.
1.03 current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is classifies as current if:
(i) it is expected to be realised or intended to be sold or consumed in normal operating cycle
(ii) it is held primarily for the purpose of trading
(iii) it is expected to be realised within twelve months after the reporting period, or
(iv) cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is classified as current if:
(i) it is expected to be settled in normal operating cycle
(ii) it is held primarily for the purpose of trading
(iii) it is due to be settled within twelve months after the reporting period, or
(iv) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities on net basis.
All assets and liabilities have been classified as current or non-current as per Companyâs normal operating cycle. Based on the nature of operations, the Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.
1.04 use of judgements, estimates & assumptions
While preparing standalone financial statements in conformity with Ind AS, the management makes certain estimates and assumptions that require subjective and complex judgments. These judgments affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses, disclosure of contingent liabilities at the statement of financial position date and the reported amount of income and expenses for the reporting period. Financial reporting results rely on our estimate of the effect of certain matters that are inherently uncertain. Future events rarely develop exactly as forecast and the best estimates require adjustments, as actual results may differ from these estimates under different assumptions or conditions. The management continually evaluate these estimates and assumptions based on the most recently available information.
Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the standalone financial statements are as below:
Key sources of estimation uncertainty
(i) Financial instruments; (Refer note 4.14)
(ii) Useful lives of Property, Plant and Equipment and intangible assets; (Refer note 1.05)
(iii) Valuation of inventories; (Refer note1.09)
(iv) Assets and obligations relating to employee benefits; (Refer note 4.08)
(v) Expected customer relationship period (i.e. expected life of the customer); (Refer note 1.16)
(vi) Evaluation of recoverability of deferred tax assets; (Refer note 2.07) and
(vii) Contingencies (Refer note 4.02 and 4.05).
Critical accounting judgements
The Company has equity stake in various entities for strategic reasons concerning its operation. The relationship with these entities have been determined based on principles laid down in Ind AS 110 - Consolidated Financial Statements and Ind AS 111 - Joint Arrangements. Accordingly, the entities mentioned below are considered as Joint ventures.
(i) GTPL Hathway Ltd (Formerly known as GTPL Hathway Pvt Ltd)
(ii) Hathway Sai Star Cable and Datacom Pvt Ltd
(iii) Hathway Digital Saharanpur Cable and Datacom Pvt Ltd
(iv) Hathway MCN Pvt Ltd
(v) Hathway Channel 5 Cable and Datacom Pvt Ltd
(vi) Hathway Mysore Cable Network Pvt Ltd (till March 25, 2017 and subsidiary thereafter)
(vii) Net 9 Online Hathway Pvt Ltd
(viii) Hathway Cable MCN Nanded Pvt Ltd
(ix) Hathway Latur MCN Cable and Datacom Pvt Ltd
(x) Hathway Palampur Cable Network Pvt Ltd
(xi) Hathway ICE Television Pvt Ltd
(xii) Hathway Sonali OM Crystal Cable Pvt Ltd
(xiii) Hathway Dattatray Cable Network Pvt Ltd
(xiv) Hathway Prime Cable and Datacom Pvt Ltd
(xv) Hathway New Concept Cable and Datacom Pvt Ltd (till October, 29, 2015 and subsidiary thereafter)
(xvi) Hathway Software Developers Pvt Ltd (till May 28, 2015 and subsidiary thereafter)
(xvii) Hathway SS Cable & Datacom LLP
1.05 PROPERTY, PLANT And EQUIPMENT
(i) Property, Plant and Equipment is stated at cost, less accumulated depreciation and accumulated impairment losses. The initial cost of an asset comprises its purchase price, any costs directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating in the manner intended by management, the initial estimate of any decommissioning obligation, if any. The purchase price is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
(ii) 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 statement of profit and loss during the reporting period in which they are incurred.
(iii) Set Top Boxes (STBs) and Internet Access devices on hand at the year-end are included in Capital Work in Progress. On installation, such devices are capitalized or treated as sale, as the case may be.
(iv) 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 statement of profit and loss.
(v) The residual values and useful lives of Property, Plant and Equipment are reviewed at each financial year end, and changes, if any, are accounted prospectively.
(vi) Stores & Spares which meet the definition of Property Plant and Equipment and satisfy the recognition criteria of Ind AS 16 are capitalized as Property, Plant and Equipment.
(vii) Depreciation on Property, Plant & Equipment is provided on straight line method. In accordance with requirements prescribed under Schedule II of Companies Act, 2013, the Company has assessed the estimated useful lives of its Property, Plant & Equipment and has adopted the useful lives and residual value as prescribed in Schedule II except for the cost of STBs & Internet Access devices at the customer location which are depreciated on straight-line method over a period of eight years based on internal technical assessment.
(viii) In case of additions or deletions during the year, depreciation is computed from the month in which such assets are put to use and up to previous month of sale, disposal or held for sale as the case may be. In case of impairment, depreciation is provided on the revised carrying amount over its remaining useful life.
(ix) All assets costing up to Rs.5,000/- are fully depreciated in the year of capitalisation.
(x) Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.
1.06 INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
Intangible assets acquired separately
Intangible assets comprises of Cable Television Franchise, Movie & Serial Rights, Bandwidth Rights, Goodwill and Softwares. Cable Television Franchisee represents purchase consideration of a network that is mainly attributable to acquisition of subscribers and other rights, permission etc. attached to a network.
Intangible assets with finite useful lives that are acquired are recognized only if they are separately identifiable and the Company expects to receive future economic benefits arising out of them. Such assets are stated at cost less accumulated amortization and impairment losses.
Intangible assets acquired in business combination
Intangible Assets acquired in business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost)
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 statement of profit and loss when the asset is derecognised.
Amortisation of intangible assets
Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. Intangible assets with finite useful lives are amortized on a straight line basis over their useful economic lives and assessed for impairment whenever there is indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at each year end. The amortisation expense on Intangible assets with finite lives and impairment loss is recognised in the Statement of Profit and Loss.
Estimated lives for current and comparative periods in relation to application of straight line method of amortisation of intangible assets (acquired) are as follows:
- Softwares are amortized over the license period and in absence of such tenor, over five years.
- Movie & Serial Rights are amortized on exploitation over the balance license period in equal installments.
- Bandwidth Rights are amortized over the period of the underlying agreements.
- Channel Design are amortized over the period of five years.
The estimated useful lives, residual values, amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
1.07 impairment of assets
Carrying amount of Tangible assets, Intangible assets, Investments in Subsidiaries, Joint Ventures and Associates (which are carried at cost) are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assetâs 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. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or Companyâs assets (cash-generating units). Non- financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
1.08 non-current assets held for sale and discontinued operations
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell.
An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised at the date of de-recognition.
Non-current assets are not depreciated or amortised while they are classified as held for sale.
Non-current assets classified as held for sale are presented separately from the other assets in the balance sheet.
A discontinued operation is a component of the entity that has been disposed off or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit and loss.
1.09 inventories
Inventories are valued as follows:
Spares and maintenance items are valued at lower of cost (net of taxes recoverable) on first in first out basis and net realizable value.
Stock-in-trade comprising of access devices are valued at cost on weighted average method or at net realizable value, whichever is lower
1.10 cash and cash equivalents
For the purpose of Cash Flow Statement, cash and cash equivalents includes cash on hand, deposits held at call with banks or financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
1.11 financial instruments
Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments.
Initial Recognition and Measurement - Financial Assets and Financial Liabilities
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 and ancillary costs related to borrowings) 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 the Statement of Profit and Loss.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (âFVTOCIâ) or fair value through profit or loss (âFVTPLâ) on the basis of following:
- the entityâs business model for managing the financial assets and
- the contractual cash flow characteristics of the financial asset.
Amortised Cost:
A financial asset is classified and measured at amortised cost if both of the following conditions are met:
- the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
FVTOCI:
A financial asset is classified and measured at FVTOCI if both of the following conditions are met:
- the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
FVTPL:
A financial asset is classified and measured at FVTPL unless it is measured at amortised cost or at FVTOCI.
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.
Impairment of Financial Assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Classification and Subsequent measurement: Financial Liabilities
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Financial Liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL.
Gains or losses on financial liabilities held for trading are recognised in the Statement of Profit and Loss.
Other Financial Liabilities:
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
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.
Derecognition of financial Assets and financial Liabilities:
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred. If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. offsetting financial instruments:
Financial assets and liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
1.12 investment in subsidiaries, joint ventures and associates
A subsidiary is an entity that is controlled by another entity. An investor controls an investee if and only if the investor has the following; (i) Power over the investee, (ii) exposure, or rights, to variable returns from its involvement with the investee and
(iii) the ability to use its power over the investee to affect the amount of the investorâs returns.
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
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.
The Companyâs investments in its subsidiaries, associates and joint ventures are accounted at cost and reviewed for impairment at each reporting date.
1.13 borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an company incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
1.14 provisions, contingent liabilities and contingent assets
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the present value of managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a current pretax rate. The increase in the provision due to the passage of time is recognised as interest expense.
Contingent liabilities are disclosed in the case of:
- a present obligation arising from the past events, when it is not probable that an outflow of resources will be required to settle the obligation;
- a present obligation arising from the past events, when no reliable estimate is possible;
- a possible obligation arising from past events, unless the probability of outflow of resources is remote.
Contingent Assets is disclosed when inflow of economic benefits is probable.
1.15 gratuity and other post-employment benefits
(i) Short-term obligations
Short term employee benefits are recognised as an expense at an undiscounted amount in the Statement of profit & loss of the year in which the related services are rendered.
(ii) post-employment obligations
The Company operates the following post-employment schemes:
- defined benefit plans such as gratuity; and
- defined contribution plans such as provident fund
Gratuity obligations
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised at amount net of taxes in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in statement of profit and loss as past service cost.
Defined contribution plans
The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
(iii) other long-term employee benefit obligations
The liabilities for leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in statement of profit and loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
(iv) Bonus Plans
The Company recognises a liability and an expense for bonuses. The Company recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
1.16 REVENuE RECOGNITION
(i) Income from Rendering of services
Subscription income includes subscription from Subscribers / Cable Operators relating to cable TV, Internet, activation of devices and from broadcasters relating to the placement of channels. Revenue from Operations is recognized on accrual basis based on underlying subscription plan or agreements with the concerned subscribers / parties.
Subscription Income from Cable TV Operators, is accrued monthly based on number of connections declared by the said operators to the Company. In cases where revision of number of connections and / or rate is under negotiations at the time of recognition of revenue, the Company recognizes revenue as per invoice raised. Adjustments for the year, if any, arising on settlement is adjusted against the Revenue. Other cases are reviewed by the management periodically.
