Notes to Accounts of Saregama India Ltd.
Mar 31, 2023
The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.
The Company has incurred expenses relating to short term leases and leases of low value assets for certain accommodation. Terms of such lease include option for renewal on mutually agreed terms. There are no restrictions imposed by lease arrangements and there are no purchase options or sub leases or contingent rents. Operating lease rentals for the year recognised in Statement of Profit and Loss amounts to Rs.352.62 Lakhs (2021-22 - Rs.325.05 Lakhs).
The total cash outflow for leases is Rs.422.04 Lakhs (2021-22 - Rs.378.09 Lakhs) for the year, including cash outflow for short term leases and leases of low value assets.
Rent income includes payments of Rs.21.12 Lakhs (2021-22 - Rs.18.90 Lakhs) for the year relating to agreements entered into by the Company. There are no restrictions imposed by lease arrangements and there are no contingent rents recognised as income for the period. These lease arrangements inter alia include escalation clause/option for renewal.
Investment property comprises a number of residential properties that are leased to third parties. Each of the leases contains an initial non-cancellable period of 12 months. Subsequent renewals are negotiated with the lessee and historically the average renewal period ranges form 24 to 36 months
The Company obtains independent valuations for its investment properties at least annually. The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available, the Company consider information from a variety of sources including:
⢠current prices in an active market for properties of different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences
⢠discounted cash flow projections based on reliable estimates of future cash flows
⢠capitalised income projections based upon a property''s estimated net market income, and a capitalisation rate derived from an analysis of market evidence
The fair values of investment properties have been determined by external, independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued.
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any parties (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
* During the year, the Company has issued NIL equity shares (Previous Year: 2,000 equity shares) of face value of Rs.10/- each under the Employee Stock Option Scheme 2013. Further during the year, the Company has allotted NIL equity shares (Previous Year: 18,50,937) of face value of Rs.10/- each through Qualified Institutions Placement aggregating to Rs. NIL (Previous Year: Rs.74,999.97 Lakhs).
** Pursuant to the Special Resolution passed by the Shareholders of the Company by way of Postal Ballot through electronic means on 31 March 2022, the Company has sub-divided its equity share of face value of Rs.10/- (Rs. Ten only) each fully paid up, into 10 (Ten) equity shares of face value Re.1/- (Rupee One only) each fully paid-up, effective from 28 April 2022. Hence, shares have now been adjusted on account of sub-division of share done by the Company.
Out of 53,38,628 equity shares of face value Rs.10/- each issued for cash at a premium of Rs.35/- (issue price- Rs.45/-) pursuant to the Rights Issue in 2005, allotment of 5,290 equity shares of face value Rs.10/- each (31 March 2022 - 5,290 equity shares of face value Rs.10/- each) (relating to cases under litigation/ pending clearance from the concerned authorities) are kept in abeyance as on 31 March 2023.
Rights, preferences and restrictions attached to shares
The Company has only one class of equity shares having a par value of Re.1/- per share (previous year Rs.10/- per share). Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting except in case of interim dividend.
In the event of liquidation of the Company, the holder of equity shares are eligible to receive remaining assets of the Company in proportion to their shareholding.
*Quest Capital Markets Limited (formerly BNK Capital Markets Limited) is added in the promoter group list of Saregama India Limited pursuant to the transaction between Lebnitze Real Estates Private Limited and Quest Capital Markets Limited (formerly BNK Capital Markets Limited).
Stock option schemes and stock appreciation rights
Information relating to Employee Option Plan, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting period, is set out in Note 30.
(i) General reserve: Under the erstwhile Companies Act 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, 2013 (the "Companies Act"), the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn. The amount credited to the reserve can be utilised by the Company in accordance with the provisions of the Companies Act.
The contract assets primarily relate to the Company''s rights to consideration for services rendered but not billed at the reporting date. The contract assets are transferred to receivables when the rights become unconditional. This usually occurs when the Company issues an invoice to the customer.
A receivable is a right to consideration that is unconditional upon passage of time. Revenue from the sale of products is recognised at the point in time when control is transferred to the customer. Revenue from licenses where the customer obtains a "right to access" is recognized over the access period. Revenues in excess of billings is recorded as unbilled revenue and is classified as a financial asset for these cases as right to consideration is unconditional upon passage of time.