Activation fee, which in substance is an advance payment for future services or the ongoing services being provided are essential to the subscribers receiving the expected benefit of the upfront payment of activation fee. Accordingly, activation fee is earned as services are provided and deferred over the expected customer relationship period (i.e. expected life of the customer).
Revenue from prepaid Internet Service plans, which are active at the end of accounting period, is recognized on time proportion basis. In other cases of Internet Service plans, entire revenue is recognized in the period of sale.
Advertisement revenue is accrued on release of the advertisement for public viewing.
Income from service does not include Service Tax (ST).
Consultancy Income:
Revenue from consulting services is recognized when the services are completed.
Rental income:
The Companyâs policy for recognition of revenue from operating leases is described in note below on Leases.
The Company collects VAT, service tax and entertainment tax on behalf of the government and, therefore, it is not an economic benefit flowing to the Company. Hence, it is excluded from revenue.
(ii) Sale of goods
Revenue from the sale of goods is recognised when significant risks and rewards of ownership of the goods have passed to the buyer. Revenue from sale of goods is measured at the fair value of consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
The Company collects value added taxes (VAT) on behalf of the Government and, therefore, these are not economic benefits flowing to the Company and hence not included in revenue.
(iii) other operating income
Other Operating Income comprises of fees for rendering management, technical and consultancy services. Income from such services is recognized upon achieving milestones as per the terms of underlying agreements.
(iv) interest income
Interest income from debt instruments is recognised using the effective interest rate method.
(v) dividend income
Dividends are recognised in the Statement of Profit and Loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
1.17 TAXES ON INCOME
Current Tax:
Tax on income for the current period is determined on the basis on estimated taxable income and tax credits computed in accordance with the provisions of the relevant tax laws and based on the expected outcome of assessments / appeals.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit and loss.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax:
Deferred tax is provided using the balance sheet approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside the statement of profit and loss is recognised outside the statement of profit and loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
The break-up of the major components of the deferred tax assets and liabilities as at balance sheet date has been arrived at after setting off deferred tax assets and liabilities where the Company have a legally enforceable right to set-off assets against liabilities.
1.18 earnings per SHARE (EPS)
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders is adjusted for after income tax effect of interest and other financing cost associated with dilutive potential equity shares and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
1.19 LEASES
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.
As a Lessee Finance Lease
Leases of Property, Plant and Equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the leaseâs inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the statement of profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Operating Lease
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to statement of profit and loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
As a Lessor
Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
1.20 foreign currency transactions
(i) Functional and presentation currency
The Companyâs standalone financial statements are prepared in INR, which is also the Companyâs functional and presentation currency.
(i) Transactions and balances Monetary items:
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in statement of profit and loss.
Non - Monetary items:
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
1.21 business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Company elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquireeâs identifiable net assets. Acquisition costs which are administrative in nature are expensed out.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Companyâs cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed off, the goodwill associated with the operation disposed off is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed off in this circumstance is measured based on the relative values of the operation disposed off and the portion of the cash-generating unit retained.
Common control business combinations include transactions, such as transfer of subsidiaries or businesses, between entities within a group.
Business combinations involving entities or businesses under common control are accounted for using the pooling of interests method. Under pooling of interest method, the assets and liabilities of the combining entities are reflected at their carrying amounts, the only adjustments that are made are to harmonise accounting policies. The financial information in the standalone financial statements in respect of prior periods are restated as if the business combination had occurred from the beginning of the preceding period in the standalone financial statements, irrespective of the actual date of the combination. However, if business combination had occurred after that date, the prior period information is restated only from that date.
The difference, if any, between the amount recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve and presented separately from other capital reserves with disclosure of its nature and purpose in the notes.
1.22 FIRST TIME ADOPTION - Mandatory EXCEPTIONS, OPTIONAL EXEMPTIONS Overall principle
The Company has prepared the opening standalone Balance Sheet as per Ind AS as of 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 lnd 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 the certain exception and certain optional exemptions availed by the Company as detailed below.
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.
Past business combinations
The Company has elected not to apply Ind AS 103 Business Combinations retrospectively to past business combinations that occurred before the transition date of April 1, 2015. Consequently,
- The Company has kept the same classification for the past business combinations as in its previous GAAP standalone financial statements;
- The Company has not recognised assets and liabilities that were not recognised in accordance with previous GAAP in the balance sheet of the acquiree and would also not qualify for recognition in accordance with Ind AS in the balance sheet of the Company;
- The Company has excluded from its opening balance sheet those items recognised in accordance with previous GAAP that do not qualify for recognition as an asset or liability under Ind AS;
- The Company has tested the goodwill for impairment at the transition date based on the conditions as of the transition date;
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 the transition date measured as per the previous GAAP and use that carrying value as itâs deemed cost as of the transition date.
Deemed cost on investments in subsidiaries, joint ventures and associates
The Company has elected to selectively use fair value of its investments in certain subsidiaries as the deemed cost of investments and has elected to continue with the carrying value of its investments is remaining subsidiaries, joint ventures and associates recognised as at April 1, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the investments in subsidiaries, joint ventures and associates.
Determining whether an arrangement contains a lease
The Company has applied Appendix C of Ind AS 17 Determining whether an Arrangement contains a Lease to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.
Long term foreign currency monetary item
The Company has continued with the policy adopted for accounting for exchange differences arising from translation of longterm foreign currency monetary items recognised in the financial statements prepared under previous GAAP for the year ended March 31, 2016.
Share based payment transaction
The Group has availed the exemption of not applying Ind AS 102- Share based payment to equity instruments that vested before date of transition to Ind AS.
Mar 31, 2016
COMPANY OVERVIEW
Hathway Cable and Datacom Limited (the Company) is a Public Company
domiciled in India and incorporated under the provisions of the
Companies Act, 1956. The Company is Multi System Operator (MSO) engaged
in distribution of television channels through analog and digital cable
distribution network and internet services through cable. Its equity
shares are listed on National Stock Exchange of India Limited (NSE) &
Bombay Stock Exchange Limited (BSE) in India.
1.00 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.01 BASIS OF PREPARATION
The financial statements of the Company are consistently prepared and
presented under historical cost convention on an accrual basis in
accordance with the generally accepted accounting principles in India
(Indian GAAP). The Company has prepared the financial statements to
comply in all material aspects with the accounting standards notified
under section 133 of the Companies Act, 2013 (the Act), read together
with rule 7 of the Companies (Accounts) Rules, 2014 and the relevant
provisions of the Act. In accordance with first proviso to section
129(1) of the Act and clause 6 of the General Instructions given in
Schedule III to the Act, the terms used in these financial statements
are in accordance with the Accounting Standards as referred to herein.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule III to the Act. Based on the nature of
operations, the Company has ascertained its operating cycle as 12
months for the purpose of current - non-current classification of
assets and liabilities.
The accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year.
1.02 USE OF ESTIMATES
The preparation of financial statements in conformity with Indian
Generally Accepted Accounting Principles (GAAP) requires management to
make judgements, estimates and assumptions that affect the reported
amounts of revenue, expenses, assets and liabilities and disclosures
relating to contingent liabilities as at the date of financial
statements and reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions, actual
results could differ from these estimates. Differences on account of
revision of estimates, actual results and existing estimates are
recognised in periods in which the results are known/ materialised in
accordance with the requirements of the respective accounting standard,
as may be applicable.
1.03 FIXED ASSETS
a) Tangible Assets
(i) The fixed assets are stated at cost less accumulated depreciation
and impairment losses, if any. Cost comprises of purchase price, non
refundable taxes and all expenses incurred in bringing the assets to
its present location and condition for its intended use and includes
installation and commissioning expenses. Such indirect expenditure
incurred during the pre-commencement period is allocated
proportionately over the cost of the relevant assets.
(ii) Set Top Boxes (STBs) and Internet Access devices on hand at the
year-end are included in Capital Work in Progress. On installation,
such devices are capitalized or treated as sale, as the case may be.
(iii) Gains or losses arising on de-recognition of fixed assets being
the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is de-recognized.
b) Intangible Assets
(i) Intangible assets comprises of Cable Television Franchise, Movie &
Serial Rights, Bandwidth Rights, Goodwill and Softwares. Cable
Television Franchisee represents purchase consideration of a network
that mainly attributable to acquisition of subscribers and other
rights, permission etc. attached to a network.
(ii) Intangible assets are recognized only if they are separately
identifiable and the Company expects to receive future economic
benefits arising out of them. Such assets are stated at cost less
accumulated amortization and impairment losses.
(iii) The amortization period and the amortization method are reviewed
at least at each financial year-end. If the expected useful life of the
asset is significantly different from previous estimates, the
amortization period is changed accordingly. If there has been a
significant change in the expected pattern of economic benefits from
the asset, the amortization method is changed to reflect the changed
pattern.
c) Fixed Asset not in active use and held for sale is classified under
"Other Non Current Assets" and are recognised at the lower of their
carrying amount or market value less cost to sell.
1.04 DEPRECIATION / AMORTISATION
a) Depreciation is the systematic allocation of the depreciable amount
of an asset over its useful life and is provided on a straight-line
basis over the useful life as prescribed in Schedule II to the Act,
unless otherwise specified.
b) Depreciable amount for assets is the cost of an asset less its
estimated residual value.
c) In case of additions or deletions during the year, depreciation is
computed from the month in which such assets are put to use and up to
previous month of sale, disposal or held for sale as the case may be.
In case of impairment, depreciation is provided on the revised carrying
amount over its remaining useful life.
d) The cost of STBs & Internet Access device at the customer location
are depreciated on straight-line method over a period of eight years.
e) Useful life of assets individually costing less than Rupees 5,000/-
is considered as one year.
f) The intangible assets are amortized on a straight line basis over
their expected useful lives as follows:
(i) Cable Television Franchise is amortized over a period of twenty
years.
(ii) Non Compete Fees classified as Goodwill is amortized over the
non-compete period stated in the underlying agreements and in absence
of the same, over ten years.
(iii) Goodwill arising on transfer of business of subsidiaries is fully
amortized in the same year.
(iv) Goodwill other than mentioned above is amortized over the specific
tenor of the relevant agreement and in absence of such tenor, over ten
years.
(v) Softwares are amortized over the license period and in absence of
such tenor, over five years.
(vi) Movie & Serial Rights are amortized on exploitation over the
balance license period in equal installments.
(vii) Bandwidth Rights are amortized over the period of the underlying
agreements.
1.05 INVESTMENTS
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition related
cost such as brokerage, fees and duties.
a) Long-Term Investments
Long-term investments in shares are stated at cost. Provision for
diminution in value of long- term investments is made if such
diminution is considered other than temporary.
b) Current Investments
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis. Other
current investments are recorded at lower of cost and fair value.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
Statement of Profit and Loss.
1.06 INVENTORIES
Inventories are valued as follows
Spares and maintenance items are valued at lower of cost (net of taxes
recoverable) on first in first out basis and net realizable value.
Stock-in-trade comprising of access devices are valued at cost on
weighted average method or at net realizable value, whichever is lower.
1.07 BORROWING COSTS
Borrowing Costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of such
assets. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other Borrowing costs are recognized as an expense in the period in
which they are incurred.
1.08 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
a) A Provision is recognized when the Company has a present obligation
as a result of past event and it is probable that an outflow of
resources would be required to settle the obligation, and in respect of
which a reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on management''s estimate for
the amount required to settle the obligation at the balance sheet date.
Provisions are reviewed on each balance sheet date and are adjusted to
effect the current best estimation.
b) Contingent liabilities are disclosed separately by way of note to
financial statements after careful evaluation by the management of the
facts and legal aspects of the matter involved in case of:
(i) a present obligation arising from the past event, when it is not
probable that an outflow of resources will be required to settle the
obligation.
(ii) a possible obligation, unless the probability of outflow of
resources is remote.
c) Contingent Assets are neither recognized nor disclosed.
1.09 EMPLOYEE BENEFITS
a) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the statement of profit & loss of the year in
which the related service is rendered.
b) Post employment and other long term employee benefits viz.,
gratuity, leave encashment, etc., are covered under Defined Benefit
Plan. The cost of providing benefits are recognized as an expense in
the statement of profit and loss for the year in which the employee has
rendered services. The amount of expense is determined on the basis of
actuarial valuation at each year-end by Projected Unit Credit Method.
Actuarial gains and losses in respect of post employment and other long
term benefits are charged to the statement of profit and loss in the
period in which they occur. The Company presents the entire liability
pertaining to leave encashment as a short term provision in the balance
sheet, since it does not have an unconditional right to defer its
settlement for 12 months after the reporting date.
1.10 EMPLOYEE STOCK OPTION SCHEME
Stock options granted under the stock options schemes are accounted as
per the accounting treatment prescribed by the guidance note on
Employee Share Based Payments issued by the Institute of Chartered
Accountants of India and SEBI (Share Based Employee Benefits)
Regulations 2014. The excess of fair price on the date of grant over
the exercise price is recognized uniformly over vesting period of the
option.
1.11 ACCOUNTING FOR LEASES
The transactions where the Company conveys or receives right to use an
asset for an agreed period of time for a payment or series of payments
are considered as Lease.
a) As Lessee - Operating Lease
Lease rentals in respect of assets taken on ''Operating Lease'' are
charged to Statement of Profit and Loss over the lease term on
systematic basis, which is more representative of the time pattern of
the Company''s benefit.
b) As Lessor - Operating Lease
Assets subject to Operating Leases are included in Fixed Assets. Lease
income is recognized in the Statement of Profit and Loss over the lease
term on systematic basis which is more representative of the time
pattern of the Company''s benefit. Costs, including depreciation are
recognized as an expense in the Statement of Profit & Loss.
c) As Lessee - Finance Lease
Finance Leases, which effectively transfer to the lessee substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets and depreciated as per the applicable policy.
Lease payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liability. The finance charge
is allocated over the lease term so as to produce a constant periodic
rate of interest on the remaining balance of liability. Initial direct
cost of lease is capitalized.
1.12 REVENUE RECOGNITION
Revenue is recognized on accrual basis to the extent it is probable
that the economic benefits will flow to the Company and the revenue can
be reliably measured.
INCOME FROM SERVICES
a) Subscription income includes subscription from Subscribers / Cable
Operators relating to cable TV, Internet, activation of devices and
from broadcasters relating to the placement of channels. Revenue from
Operations is recognized on accrual basis based on underlying
subscription plan or agreements with the concerned subscribers /
parties.
b) Revenue from prepaid Internet Service plans, which are active at the
end of accounting period, is recognized on time proportion basis. In
other cases of sale of prepaid Internet Service plans, entire revenue
is recognized in the period of sale.
c) Subscription Income from Cable TV Operators, is accrued monthly
based on number of connections declared by the said operators to the
Company. In cases where revision of number of connections and / or rate
is under negotiations at the time of recognition of revenue, the
Company recognizes revenue as per invoice raised. Adjustments for the
year, if any, arising on settlement is adjusted against the Revenue.
Other cases are reviewed by the management periodically.
d) Advertisement revenue is accrued on release of the advertisement for
public viewing.
e) The Company collects service tax on behalf of the government and,
therefore, it is not an economic benefit flowing to the Company. Hence,
it is excluded from revenue.
SALE OF GOODS
Revenue from sale of Access Devices is recognized when all significant
risks and rewards of ownership of the goods are passed to the buyer,
usually on delivery of the devices. The Company collects value added
taxes (VAT) on behalf of the Government and, therefore, these are not
economic benefits flowing to the Company and hence not included in
revenue.
OTHER OPERATING INCOME
Other Operating Income comprises of fees for rendering management,
technical and consultancy services. Income from such services is
recognized upon achieving milestones as per the terms of underlying
agreements.
INTEREST INCOME
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Interest income is included under the head "Other Income" in the
Statement of Profit and Loss.
1.13 TAXATION
a) Provision for Current Tax is made on the basis of taxable profits
computed for the current accounting year in accordance with the Income
Tax Act, 1961.
b) Deferred Tax is calculated at the tax rates and laws that have been
enacted or substantively enacted as of the Balance Sheet date and is
recognized on timing difference that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred Tax
assets are recognized on carry forward of unabsorbed depreciation and
tax losses, only if, there is virtual certainty that such deferred tax
assets can be realized against future taxable income. Other deferred
tax assets are recognized only to the extent that there is a reasonable
certainty of realization in future.
1.14 FOREIGN CURRENCY TRANSACTIONS
a) Foreign currency transactions are recorded at the exchange rate
prevailing at the date of transactions. Exchange difference arising on
settlement of transactions is recognized as income or expense in the
year in which they arise except for transactions covered under (c)
below.
b) Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are restated at
the year-end rate and difference in translations and realized gains /
(losses) on foreign currency transactions are recognized in the
statement of profit & loss except for transactions covered under (c)
below.
c) The exchange difference in respect of long-term monetary items
arising in respect of accounting period commencing on or after December
07, 2006 to the extent they relate to the acquisition of depreciable
capital assets are added to or deducted from the cost of the assets and
are depreciated over the balance life of the assets.
d) The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year.
e) Synthetic Swap (under forward contract) :
Outstanding forward / future contracts against firm commitments and
derivative contracts, other than stated above, are marked to market and
the resulting loss, if any, is charged to the Statement of Profit &
Loss. Gain, if any, on such marked to market is not recognized unless
it is reversal of loss recognized earlier.
1.15 EARNINGS PER SHARE (EPS)
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they are entitled to participate in dividends relative to a
fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
1.16 IMPAIRMENT
The Company assesses at each Balance Sheet whether there is any
indication that assets may be impaired. If any such indications exist,
the Company estimates the recoverable amount of the assets or the
cash-generating unit and if the same is less than its carrying amount,
the carrying amount is reduced to its recoverable amount. The reduction
is treated as an impairment loss and is recognized in the statement of
profit and loss. If at the balance sheet date there is an indication
that if a previously assessed impairment loss no longer exists, the
recoverable amount is reassessed and the assets are reflected at the
recoverable amount.
1.17 MEASUREMENT OF EBITDA
The Company has elected to present earnings before interest, tax,
depreciation and amortization (EBITDA) as a separate line item on the
face of the statement of profit and loss. The Company measures EBITDA
on the basis of profit/ (loss) from continuing operations. In its
measurement, the Company does not include depreciation and amortization
expense, finance costs and tax expense.
1.18 CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank, cash in hand, demand
deposits with banks and other short-term investments with an original
maturity of three months or less.
Mar 31, 2014
1.01 METHOD OF ACCOUNTING AND BASIS OF PREPARATION
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India, on the basis of
going concern under the historical cost convention and also on accrual
basis. These financial statements comply, in all material aspects, with
the provisions of the Companies Act, 1956 and the Companies Act, 2013
(to the extent applicable) and also accounting standards prescribed by
the Companies (Accounting Standards) Rules, 2006, which continue to be
applicable in respect of Section 133 of the Companies Act, 2013 in
terms of General Circular 15/2013 dated September 13, 2013 of the
Ministry of Corporate Affairs.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule VI to the Companies Act, 1956. Based
on the nature of services rendered by the Company and realisation of
consideration in cash and cash equivalents, the Company has as
certained its Operating Cycle as less than 12 months for the purpose of
current-non-current classification of assets and liabilities.
The accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year.
1.02 USE OF ESTIMATES
The preparation of the financial statements in conformity with Indian
GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of financial statements and
reported amounts of revenue and expenses during the reported period.
Such estimates are on a reasonable and prudent basis taking into
account all available information; actual results could differ from
estimates. Differences on account of revision of estimates actual
outcome and existing estimates are recognised prospectively once such
results are known / materialised in accordance with the requirements of
the respective accounting standard, as may be applicable.
1.03 FIXED ASSETS
a) Tangible Assets
(i) The fixed assets are stated at cost less accumulated depreciation
and impairment losses, if any. Cost comprises of purchase price, non
refundable taxes and all expenses incurred in bringing the assets to
its present location and condition for its intended use and includes
installation and commissioning expenses. Such indirect expenditure
incurred during the pre-commencement period is allocated
proportionately over the cost of the relevant assets.
(ii) Set Top Boxes (STBs) and Internet Access devices on hand at the
year-end are included in Capital Work in Progress. On installation,
such devices are capitalised or treated as sale as the case may be.
(iii) Gains or losses arising from de-recognition of fixed assets being
the difference between the net disposal proceeds and the carrying
amount of the asset and are recognised in the statement of profit and
loss when the asset is de-recognised.
b) Intangible Assets
(i) Intangible assets are recognised only if they are separately
identifiable and the Company expects to receive future economic
benefits arising out of them. Such assets are stated at cost less
accumulated amortisation and impairment losses.
(ii) The amortisation period and the amortisation method are reviewed
at least at each financial year-end. If the expected useful life of the
asset is significantly different from previous estimates, the
amortisation period is changed accordingly.
(iii) Intangible assets comprises of Cable Television Franchise, Movie
& Serial Rights, Bandwidth Rights, Goodwill and Softwares.