29 ASSETS AND LIABILITIES RELATING TO EMPLOYEE BENEFITS (I) Post-employment defined benefit plans:
(A) Gratuity (funded)
The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. As per the plan, the Saregama India Limited Employees Group Gratuity Fund (Gratuity Fund), administered and managed by the Trustees and funded primarily with Life Insurance Corporation of India (LICI) and ICICI Prudential Life Insurance Company Limited, make payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. The Trustees are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. Each year an Asset-Liability matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles. Investment and contribution policies are integrated within this study. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as set out in Note 1(r)(iii) in significant accounting policies, based upon which, the Company makes contributions to the Employees'' Gratuity Funds.
The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied when calculating the defined benefit obligation recognised in the Balance Sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
(k) The Company expects to contribute Rs.108 Lakhs (previous year - Rs.100 Lakhs) to the funded gratuity plans during the next financial year.
(l) The weighted average duration of the defined benefit obligation as at 31 March 2023 is 7 years (31 March 2022 - 8 years).
(II) Post-employment defined contribution plans
(A) Superannuation fund
Certain categories of employees of the Company participate in superannuation, a defined contribution plan administered by the Trust set up by the Company. The Company makes yearly contributions based on a specified percentage of each covered employee''s salary. The Company has no further obligations under the plan beyond its annual contributions.
During the year, an amount of Rs.10.89 Lakhs (previous year- Rs.10.16 Lakhs) has been recognised as expenditure towards above defined contribution plan of the Company.
(B) Provident fund
All categories of employees of the Company receive benefits from a provident fund, a defined contribution plan. Both the employee and employer make monthly contributions to a government administered fund at specified percentage of the covered employee''s qualifying salary. The Company has no further obligations under the plan beyond its monthly contributions.
During the year, an amount of Rs.220.78 Lakhs (previous year- Rs.192.27 Lakhs) has been recognised as expenditure towards above defined contribution plan of the Company.
The Company provides for accumulation of leave by certain categories of its employees. These employees can carry forward a portion of the unutilised leave balances and utilise it in future periods or receive cash (only in case of earned leave) in lieu thereof as per the Company''s policy. The Company records a provision for leave obligations in the period in which the employee renders the services that increases this entitlement.
The total closing provision towards this obligation was Rs.485.40 Lakhs and Rs.437.41 Lakhs as at 31 March 2023 and 31 March 2022 respectively. The amount of the provision is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.
Salary growth risks
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.
Demographic risk
In the valuation of the liability, certain demographic (mortality and attrition rates) assumptions are made. The Company is exposed to this risk to the extent of actual experience eventually being worse compared to the assumptions thereby causing an increase in the benefit cost.
30 SHARE BASED PAYMENTS (a) Employee stock option scheme
The establishment of the Employee Stock Option Scheme 2013 (Scheme) was approved by the shareholders at the Annual General Meeting held on 26 July 2013. The Scheme is designed to provide incentives to eligible employees to deliver long term returns. Under the Scheme each Option entitles the holder thereof to apply for and be allotted one equity shares of the Company of Re.1 each upon payment of the exercise price during the exercise period as defined in the Scheme. The exercise period commences from the date of vesting of the Options and expires at the end of 10 years from the date of vesting. The Options have been granted at the ''market price'' as defined under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, as amended.
Information in respect of Options granted under the Scheme:
Pursuant to approved Scheme, the Compensation Committee / Nomination and Remuneration Committee of the Board of Directors has granted shares / options during 2020-21, 2021-22 and 2022-23 to certain eligible employees and outstanding as on 31 March 2023 at the following exercise price, being prevailing market price as on date of grant to respective employee.
(IV) Risk exposure
Through its defined benefit plans, the Company is exposed to some risks, the most significant of which are detailed below: Discount rate risk
The Company is exposed to the risk of fall in discount rate. A fall in discount rate will eventually increase the ultimate cost of providing the above benefit thereby increasing the value of the liability.
Measurement of fair value
The fair value of Employee Stock Options as on the date of grant was determined using the Black Scholes Model which takes into account the share price at the measurement date, expected price volatility of the underlying share, the expected dividend yield and risk free interest rate and carrying amount of liability included in employee benefit obligations.
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are
(a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows below.
Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.
Level 2: Inputs other than quoted price included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
The fair value of financial instruments that are not traded in an active market is determined using market approach and valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty.