(iv) Cable Television Franchisee represents purchase consideration of a
networkthat mainly attributable to acquisition of subscribers and other
rights, permission etc. attached to a network.
c) Fixed Assets not in active use and held for sale are classified
under "Other Current Assets" and are recognised at the lower of their
carrying amount or market value less cost to sell
1.04 DEPRECIATION/AMORTISATION
a) Depreciation on tangible fixed assets, except STBs, is computed on
written down value method, at the rates prescribed in Schedule XIV to
the Companies Act, 1956. In case of additions or deletions during the
year, depreciation is computed from the month in which such assets are
put to use and up to previous month of sale, disposal or held for sale
as the case may be. In case of impairment, depreciation is provided on
the revised carrying amount over its remaining useful life.
b) The cost of STBs are depreciated on straight-line method over a
period of eight years except STBs deployed in Conditional Access System
(CAS) notified areas. Such STBs are depreciated over a period of five
years.
c) The intangible assets are amortised on a straight line basis over
their expected useful lives as follows: (i) Cable Television Franchise
is amortised over a period of twenty years.
(ii) Non Compete Fees classified as Goodwill is amortised over the
non-compete period stated in the underlying agreements and in absence
of the same, over ten years.
(iii) Goodwill arising on transfer of business from subsidiaries is
fully amortised in the same year.
(iv) Goodwill other than mentioned above is amortised over the specific
tenor of the relevant agreement and in absence of such tenor, over ten
years.
(v) Softwares are amortised over the license period and in absence of
such tenor, over five years.
(vi) Movie Rights are amortised on exploitation over the balance
license period in equal installments.
(vii) Bandwidth Rights are amortised over the period of the underlying
agreements.
1.05 INVESTMENTS
Investments, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition related
cost such as brokerage, fees and duties.
a) Long-Term Investments
Long-term investments in shares are stated at cost. The provision for
diminution in value of such investments is made if such diminution is
considered other than temporary.
b) Current Investments
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Certificate of Deposits are valued at lower of (i) aggregate amount of
cost and proportionate income thereon and (ii) rates published by
FIMMDA. Other current investments are recorded at lower of cost or fair
value.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
1.06 INVENTORIES
Inventories are valued as follows:
Spares and maintenance items are valued at lower of cost (net of taxes
recoverable) on first in first out basis and net realisable value.
Stock-in-trade comprising of are valued at cost on weighted average
method or at net realisable value, whichever is lower.
1.07 BORROWING COSTS
Borrowing Costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of such
assets. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other Borrowing costs are recognised as an expense in the period in
which they are incurred.
1.08 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
a) A Provision is recognised when the Company has a present obligation
as a result of past event and it is probable that an outflow of
resources would be required to settle the obligation, and in respect of
which a reliable estimate can be made. Provisions are reviewed on each
balance sheet date and are adjusted to effect the current best
estimation.
b) Contingent liabilities are disclosed separately by way of note to
financial statements after careful evaluation by the management of the
facts and legal aspects of the matter involved in case of:
(i) a present obligation arising from the past event, when it is not
probable that an outflow of resources will be required to settle the
obligation.
(ii) a possible obligation, unless the probability of outflow of
resources is remote.
c) Contingent Assets are neither recognised nor disclosed.
1.09 EMPLOYEE BENEFITS
a) Short-term employee benefits are recognised as an expense at the
undiscounted amount in the statement of profit & loss of the year in
which the related service is rendered.
b) Post employment and other long term employee benefits viz.,
gratuity, leave encashment, etc., are covered under Defined Benefit
Plan. The cost of providing benefits are recognised as an expense in
the statement of profit and loss for the year in which the employee has
rendered services. The amount of expense is determined on the basis
actuarial valuation at each year-end by Projected Unit Credit Method.
Actuarial gains and losses in respect of post employment and other long
term benefits are charged to the statement of profit and loss in the
period in which they occur. The Company presents the entire liability
pertaining to leave encashment as a short term provision in the balance
sheet, since it does not have an unconditional right to defer its
settlement for 12 months after the reporting date.
1.10 EMPLOYEE STOCK OPTION SCHEME
Stock options granted under the stock options schemes are accounted as
per the accounting treatment prescribed by the guidance note on
Employee Share Based Payments issued by the Institute of Chartered
Accountants of India and SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999. Accordingly the
excess of fair price on the date of grant over the exercise price is
recognised uniformly over vesting period of the option.
1.11 ACCOUNTING FOR LEASES
The transactions where the Company conveys or receives right to use an
asset for an agreed period of time for a payment or series of payments
are considered as Lease.
a) As Lessee - Operating Lease
Lease rentals in respect of assets taken on ''Operating Lease'' are
charged to Statement of Profit and Loss over the lease term on
systematic basis, which is more representative of the time pattern of
the Company''s benefit.
b) As Lessor - Operating Lease
Assets subject to Operating Leases are included in Fixed Assets. Lease
income is recognised in the Statement of Profit and Loss over the lease
term on systematic basis which is more representative of the time
pattern of the Company''s benefit. Costs, including depreciation are
recognised as an expense in the Statement of Profit & Loss.
c) As Lessee - Finance Lease
Finance Leases, which effectively transfer to the lessee substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalised at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets and depreciated as per the applicable policy.
Lease payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liability. The finance charge
is allocated over the lease term so as to produce a constant periodic
rate of interest on the remaining balance of liability. Initial direct
cost of lease is capitalised.
1.12 REVENUE RECOGNITION
Revenue is recognised on accrual basis to the extent it is probable
that the economic benefits will flow to the Company and the revenue can
be reliably measured.
INCOME FROM SERVICES
a) Subscription income includes subscription from Subscribers / Cable
Operators relating to cable TV, Internet, activation of devices and
from broadcasters relating to the placement of channels. Revenue from
Operations is recognised on accrual basis based on underlying
subscription plan or agreements with the concerned subscribers /
parties except to the extent stated against (d) hereunder.
b) Revenue from prepaid Internet Service plans, which are active at the
end of accounting period, is recognised on time proportion basis. In
other cases of prepaid Internet Service plans, entire revenue is
recognised in the year of sale.
c) The revenue relating to Conditional Access System (CAS), which was
in force in certain part of Mumbai and Delhi till introduction of
Digital Addressable System (DAS) is governed by TRAI and the same is
recognised in accordance with prescribed regulations.
The revenue relating to Digital Addressable System (DAS) is governed by
TRAI and the same is to be recognised in accordance with prescribed
regulations. (Refer Note No. 4.22)
d) Subscription Income from Cable TV Operators, is accrued monthly
based on number of connections declared by the said operators to the
Company. In cases where revision of number of connections and / or rate
is under negotiations at the time of recognition of revenue, the
Company recognises revenue as per invoice raised. Adjustments for the
year, if any, arising on settlement is adjusted against the Revenue.
Other cases are reviewed by the management periodically.
e) Advertisement revenue is accrued on the release of the
advertisements for public viewing. Marketing support fees is recognised
based on underlying terms of agreement and proportionately with the
degree of completion of services under such agreement.
f) Lease rentals are recognised on accrual basis over the terms of
related agreements.
g) The Company collects service tax on behalf of the government and,
therefore, it is not an economic benefit flowing to the Company. Hence,
it is excluded from revenue.
SALE OF GOODS
Revenue from sale of Access Devices is recognised when all the
significant risks and rewards of ownership of the goods are passed to
the buyer, usually on delivery of the devices. The Company collects
value added taxes (VAT) on behalf of the Government and, therefore,
these are not economic benefits flowing to the Company and hence not
included in revenue.
OTHER OPERATING INCOME
Other Operating Income comprises of fees for rendering management,
technical and consultancy services. Income from such services is
recognised upon achieving milestones as per the terms of underlying
agreements.
INTEREST INCOME
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Interest income is included under the head "Other Income" in the
statement of profit and loss.
1.13 TAXATION
a) Provision for Current Tax is made on the basis of taxable profits
computed for the current accounting year in accordance with the Income
Tax Act, 1961.
b) Deferred Tax is calculated at the tax rates and laws that have been
enacted or substantively enacted as of the Balance Sheet date and is
recognised on timing difference that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred Tax
assets are recognised on carry forward of unabsorbed depreciation and
tax losses, only if, there is virtual certainty that such deferred tax
assets can be realised against future taxable income. Other deferred
tax assets are recognised only to the extent that there is a reasonable
certainty of realisation in future.
1.14 FOREIGN CURRENCY TRANSACTIONS
a) Foreign currency transactions are recorded at the exchange rate
prevailing at the date of transactions. Exchange difference arising on
settlement of transactions is recognised as income or expense in the
year in which they arise except for transactions covered under (c)
below.
b) Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are restated at
the year-end rate and difference in translations and realised gains /
(losses) on foreign currency transactions are recognised in the
statement of profit & loss except for transactions covered under (c)
below.
c) The exchange difference in respect of long-term monetary items
arising in respect of accounting period commencing on or after December
07, 2006 to the extent they relate to the acquisition of depreciable
capital assets are added to or deducted from the cost of the assets and
are depreciated over the balance life of the assets.
d) The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or as expense for the
year.
1.15 EARNINGS PER SHARE (EPS)
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they are entitled to participate in dividends relative to a
fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
1.16 IMPAIRMENT
The Company assesses at each balance sheet whether there is any
indication that assets may be impaired. If any such indications exist,
the Company estimates the recoverable amount of the assets or the
cash-generating unit and if the same is less than its carrying amount,
the carrying amount is reduced to its recoverable amount. The reduction
is treated as an impairment loss and is recognised in the statement of
profit and loss. If at the balance sheet date there is an indication
that if a previously assessed impairment loss no longer exists, the
recoverable amount is reassessed and the assets are reflected at the
recoverable amount.
1.17 MEASUREMENT OF EBITDA
The Company has elected to present Earnings Before Interest, Tax,
Depreciation and Amortisation (EBITDA) as a separate line item on the
face of the statement of profit and loss. The Company measures EBITDA
on the basis of profit/ (loss) from continuing operations. In its
measurement, the Company does not include depreciation and amortisation
expense, finance costs and tax expense.
1.18 CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank, cash in hand, demand
deposits with banks and other short-term investments with an original
maturity of three months or less.
d) Rights, Preference and restrictions attached to Shares;
Terms/ Rights attached to Equity Shares
The Company has only one class of equity shares having face value of Rs.
10 per share. Each holder of equity shares is entitled to one vote per
share. In the event of liquidation of the Company, the holders of
equity shares will be entitled to receive remaining assets of the
Company, after distribution of all preferential amounts in proportion
to the number of equity shares held by the shareholders.
e) Shares reserved for issue under options
161,299 number of equity shares (as at March 31, 2013 : 265,299 equity
shares) ofRs. 10 each towards outstanding employees stock option granted/
available for grant. (Refer Note 4.07)
2.11 DEFERRED TAX ASSETS (NET)
* The Company has substantial unabsorbed depreciation and carry forward
losses under the Income Tax Act, 1961. The deferred tax assets relating
to such unabsorbed depreciation and other items is significantly higher
than deferred tax liabilities arising on account of timing differences.
On conservative approach, the Company has recognised deferred tax
assets on unabsorbed depreciation only to the extent of its deferred
tax liabilities. Disclosure relating deferred tax liabilities required
pursuant to Accounting Standard 22 - "Accounting for Taxes on Income"
is as above.
Mar 31, 2013
1.01 METHOD OF ACCOUNTING AND BASIS OF PREPARATION
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under Section 211(3C) vide Companies (Accounting
Standards) Rules, 2006 and the other relevant provisions of the
Companies Act, 1956.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule VI to the Companies Act, 1956. Based
on the nature of services rendered by the Company and realization of
consideration in cash and cash equivalents, the Company has ascertained
its Operating Cycle as less than12 months for the purpose of current -
non-current classification of assets and liabilities.
The accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year.
1.02 USE OF ESTIMATES
The preparation of the financial statements in conformity with Indian
GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of financial statements and
reported amounts of revenue and expenses during the reported period.
Such estimates are on a reasonable and prudent basis taking into
account all available information, actual results could differ from
estimates. Differences on account of revision of estimates actual
outcome and existing estimates are recognized prospectively once such
results are known / materialized in accordance with the requirements of
the respective accounting standard, as may be applicable.
1.03 FIXED ASSETS
a) Tangible Assets
(i) The fixed assets are stated at cost less accumulated depreciation
and impairment losses, if any. Cost comprises of purchase price, non
refundable taxes and all expenses incurred in bringing the assets to
its present location and condition for its intended use and includes
installation and commissioning expenses. Such indirect expenditure
incurred during the pre-commencement period is allocated
proportionately over the cost of the relevant assets.
(ii) Set Top Boxes (STBs) and Internet Access devices on hand at the
year-end are included in Capital Work in Progress. On installation,
such devices are capitalized or treated as sale as the case may be.
(iii) Gains or losses arising from de-recognition of fixed assets being
the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is de-recognized.
(iv) Fixed Assets not in active use and held for sale are classified
under "Other Current Assets" and are recognised at the lower of
their carrying amount or market value less cost to sell
b) Intangible Assets
(i) Intangible assets are recognized only if they are separately
identifiable and the Company expects to receive future economic
benefits arising out of them. Such assets are stated at cost less
accumulated amortization and impairment losses.
(ii) The amortization period and the amortization method are reviewed
at least at each financial year-end. If the expected useful life of the
asset is significantly different from previous estimates, the
amortization period is changed accordingly.
(iii) Intangible assets comprises of Cable Television Franchise, Movie
& Serial Rights, Bandwidth Rights, Goodwill and Softwares.
(iv) Cable Television Franchisee represents purchase consideration of a
network that mainly attributable to acquisition of subscribers and
other rights, permission etc. attached to a network.
1.04 DEPRECIATION / AMORTISATION
a) Depreciation on tangible fixed assets, except STBs, is computed on
written down value method, at the rates prescribed in Schedule XIV to
the Companies Act, 1956. In case of additions or deletions during the
year, depreciation is computed from the month in which such assets are
put to use and up to previous month of sale, disposal or held for sale
as the case may be. In case of impairment, depreciation is provided on
the revised carrying amount over its remaining useful life.
b) The cost are depreciated on straight-line method over a period of
eight years except STBs deployed in Conditional Access System (CAS)
notified areas. Such STBs are depreciated over a period of five years.
c) The intangible assets are amortized on a straight line basis over
their expected useful lives as follows:
(i) Cable Television Franchise is amortized over a period of twenty
years.
(ii) Non Compete Fees classified as Goodwill is amortized over the
non-compete period stated in the underlying agreements and in absence
of the same, over ten years.
(iii) Goodwill arising on transfer of business from subsidiaries is
fully amortized in the same year.
(iv) Goodwill other than mentioned above is amortized over the specific
tenor of the relevant agreement and in absence of such tenor, over ten
years.
(v) Softwares are amortized over the license period and in absence of
such tenor, over five years.
(vi) Movie Rights are amortized on exploitation over the balance
license period in equal installments.
(vii) Bandwidth Rights are amortized over the period of the underlying
agreements.
1.05 INVESTMENTS
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition related
cost such as brokerage, fees and duties.
a) Long-Term Investments
Long-term investments in shares are stated at cost. The provision for
diminution in value of such investments is made if such diminution is
considered other than temporary.
b) Current Investments
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Certificate of Deposits are valued at lower of (i) aggregate amount of
cost and proportionate income thereon and (ii) rates published by
FIMMDA. Other current investments are recorded at lower of cost or fair
value.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
1.06 INVENTORIES
Inventories are valued as follows:
Spares and maintenance items are valued at lower of cost (net of taxes
recoverable) on first in first out basis and net realizable value.
Stock-in-trade are valued at cost on weighted average method or at net
realizable value, whichever is lower.
1.07 BORROWING COSTS
Borrowing Costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of such
assets. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other Borrowing costs are recognized as an expense in the period in
which they are incurred.
1.08 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
a) A Provision is recognized when the Company has a present obligation
as a result of past event and it is probable that an outflow of
resources would be required to settle the obligation, and in respect of
which a reliable estimate can be made. Provisions are reviewed on each
balance sheet date and are adjusted to effect the current best
estimation.
b) Contingent liabilities are disclosed separately by way of note to
financial statements after careful evaluation by the management of the
facts and legal aspects of the matter involved in case of:
(i) a present obligation arising from the past event, when it is not
probable that an outflow of resources will be required to settle the
obligation.
(ii) a possible obligation, unless the probability of outflow of
resources is remote.
c) Contingent Assets are neither recognized nor disclosed.
1.09 EMPLOYEE BENEFITS
a) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the statement of profit & loss of the year in
which the related service is rendered.
b) Post employment and other long term employee benefits viz.,
gratuity, leave encashment, etc., are covered under Defined Benefit
Plan. The cost of providing benefits are recognized as an expense in
the statement of profit and loss for the year in which the employee has
rendered services. The amount of expense is determined on the basis
actuarial valuation at each year- end by Projected Unit Credit Method.
Actuarial gains and losses in respect of post employment and other long
term benefits are charged to the statement of profit and loss in the
period in which they occur. The Company presents the entire liability
pertaining to leave encashment as a short term provision in the balance
sheet, since it does not have an unconditional right to defer its
settlement for 12 months after the reporting date.
1.10 EMPLOYEE STOCK OPTION SCHEME
Stock options granted under the stock options schemes are accounted as
per the accounting treatment prescribed by the guidance note on
Employee Share Based Payments issued by the Institute of Chartered
Accountants of India and SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999.Accordingly, the
excess of fair price on the date of grant over the exercise price is
recognized uniformly over vesting period of the option.
1.11 ACCOUNTING FOR LEASES
The transactions where the Company conveys or receives right to use an
asset for an agreed period of time for a payment or series of payments
are considered as Lease.
a) As Lessee - Operating Lease
Lease rentals in respect of assets taken on ''Operating Lease'' are
charged to Statement of Profit and Loss over the lease term on
systematic basis, which is more representative of the time pattern of
the Company''s benefit.
b) As Lessor - Operating Lease
Assets subject to Operating Leases are included in Fixed Assets. Lease
income is recognized in the Statement of Profit and Loss over the lease
term on systematic basis which is more representative of the time
pattern of the Company''s benefit. Costs, including depreciation are
recognized as an expense in the Statement of Profit & Loss.
c) As Lessee - Finance Lease
Finance Leases, which effectively transfer to the lessee substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets and depreciated as per the applicable policy.
Lease payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liability. The finance charge
is allocated over the lease term so as to produce a constant periodic
rate of interest on the remaining balance of liability. Initial direct
cost of lease is capitalized.
1.12 REVENUE RECOGNITION
Revenue is recognized on accrual basis to the extent it is probable
that the economic benefits will flow to the Company and the revenue can
be reliably measured.
INCOME FROM SERVICES
a) Subscription income includes subscription from Subscribers / Cable
Operators relating to cable TV, Internet, activation of devices and
from broadcasters relating to the placement of channels. Revenue from
Operations is recognized on accrual basis based on underlying
subscription plan or agreements with the concerned subscribers /
parties except to the extent stated against (d) hereunder.
b) Revenue from prepaid Internet Service plans, which are active at the
end of accounting period, is recognized on time proportion basis. In
other cases of prepaid Internet Service plans, entire revenue is
recognized in the year of sale.
c) The revenue relating to Conditional Access System (CAS), which was
in force in certain part of Mumbai and Delhi till introduction of
Digital Addressable System (DAS) is governed by TRAI and the same is
recognized in accordance with prescribed regulations.
d) Subscription Income from Cable TV Operators, is accrued monthly
based on number of connections declared by the said operators to the
Company. In cases where revision of number of connections and / or rate
is under negotiations at the time of recognition of revenue, the
Company recognizes revenue as per invoice raised. Adjustments for the
year, if any, arising on settlement is adjusted against the Revenue.
Other cases are reviewed by the management periodically.
e) Advertisement revenue is accrued on release of the advertisement for
public viewing.
f) The Company collects service tax on behalf of the government and,
therefore, it is not an economic benefit flowing to the Company. Hence,
it is excluded from revenue.
SALE OF GOODS
Revenue from sale of Access Devices is recognized when all the
significant risks and rewards of ownership of the goods are passed to
the buyer, usually on delivery of the devices. The Company collects
value added taxes (VAT) on behalf of the Government and, therefore,
these are not economic benefits flowing to the Company and hence not
included in revenue.
OTHER OPERATING INCOME
Other Operating Income comprises of fees for rendering management,
technical and consultancy services. Income from such services is
recognized upon achieving milestones as per the terms of underlying
agreements.
INTEREST INCOME
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Interest income is included under the head "Other Income" in the
statement of profit and loss.
1.13 TAXATION
a) Provision for Current Tax is made on the basis of taxable profits
computed for the current accounting year in accordance with the Income
Tax Act, 1961.
b) Deferred Tax is calculated at the tax rates and laws that have been
enacted or substantively enacted as of the Balance Sheet date and is
recognized on timing difference that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred Tax
assets are recognized on carry forward of unabsorbed depreciation and
tax losses, only if, there is virtual certainty that such deferred tax
assets can be realized against future taxable income. Other deferred
tax assets are recognized only to the extent that there is a reasonable
certainty of realization in future.