The fair value of trade receivables, cash and cash equivalents, other bank balances, loans and deposits, trade payables, borrowings, lease liabilities and other financial assets and liabilities is considered to be equal to the carrying amounts of these items due to their short-term nature. The fair values of unquoted equity instruments were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk. There has been no change in the valuation methodology for Level 3 inputs during the year. The Company has classified certain financial instruments under Level 3 of the fair value hierarchy. There were no transfers between Level 1 and Level 2 during the year ended 31 March 2023 and 31 March 2022.
The Company has a system-based approach to risk management, anchored to policies and procedures aimed at ensuring early identification, evaluation and management of key financial risks (such as market risk, credit risk and liquidity risk) that may arise as a consequence of its business operations as well as its investing and financing activities.
Accordingly, the Company''s risk management framework has the objective of ensuring that such risks are managed within acceptable and approved risk parameters in a disciplined and consistent manner and in compliance with applicable regulation. It also seeks to drive accountability in this regard.
This Note explains the sources of risk which the entity is exposed to and how the entity manages the risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The Company is exposed to credit risk from its operating activities (primarily Trade Receivables) and from its investing activities (primarily Deposits with Banks).
Trade receivables
Trade receivables are typically unsecured and are derived from revenue earned from customers. Customer credit risk is managed by respective segment subject to the Company''s policy and procedures which involve credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. The Company''s customer base is large and diverse limiting the risk arising out of credit concentration. Further, credit is extended in business interest in accordance with business-specific credit policies. The Company''s exposure to trade receivables on the reporting date, net of expected loss provisions, stood at Rs.15,133.24 Lakhs as on 31 March 2023 (31 March 2022 - Rs.10,751.04 Lakhs).
All overdue customer balances are evaluated taking into account the age of the dues, specific credit circumstances, the track record of the counterparty etc. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss.
Other financial assets
Credit risk from balances with banks, term deposits and investments is managed by Company''s finance department. Investments in fixed deposits are held with highly rated banks. Investments of surplus are made within assigned credit limits with approved counterparties who meet the threshold requirements with respect to ratings, financial strength, credit spreads etc. Counterparty credit limits are set to minimize concentration risk and are reviewed periodically by the Board of Directors.
The Company''s maximum exposure to credit risk for the components of the Balance Sheet as of 31 March 2023 and 31 March 2022 is the carrying amounts as disclosed in Note 8.1, 8.2, 11.1, 11.3, 11.4, 11.5 and 11.6.
Liquidity risk refers to the risk that the Company fails to honour its financial obligations in accordance with terms of contract. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions.
Management monitors rolling forecasts of the company''s liquidity position (including the undrawn credit facilities extended by banks and financial institutions) and cash and cash equivalents on the basis of expected cash flows. In addition, the Company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
The following table shows a maturity analysis of the anticipated cash flows including interest obligations for the Company''s nonderivative financial liabilities on an undiscounted basis, which therefore does not differ significantly from their carrying value as the impact of discounting is not significant.
The Company does not have derivative financial liabilities as at the end of above mentioned reporting periods.
The Company is having cash credit facility and the same carries interest of 8.10% to 9.15% p.a. (2021-22: 7.70% to 8.40% p.a.). The facility is unutilised as on 31 March 2023 and 31 March 2022. Cash Credit facility was secured by first pari passu charge (ranking pari passu with all consortium bankers) over the whole of the current assets of the Company including its inventories, bills receivable and book debts and all other movables, both present and future whether now lying loose or in cases wherever they may be situated and also by the second charge on the Company''s movable fixed assets, both present and future ranking pari passu without any preference or priority of one over the others.
(i) Foreign currency risk
Foreign currency risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company transacts business in local currency and in foreign currencies (primarily US Dollars and GBP). The Company has foreign currency trade receivables, trade payables and advances and is therefore exposed to foreign currency risk. The risk is measured through a forecast of highly probable foreign currency cash flows.
The Company''s risk management policy is hedging of net foreign currency exposure at all points in time through foreign exchange forward contracts. The objective of the hedging is to eliminate the currency risk due to volatility in exchange rates.
(a) Foreign currency risk exposure:
(ii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to risk of changes in market interest rates relates primarily to the Company''s debt interest obligation. Further the Company engages in financing activities at market linked rates, any changes in the interest rate environment may impact future rates of borrowings.