1.14 FOREIGN CURRENCY TRANSACTIONS
a) Foreign currency transactions are recorded at the exchange rate
prevailing at the date of transactions. Exchange difference arising on
settlement of transactions is recognized as income or expense in the
year in which they arise except for transactions covered under (c)
below.
b) Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are restated at
the year-end rate and difference in translations and realized gains /
(losses) on foreign currency transactions are recognized in the
statement of profit & loss except for transactions covered under (c)
below.
c) The exchange difference in respect of long-term monetary items
arising in respect of accounting period commencing on or after December
07, 2006 to the extent they relate to the acquisition of depreciable
capital assets are added to or deducted from the cost of the assets and
are depreciated over the balance life of the assets.
d) The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year.
1.15 EARNINGS PER SHARE (EPS)
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they are entitled to participate in dividends relative to a
fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
1.16 IMPAIRMENT
The Company assesses at each balance sheet whether there is any
indication that assets may be impaired. If any such indications exist,
the Company estimates the recoverable amount of the assets or the
cash-generating unit and if the same is less than its carrying amount,
the carrying amount is reduced to its recoverable amount. The reduction
is treated as an impairment loss and is recognized in the statement of
profit and loss. If at the balance sheet date there is an indication
that if a previously assessed impairment loss no longer exists, the
recoverable amount is reassessed and the assets are reflected at the
recoverable amount.
1.17 MEASUREMENT OF EBITDA
The Company has elected to present earnings before interest, tax,
depreciation and amortization (EBITDA) as a separate line item on the
face of the statement of profit and loss. The Company measures EBITDA
on the basis of profit/ (loss) from continuing operations. In its
measurement, the company does not include depreciation and amortization
expense, finance costs and tax expense.
1.18 CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank, cash in hand, demand
deposits with banks and other short-term investments with an original
maturity of three months or less.
Mar 31, 2012
1.01 METHOD OF ACCOUNTING AND BASIS OF PREPARATION
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under Section 211(3C) [Companies (Accounting
Standards) Rules, 2006, as amended] and the other relevant provisions
of the Companies Act, 1956.
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out in the Revised Schedule VI to the Companies Act, 1956
notified by MCA vide its notification no. 447(E) dated February 28, 2011.
Based on the nature of services rendered by the Company and realization
of consideration in cash and cash equivalents, the Company has
ascertained its Operating Cycle as less than12 months for the purpose
of current à non-current classification of assets and liabilities.
The accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year.
1.02 USE OF ESTIMATES
The preparation of the financial statements in conformity with Indian
GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of financial statements and
reported amounts of revenue and expenses during the reported period.
Such estimates are on a reasonable and prudent basis taking into
account all available information; actual results could differ from
estimates. Differences on account of revision of estimates actual
outcome and existing estimates are recognized prospectively once such
results are known / materialized in accordance with the requirements of
the respective accounting standard, as may be applicable.
1.03 FIXED ASSETS
a) Tangible Assets
(i) The fixed assets are stated at cost less accumulated depreciation
and impairment losses, if any. Cost comprises of purchase price, non
refundable taxes and all expenses incurred in bringing the assets to
its present location and condition for its intended use and includes
installation and commissioning expenses. The indirect expenditure
incurred during the pre-commencement period is allocated
proportionately over the cost of the relevant assets.
(ii) Set Top Boxes (STBs) and Internet Access devices on hand at the
year-end are included in Capital Work in Progress. On installation,
such devices are capitalized or treated as sale as the case may be.
(iii) Gains or losses arising from de-recognition of fixed assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
Profit and loss when the asset is de-recognized.
b) Intangible Assets
(i) Intangible assets are recognized only if they are separately
identifiable and the Company expects to receive future economic benefits
arising out of them. Such assets are stated at cost less accumulated
amortization and impairment losses.
(ii) The amortization period and the amortization method are reviewed
at least at each financial year-end. If the expected useful life of the
asset is significantly different from previous estimates, the
amortization period is changed accordingly. If there has been a
significant change in the expected pattern of economic benefits from the
asset, the amortization method is changed to reflect the changed
pattern.
(iii) Intangible assets comprises of Cable Television Franchise, Movie
& Serial Rights, Bandwidth Rights, Goodwill and Softwares.
1.04 DEPRECIATION / AMORTISATION
a) Depreciation on tangible fixed assets, except STBs, is computed on
written down value method, at the rates prescribed in Schedule XIV to
the Companies Act, 1956. In case of additions or deletions during the
year, depreciation is computed from the month in which such assets are
put to use and up to previous month of sale or disposal, as the case
may be. In case of impairment, depreciation is provided on the revised
carrying amount over its remaining useful life.
b) The cost of STBs are depreciated on straight-line method over a
period of eight years except STBs deployed in Conditional Access System
(CAS) notified areas. Such STBs are depreciated over a period of five
years.
c) The intangible assets are amortized on a straight line basis over
their expected useful lives as follows:
(i) Cable Television Franchise is amortized over a period of twenty
years.
(ii) Non Compete Fees classified as Goodwill is amortized over the
non-compete period stated in the underlying agreements and in absence
of the same, over ten years.
(iii) Goodwill arising on transfer of business of subsidiaries is fully
amortized in the same year.
(iv) Goodwill other than mentioned above is amortized over the specific
tenor of the relevant agreement and in absence of such tenor, over ten
years.
(v) Softwares are amortized over the license period and in absence of
such tenor, over five years.
(vi) Movie Rights are amortized on exploitation over the balance
license period in equal installments.
(vii) Bandwidth Rights are amortized over the period of the underlying
agreements.
1.05 INVESTMENTS
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
a) Long-Term Investments
Long-term investments in shares are stated at cost. The provision for
diminution in value of such investments is made if such diminution is
considered other than temporary.
b) Current Investments
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Certificate of Deposits are valued at lower of amount of cost and
proportionate income thereon or rates published by FIMMDA. Other
current investments are recorded at lower of cost or fair value.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of Profit and loss.
1.06 INVENTORIES
Inventories are valued as follows:
Spares and maintenance items are valued at lower of cost (net of taxes
recoverable) on first in first out basis and net realizable value.
Stock-in-trade comprising of access devices are valued at cost on
weighted average method or at net realizable value, whichever is lower.
1.07 BORROWING COSTS
Borrowing Costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of such
assets. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other Borrowing costs are recognized as an expense in the period in
which they are incurred.
1.08 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
a) A Provision is recognized when the Company has a present obligation
as a result of past event and it is probable that an outflow of
resources would be required to settle the obligation, and in respect of
which a reliable estimate can be made. Provisions are reviewed on each
balance sheet date and are adjusted to effect the current best
estimation.
b) Contingent liabilities are disclosed separately by way of note to
financial statements after careful evaluation by the management of the
facts and legal aspects of the matter involved in case of:
(i) a present obligation arising from the past event, when it is not
probable that an outflow of resources will be required to settle the
obligation.
(ii) a possible obligation, unless the probability of outflow of
resources is remote.
c) Contingent Assets are neither recognized nor disclosed.
1.09 EMPLOYEE BENEFITS
a) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the Profit and loss account of the year in which
the related service is rendered.
b) Post employment and other long term employee benefits viz., gratuity,
leave encashment, etc., are covered under Defined Benefit Plan. The cost
of providing benefits are recognized as an expense in the statement of
Profit and loss for the year in which the employee has rendered
services. The amount of expense is determined on the basis actuarial
valuation at each year- end by Projected Unit Credit Method. Actuarial
gains and losses in respect of post employment and other long term
benefits are charged to the statement of Profit and loss in the period in
which they occur. The Company presents the entire liability pertaining
to leave encashment as a short term provision in the balance sheet,
since it does not have an unconditional right to defer its settlement
for 12 months after the reporting date.
c) In respect of employees' stock options, the excess of fair price on
the date of grant over the exercise price is recognized uniformly over
vesting period of the option.
1.10 EMPLOYEE STOCK OPTION SCHEME
Stock options granted to the employees under the stock options schemes
are accounted as per the accounting treatment prescribed by the
guidance note on Employee share based payments issued by the Institute
of Chartered Accountants of India and SEBI (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines,
1999.Accordingly, the excess of fair price on the date of grant over
the exercise price is recognized uniformly over vesting period of the
option.
1.11 ACCOUNTING FOR LEASES
The transactions where the Company conveys or receives right to use an
asset for an agreed period of time for a payment or series of payments
are considered as Lease.
a) As Lessee à Operating Lease
Lease rentals in respect of assets taken on 'Operating Lease' are
charged to Statement of Profit and Loss over the lease term on
systematic basis, which is more representative of the time pattern of
the Company's benefit.
b) As Lessor à Operating Lease
Assets subject to Operating Leases are included in Fixed Assets. Lease
income is recognized in the Statement of Profit and Loss over the lease
term on systematic basis which is more representative of the time
pattern of the Company's benefit. Costs, including depreciation are
recognized as an expense in the Statement of Profit & Loss.
c) As Lessee à Finance Lease
Finance Leases, which effectively transfer to the lessee substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets and depreciated as per the applicable policy.
Lease payments are apportioned between the finance charges and reduction
of the lease liability so as to achieve a constant rate of interest on
the remaining balance of the liability. The finance charge is allocated
over the lease term so as to produce a constant periodic rate of
interest on the remaining balance of liability. Initial direct cost of
lease is capitalized.
1.12 REVENUE RECOGNITION
Revenue is recognized on accrual basis to the extent it is probable
that the economic benefits will flow to the Company and the revenue can
be reliably measured.
INCOME FROM SERVICES
Revenue from sale of prepaid Internet Service plans, which are active
at the year end, is recognized on time proportion basis. In other cases
of sale of prepaid Internet Service plans, entire revenue is recognized
in the year of sale.
The revenue relating to Conditional Access System (CAS) notified areas
is governed by TRAI and the same is recognized in accordance with
prescribed regulations.
Subscription Income from Cable TV Operators is accrued monthly based on
number of connections declared by the said operators to the Company. In
cases where revision of number of connections and / or rate is under
negotiations at the time of recognition of revenue, the Company
recognizes revenue as per invoice raised. Adjustments for the year, if
any, arising on settlement is adjusted against the Revenue. Other cases
are reviewed by the management periodically and provision for doubtful
debts is made wherever ultimate realization is considered uncertain.
Other Revenue from Operations is recognized on accrual basis based on
underlying subscription plan or agreements with the concerned
subscribers / parties.
Advertisement revenue is accrued on release of the advertisement for
public viewing.
Lease rentals are recognized on accrual basis over the terms of related
agreements.
The company collects service tax on behalf of the government and,
therefore, it is not an economic benefit flowing to the company. Hence,
it is excluded from revenue.
SALE OF GOODS
Revenue from sale of Access Devices is recognized when all the
significant risks and rewards of ownership of the goods have been passed
to the buyer, usually on delivery of the goods. The Company collects
sales taxes and value added taxes (VAT) on behalf of the Government
and, therefore, these are not economic benefits flowing to the Company.
Hence, they are excluded from revenue.
OTHER OPERATING INCOME
Other Operating Income comprises of fees for rendering management,
technical and consultancy services. Income from such services is
recognized upon achieving milestones as per the terms of underlying
agreements.
INTEREST INCOME
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Interest income is included under the head "Other Income" in the
statement of Profit and loss.
1.13 TAXATION
a) Provision for Current Tax is made on the basis of taxable Profits
computed for the current accounting year in accordance with the Income
Tax Act, 1961.
b) Deferred Tax is calculated at the tax rates and laws that have been
enacted or substantively enacted as of the Balance Sheet date and is
recognized on timing difference that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred Tax
assets are recognized on carry forward of unabsorbed depreciation and
tax losses, only if, there is virtual certainty that such deferred tax
assets can be realized against future taxable income. Other deferred
tax assets are recognized only to the extent that there is a reasonable
certainty of realization in future.
1.14 FOREIGN CURRENCY TRANSACTIONS
a) Foreign currency transactions are recorded at the exchange rate
prevailing at the date of transactions. Exchange difference arising on
settlement of transactions is recognized as income or expense in the
year in which they arise except for transactions covered under (c)
below.
b) Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are restated at
the year-end rate and difference in translations and realized gains /
(losses) on foreign currency transactions are recognized in the
statement of Profit & loss except for transactions covered under (c)
below.
c) The exchange difference in respect of long-term monetary items
arising in respect of accounting period commencing on or after 07th
December, 2006 to the extent they relate to the acquisition of
depreciable capital assets are added to or deducted from the cost of
the assets and are depreciated over the balance life of the assets.
d) The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of Profit and loss in the year in which the exchange rates
change. Any Profit or loss arising on cancellation or renewal of forward
exchange contract is recognized as income or as expense for the year.
1.15 EARNINGS PER SHARE (EPS)
Basic earnings per share are calculated by dividing the net Profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they are entitled to participate in dividends relative to a
fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
Profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
1.16 IMPAIRMENT
The Company assesses at each balance sheet whether there is any
indication that assets may be impaired. If any such indications exist,
the Company estimates the recoverable amount of the assets or the
cash-generating unit and if the same is less than its carrying amount,
the carrying amount is reduced to its recoverable amount. The reduction
is treated as an impairment loss and is recognized in the statement of
Profit and loss. If at the balance sheet date there is an indication
that if a previously assessed impairment loss no longer exists, the
recoverable amount is reassessed and the assets are reflected at the
recoverable amount.
1.17 MEASUREMENT OF EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of Profit and loss. The Company
measures EBITDA on the basis of Profit/ (loss) from continuing
operations. In its measurement, the company does not include
depreciation and amortization expense, finance costs and tax expense.
1.18 CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank, cash in hand, demand
deposits with banks and other short-term investments with an original
maturity of three months or less.
Mar 31, 2011
1) METHOD OF ACCOUNTING:
These financial statements are prepared on accrual basis of accounting,
following historical cost convention, in accordance with the provisions
of the Companies Act, 1956 ('the Act'), accounting principles generally
accepted in India and comply with the accounting standards prescribed
in the Companies (Accounting Standards) Rules, 2006 issued by the
Central Government, in consultation with the National Advisory
Committee on Accounting Standards, to the extent applicable. The
accounting policies have been consistently applied by the Company and
are consistent with those used in the previous year.
2) USE OF ESTIMATES:
The preparation of the financial statements in conformity with Indian
GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of financial statements and
reported amounts of revenue and expenses during the reported period.
Such estimates are on a reasonable and prudent basis taking into
account all available information; actual results could differ from
estimates. Differences on account of revision of estimates actual
outcome and existing estimates are recognised prospectively once such
results are known / materialized in accordance with the requirements of
the respective accounting standard, as may be applicable.
3) FIXED ASSETS:
a) Intangible Assets
(i) Intangible assets comprises of Cable Television Franchise, Movie &
Serial Rights, Bandwidth Rights, Goodwill and Softwares.
(ii) Intangible assets are recognized only if they are separately
identifiable and the Company expects to receive future economic
benefits arising out of them. Such assets are stated at cost less
accumulated amortisation and impairment losses, if any. Internally
generated intangible assets are not recognised in the books of
accounts.
b) Tangible Assets
(i) The fixed assets are stated at cost less accumulated depreciation
and impairment losses, if any. Cost comprises of purchase price, non
refundable taxes and all expenses incurred in bringing the assets to
its present location and condition for its intended use and includes
installation and commissioning expenses. The indirect expenditure
incurred during the pre-commencement period is allocated
proportionately over the cost of the relevant assets.
(ii) Set Top Boxes and Internet Access devices on hand at the year-end
are included in Capital Work in Progress. On installation, such devices
are capitalised or treated as sale as the case may be.
4) DEPRECIATION / AMORTISATION:
a) The intangible assets are amortised on a straight line basis over
their expected useful lives as follows:
(i) Cable Television Franchise is amortised over a period of twenty
years.
(ii) Non Compete Fees classified in Goodwill is amortised over the
non-compete period stated in the underline agreement and in absence of
the same, over ten years.
(iii) Goodwill arising on transfer of business of subsidiaries is fully
amortised in the same year.
(iv) Goodwill other than mentioned above is amortised over the specific
tenor of the relevant agreement and in absence of such tenor, over ten
years.
(v) Softwares are amortised over the license period and in absence of
such tenor, over five years.
(vi) Movie Rights are amortised on exploitation over the balance
license period in equal instalments.
(vii) Bandwidth Rights are amortised over the period of the underlying
agreements.
b) Depreciation on tangible fixed assets, except Set Top Boxes, is
computed on written down value method, at the rates prescribed in
Schedule XIV to the Companies Act, 1956. In case of additions or
deletions during the year, depreciation is computed from the month in
which such assets are put to use and up to previous month of sale or
disposal as the case may be. In case of impairment, depreciation is
provided on the revised carrying amount over its remaining useful life.
c) The cost of Set Top Boxes (STB) net of estimated realizable value is
depreciated on straight-line method over a period of eight years except
STB deployed in Conditional Access System (CAS), notified areas, And
such STB's are depreciated over a period of five years. [Refer Note
B(11)]
5) INVESTMENTS:
a) Long-Term Investments:
Long-term investments in shares are stated at cost. The provision for
diminution in value of such investments is made if such diminution is
considered other than temporary.
b) Current Investments:
Certificate of Deposits are valued at lower of amount of cost and
proportionate income thereon or rates published by FIMMDA. Other
current investments are recorded at lower of cost or fair value.
6) INVENTORIES
Inventories comprise of spares and maintenance items, which are valued
at lower of cost (net of taxes recoverable) and net realizable value.
7) BORROWING COSTS:
Borrowing Costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of such
assets. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other Borrowing costs are recognized as an expense in the period in
which they are incurred.
8) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
a) A Provision is recognized when the Company has a present obligation
as a result of past event and it is probable that an outflow of
resources would be required to settle the obligation, and in respect of
which a reliable estimate can be made. Provisions are reviewed on each
balance sheet date and are adjusted to effect the current best
estimation.
b) Contingent liabilities are disclosed separately by way of note to
financial statements after careful evaluation by the management of the
facts and legal aspects of the matter involved in case of
i. a present obligation arising from the past event, when it is not
probable that an outflow of resources will be required to settle the
obligation.
ii. a possible obligation, unless the probability of outflow of
resources is remote.
c) Contingent Assets are neither recognised, nor disclosed.
9) EMPLOYEE BENEFITS:
a) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
b) Post employment and other long term employee benefits are recognized
as an expense in the profit and loss account for the year in which the
employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to the profit and
loss account.
c) In respect of employees' stock options, the excess of fair price on
the date of grant over the exercise price is recognized uniformly over
vesting period of the option.
10) ACCOUNTING FOR LEASES:
a) As Lessee - Operating Lease
Lease rentals in respect of assets taken on 'Operating Lease' are
charged to Profit and Loss Account over the lease term on systematic
basis which is more representative of the time pattern of the Company's
benefit.
b) As Lessor - Operating Lease
Assets subject to Operating Leases are included in Fixed Assets. Lease
income is recognized in the Profit and Loss Account over the lease term
on systematic basis which is more representative of the time pattern of
the Company's benefit. Costs. including depreciation are recognized as
an expense in the Profit & Loss Account.
c) As Lessee - Finance Lease
Finance Leases, which effectively transfer to the lessee substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets and depreciated as per the applicable policy.
Lease rentals payable is apportioned between principal and finance
charge using the internal rate of return method. The finance charge is
allocated over the lease term so as to produce a constant periodic rate
of interest on the remaining balance of liability.
d) Initial direct cost is charged off to Profit & Loss account in the
year of lease.
11) REVENUE RECOGNITION:
Revenue is recognized on accrual basis to the extent it is probable
that the economic benefits will flow to the Company and the revenue can
be reliably measured.
Revenue from sale of prepaid Internet Service plans, which are active
at the year end, is recognized on time proportion basis. In other cases
of sale of prepaid Internet Service plans, entire revenue is recognized
in the year of sale.
The revenue relating to Conditional Access System (CAS) notified areas
is governed by TRAI and the same is recognised in accordance with
prescribed regulations.
Subscription Income from Cable TV Operators is accrued monthly based on
number of connections declared by the said operators to the Company. In
cases where revision of number of connections and rate is under
negotiations at the time of recognition of revenue. the Company
recognises revenue as per invoice raised. Adjustments for the year, if
any, arising on settlement is adjusted against the Revenue. Other cases
are reviewed by the management periodically and provision for doubtful
debts is made wherever ultimate realization is considered uncertain.
Other Revenue from Operations is recognised on accrual basis based on
underlying subscription plan or agreements with the concerned
subscribers/ parties.
Lease rentals are recognized on accrual basis over the terms of related
agreements.
Other operating income also comprises fees for rendering management,
technical and consultancy services. Income from such services is
recognised upon achieving milestones as per the terms of underlying
agreements.
Advertisement revenue is accrued on release of the advertisement for
public viewing.
Interest income is recognized on accrual basis.
12) TAXATION:
a) Provision for Current Tax is made on the basis of taxable profits
computed for the current accounting year in accordance with the Income
Tax Act, 1961.
b) Deferred Tax is calculated at the tax rates and laws that have been
enacted or substantively enacted as of the Balance Sheet date and is
recognized on timing difference that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred Tax
assets are recognised on carry forward of unabsorbed depreciation and
tax losses only if there is virtual certainty that such deferred tax
assets can be realized against future taxable income. Other deferred
tax assets are recognised only to the extent that there is a reasonable
certainty of realisation in future.