Consistent with others in the industry, the Company monitors capital on the basis of net debt to equity ratio and maturity profile of overall debt portfolio of the Company.
Net debt implies total borrowings of the Company as reduced by Cash and Cash Equivalent and Equity comprises all components attributable to the owners of the Company.
Increase/ decrease of 50 basis points (holding all other variables constant) in interest rates at the balance sheet date would result in increase/decrease of Rs. NIL (31 March 2022 - Rs.NIL) in interest expense on financial liabilities with floating interest rate and corresponding impact on profit before tax for the year ended 31 March 2023.
The Company invests its surplus funds in fixed deposits and mutual funds. Fixed deposits are held with highly rated banks and have a short tenure and are not subject to interest rate volatility.
(iii) Securities price risk
Securities price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded prices. The Company is not an active investor in equity markets; it used to hold certain investments in equity for long term value accretion which are accordingly measured at fair value through Other Comprehensive Income which has been tranferred pursuant to a scheme of arrangement (Refer Note 34) to the Resulting Company. Hence, the value of investments in such equity instruments (including quoted and unquoted) as at 31 March 2023 stands Rs. NIL (31 March 2022 - Rs.14,528.26 Lakhs). Accordingly, fair value fluctuations arising from market volatility is not recognised in Other Comprehensive Income for the year ended 31 March 2023.
The Company also invests in mutual fund schemes of leading fund houses. Such investments are susceptible to market price risk that will fluctuate due to changes in market traded prices, which may impact the return and value of such investments. The value of investments in such mutual fund schemes as at 31 March 2023 is Rs.21,235.62 Lakhs (31 March 2022 - Rs.50,570.95 Lakhs). Accordingly, fair value fluctuations arising from market volatility is recognised in Statement of profit and loss.
34 SCHEME OF ARRANGEMENT
a) Pursuant to the Scheme of Arrangement (the ''Scheme''), duly sanctioned by the National Company Law Tribunal (NCLT), Kolkata Bench vide Order dated 22 June 2023 ("Order"), with effect from the Appointed Date i.e., 1 April 2022, the E-commerce Distribution Business along with identified non-core assets (''the demerged undertaking '') of the Company ("Demerged Company") stands transferred into the "Digidrive Distributors Limited" (''the resulting company'').
On receipt of the order dated 22 June 2023 from NCLT, sanctioning the Scheme and upon filing the same with Registrar of Companies, Kolkata on 12 July 2023, the Scheme has become effective. Accordingly, the Company has given effect to the Scheme from the Appointed date of 1 April 2022 by revising the Original standalone financial statements which were approved by the Board of Directors on 19 May 2023.
33 CAPITAL MANAGEMENT (a) Risk management
The Company''s objectives when managing capital are to:
⢠safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
⢠maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
b) The Company has recognised the effect of demerger and the difference of Rs.7416.85 Lakhs i.e. excess of the value of transferred assets over the transferred liabilities pertaining to the demerged undertaking pursuant to the Scheme has been debited to the Retained earnings of the Company.
c) Upon the effectiveness of this Scheme, the Resulting Company has issued and allotted to each shareholder of the Company, whose name is recorded in the register of members and records of the depository as members of the Company, on the Record Date, (1) one equity share of Rs.10 (Rupees Ten ) each of the Resulting Company, credited as fully paid up for every five equity share of Re. 1 (Rupees one) each held by such shareholder in the Company such that the shareholding in the Resulting Company on such issuance of shares is the mirror image of the shareholding in the Demerged Company.
d) The transactions pertaining to the demerged undertaking of the Demerged Company from the appointed date, i.e 1 April 2022 upto the effective date of the Scheme have been deemed to be made by Digidrive Distributors Limited, Resulting Company, and the same is recorded as payable to resulting company as at 31st March 2023.
Terms and conditions of transactions with related parties :
⢠Sales to related parties are made in the ordinary course of business and on terms equivalent to those that prevail in arm''s length transactions with other customers. Outstanding balances at the year-end are unsecured and will be settled in cash and cash equivalents.
⢠The loan given to related parties is made in the ordinary course of business and on terms at arm''s length price. Outstanding balances at the year-end is unsecured and will be settled in cash and cash equivalents.