13) FOREIGN CURRENCY TRANSACTIONS
a) Foreign currency transactions are recorded at the exchange rate
prevailing at the date of transactions. Exchange difference arising on
settlement of transactions is recognized as income or expense in the
year in which they arise except for transactions covered under (c)
below.
b) Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are restated at
the year-end rate and difference in translations and realized gains/
(losses) on foreign currency transactions are recognized in the profit
& loss account except for transactions covered under (c) below.
c) Exchange differences on settlement / conversion other than in
respect of long term monetary items, in respect of accounting period
commencing on or after 07th December, 2006 are recognised in the profit
and loss account. The exchange difference in respect of long-term
monetary items arising in respect of accounting period commencing on or
after 07th December, 2006 to the extent they relate to the acquisition
of depreciable capital assets are added to or deducted from the cost of
the assets and are depreciated over the balance life of the assets.
d) The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or as expense for the
year.
14) IMPAIRMENT
The Company assesses at each balance sheet whether there is any
indication that assets may be impaired. If any such indications exist,
the Company estimates the recoverable amount of the assets or the
cash-generating unit and if the same is less than its carrying amount,
the carrying amount is reduced to its recoverable amount. The reduction
is treated as an impairment loss and is recognised in the profit and
loss account. If at the balance sheet date there is an indication that
if a previously assessed impairment loss no longer exists, the
recoverable amount is reassessed and the assets are reflected at the
recoverable amount.
Mar 31, 2010
1) METHOD OF ACCOUNTING:
These financial statements are prepared on accrual basis of accounting,
following historical cost convention, in accordance with the provisions
of the Companies Act, 1956 (the Act), accounting principles generally
accepted in India and comply with the accounting standards prescribed
in the Companies (Accounting Standards) Rules, 2006 issued by the
Central Government, in consultation with the National Advisory
Committee on Accounting Standards, to the extent applicable. The
accounting policies have been consistently applied by the Company and
are consistent with those used in the previous year other than
mentioned in Note B (10) below.
2) USE OF ESTIMATES:
The preparation of the financial statements in conformity with Indian
GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of financial statements and
reported amounts of revenue and expenses during the reported period.
Such estimates are on a reasonable and prudent basis taking into
account all available information; actual results could differ from
estimates. Differences on account of revision of estimates actual
outcome and existing estimates are recognised prospectively once such
results are known / materialized in accordance with the requirements of
the respective accounting standard, as may be applicable.
3) FIXED ASSETS:
a) Intangible Assets
(i) Intangible assets are recognized only if they are separately
identifiable and the Company expects to receive future economic
benefits arising out of them. Such assets are stated at cost less
accumulated amortisation and impairment, if any. Internally Generated
assets are not recognised in the books of accounts.
(ii) Intangible assets comprises of Cable Television Franchise, Movie &
Serial Rights, Bandwidth Rights, Goodwill and Softwares.
(iii) The aggregate consideration paid to acquire CATV / ISP
Subscribers connected to a network along with Network assets and all
the rights attached thereto are disclosed under the head Cable
Television Franchise. In cases where value for assets acquired along
with Subscribers connected to the network is separately ascertained,
the assets are capitalised under the relevant heads. The consideration
paid for non-compete as per the underlying agreements is included in
Goodwill.
b) Tangible Assets
(i) The fixed assets are stated at cost less accumulated depreciation
and impairment, if any. Cost comprises of purchase price, non
refundable taxes and all expenses incurred in bringing the assets to
its present location and condition for its intended use and includes
installation and commissioning expenses. The indirect expenditure
incurred during the pre-commencement period is allocated
proportionately over the cost of the relevant assets.
(ii) Set Top Boxes and Internet Access devices on hand at the year-end
are included in Capital Work in Progress. On installation, such devices
are capitalised or treated as sale depending on scheme opted by the
customers.
4) DEPRECIATION / AMORTISATION:
a) The intangible assets are amortised on a straight line basis over
their expected useful lives as follows:
(i) Cable Television Franchise is amortised over a period of twenty
years.
(ii) Non Compete Fees included in Goodwill is amortised over the
non-compete period stated in the underline agreement and in absence of
the same, over ten years.
(iii) Goodwill arising on transfer of business of subsidiaries is fully
amortised in the same year.
(iv) Goodwill other than mentioned above is amortised over the specific
tenor in the relevant agreement or ten years in absence of specific
tenor in the relevant agreement.
(v) SoftwareÃs are amortised over the license period or five years in
absence of specific tenor of the license.
(vi) Movie & Serial Rights are amortised on exploitation over the
balance license period in equal instalments. (vii) Bandwidth Rights
are amortised over the period of the underlying agreements.
b) Depreciation on tangible fixed assets, except Set Top Boxes, is
computed on written down value method, at the rates prescribed in
Schedule XIV to the Companies Act, 1956. In case of additions or
deletions during the year, depreciation is computed from the month in
which such assets are put to use and up to previous month of sale or
disposal as the case may be. After impairment, depreciation is provided
on the revised carrying amount over its remaining useful life.
c) The cost of Set Top Boxes net of estimated realizable value is
depreciated on straight-line method over a period of eight years.
[Refer Note B(10)]
5) INVESTMENTS:
a) Long-Term Investments:
Long-term investments in shares are stated at cost. The provision for
diminution in value of such investments is made if such diminution is
considered other than temporary.
b) Current Investments:
Current investments are recorded at lower of cost or fair value.
6) INVENTORIES
Inventories comprise of spares and maintenance items, which are valued
at lower of cost (net of taxes recoverable) and net realizable value.
7) BORROWING COSTS:
Borrowing Costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of such
assets. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other Borrowing costs are recognized as an expense in the period in
which they are incurred.
8) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
a) A Provision is recognized when the Company has a present obligation
as a result of past event and it is probable that an outflow of
resources would be required to settle the obligation, and in respect of
which a reliable estimate can be made. Provisions are reviewed on each
balance sheet date and are adjusted to effect the current best
estimation.
b) Contingent liabilities are disclosed separately by way of note to
financial statements after careful evaluation by the management of the
facts and legal aspects of the matter involved in case of
i. a present obligation arising from the past event, when it is not
probable that an outflow of resources will be required to settle the
obligation.
ii. a possible obligation, unless the probability of outflow of
resources is remote.
c) Contingent Assets are neither recognised, nor disclosed.
9) EMPLOYEE BENEFITS:
a) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
b) Post employment and other long term employee benefits are recognized
as an expense in the profit and loss account for the year in which the
employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to the profit and
loss account.
c) In respect of employeesà stock options, the excess of fair price on
the date of grant over the exercise price is recognized uniformly over
vesting period of the option.
10) ACCOUNTING FOR LEASES:
a) As Lessee à Operating Lease
Lease rentals in respect of assets taken on ÃOperating Leaseà are
charged to Profit and Loss Account over the lease term on systematic
basis which is more representative of the time pattern of the CompanyÃs
benefit.
b) As Lessor - Operating Lease
Assets subject to Operating Leases are included in Fixed Assets. Lease
income is recognized in the Profit and Loss Account over the lease term
on systematic basis which is more representative of the time pattern of
the Company-s benefit. Costs, including depreciation are recognized as
an expense in the Profit & Loss Account.
c) As Lessee - Finance Lease
Finance Leases, which effectively transfer to the lessee substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets and depreciated as per the applicable policy.
Lease rentals payable is apportioned between principal and finance
charge using the internal rate of return method. The finance charge is
allocated over the lease term so as to produce a constant periodic rate
of interest on the remaining balance of liability.
d) Initial direct cost is charged off to Profit & Loss account in the
year of lease.
11) REVENUE RECOGNITION:
Income from Operations is recognized on accrual basis based on
agreements / arrangements with the concerned parties.
Revenue from sale of prepaid Internet Service plans, which are active
at the year end, is recognized on time proportion basis. In other
cases of sale of prepaid Internet Service plans, entire revenue is
recognized in the year of sale.
The revenue relating to Conditional Access System (CAS) notified areas
is governed by TRAI and the same is recognised in accordance with
prescribed regulations.
Subscription Income from Cable TV Operators is accrued monthly based on
number of connections declared by the said operators to the Company. In
cases where revision of number of connections and rate is under
negotiations at the time of recognition of revenue, the Company
recognises revenue as per invoice raised. Adjustments for the year, if
any, arising on settlement is adjusted against the Revenue. Other cases
are reviewed by the management periodically and provision for doubtful
debts is made wherever ultimate realization is considered uncertain.
Interest income is recognized on accrual basis.
12) TAXATION:
a) Provision for Current Tax is made on the basis of taxable profits
computed for the current accounting year in accordance with the Income
Tax Act, 1961.
b) Deferred Tax is calculated at the tax rates and laws that have been
enacted or substantively enacted as of the Balance Sheet date and is
recognized on timing difference that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred Tax
assets are recognised on carry forward of unabsorbed depreciation and
tax losses only if there is virtual certainty that such deferred tax
assets can be realized against future taxable income. Other deferred
tax assets are recognised only to the extent that there is a reasonable
certainty of realisation in future.
c) Provision for Fringe Benefit Tax is made in accordance with the
Income Tax Act, 1961.
13) FOREIGN CURRENCY TRANSACTIONS
a) Foreign currency transactions are recorded at the exchange rate
prevailing at the date of transactions. Exchange difference arising on
settlement of transactions is recognized as income or expense in the
year in which they arise except for transactions covered under (c)
below.
b) Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are restated at
the year-end rate and difference in translations and realized gains /
(losses) on foreign currency transactions are recognized in the profit
& loss account except for transactions covered under (c) below.
c) Exchange differences on settlement / conversion other than in
respect of long term monetary items, in respect of accounting period
commencing on or after 07th December, 2006 are recognised in the profit
and loss account. The exchange difference in respect of long-term
monetary items arising in respect of accounting period commencing on or
after 07th December, 2006 to the extent they relate to the acquisition
of depreciable capital assets are added to or deducted from the cost of
the assets and are depreciated over the balance life of the assets.
14) IMPAIRMENT
The Company assesses at each balance sheet whether there is any
indication that assets may be impaired. If any such indications exist,
the Company estimates the recoverable amount of the assets or the
cash-generating unit and if the same is less than its carrying amount,
the carrying amount is reduced to its recoverable amount. The reduction
is treated as an impairment loss and is recognised in the profit and
loss account. If at the balance sheet date there is an indication that
if a previously assessed impairment loss no longer exists, the
recoverable amount is reassessed and the assets are refected at the
recoverable amount.