Estimated amount of contract remaining to be executed on Capital account and not provided for [net of advances of Rs.5,696.46 Lakhs (31 March 2022 - Rs.2,874.47 Lakhs)] as at 31 March 2023 are estimated at Rs.4,466.00 Lakhs (31 March 2022- Rs.2,278.00 Lakhs).
37 CONTINGENT LIABILITIES IN RESPECT OF:(i) Income Tax Matter
The Company has ongoing disputes with income tax authorities in India. The disputes relate to tax treatment of certain expenses claimed as deductions, computation or eligibility of allowances. The Company has contingent liability of Rs.3,287.32 Lakhs as at 31 March 2023 (31 March 2022 - Rs.2,808.68 Lakhs) in respect of tax demands which are being contested by the Company based on the management evaluation and advice of tax consultants.
The Company has ongoing disputes with Indian tax authorities mainly relating to treatment of characterisation and classification of certain items. The Company have demands amounting to Rs.554.22 Lakhs as at 31 March 2023 (31 March 2022 - Rs.463.52 Lakhs) relating to Goods and Service Tax, Excise duty, Custom duty, Service tax, Sales tax/VAT and Other indirect taxes from respective indirect tax authorities which are being contested by the Company based on the management evaluation and advice of tax consultants.
The Company has received legal notices of claims / lawsuits filed against it relating to infringement of copyrights in relation to the music used / other matters. Based on management evaluation and advice from legal solicitors, Rs.20.00 Lakhs as at 31 March 2023 (31 March 2022 - Rs.20.25 Lakhs) is considered as contingent on account of such claims / law suits.
(iv) Other matters including claims related to property related demands Rs.5,798.93 Lakhs as at 31 March 2023 (31 March 2022 -Rs.5,018.66 Lakhs).
In respect of above, it is not practicable for the Company to estimate the timings of cash outflows, if any, pending resolution of the respective proceedings. The Company does not expect any reimbursements in respect of the above.
41 Saregama Regency Optimedia Private Limited (SROPL), a joint venture of the Company had been directed to be wound up vide Order dated 19 September 2016 by the Hon''ble High Court at Calcutta and the Official Liquidator attached to this Court has forthwith taken into his custody all the property, effects, books of accounts, other documents and actionable claims. Accordingly, the financial statements of SROPL has been prepared up to the date preceding the date of Court Order. In view of the above, information relating to the Company''s interest in the Joint Venture has not been disclosed in the current year as well as in the previous year.
45 In terms of Indian Accounting Standard (Ind AS) 108 on ''Operating Segment'' notified in the Act, segment information has been presented in the Consolidated Financial Statements, prepared pursuant to Indian Accounting Standard (Ind AS) 110 on ''Consolidated Financial Statements'' and Indian Accounting Standard (Ind AS) 28 on ''Investments in Associates and Joint Ventures'' notified in the Act, included in the Annual Report for the year.
Mar 31, 2022
The Company has chosen the revaluation model for land and cost model for other items of PPE as its accounting policy [Refer Note 1(c)]. Accordingly, Company''s land was revalued by registered valuer using market approach. Resultant incremental value amounting to Rs.12,599.73 Lakhs were added to the book value of related land with corresponding credit to Other Comprehensive Income and other equity. The carrying amount of land that would have been recognised had it been carried under the cost model is Rs.8,367.47 Lakhs.
Title deeds of the immovable properties as set out in the above table are in the name of the Company.
The Company has cash credit facility from banks which carry charge over certain of the above PPE (Refer Note 32(B) for details).
Aggregate amount of depreciation has been included under ''Depreciation and amortisation expense'' in the Statement of Profit and Loss (Refer Note 26).
The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.
The Company has incurred expenses relating to short term leases and leases of low value assets for certain accommodation. Terms of such lease include option for renewal on mutually agreed terms. There are no restrictions imposed by lease arrangements and there are no purchase options or sub leases or contingent rents. Operating lease rentals for the year recognised in Statement of Profit and Loss amounts to Rs.325.05 Lakhs (2020-21 - Rs.325.32 Lakhs).
The total cash outflow for leases is Rs.378.09 Lakhs (2020-21 - Rs.381.71 Lakhs) for the year, including cash outflow for short term leases and leases of low value assets.
Company as a Lessor
Rent income includes payments of Rs.18.90 Lakhs (2020-21 - Rs.18.96 Lakhs) for the year relating to agreements entered into by the Company. There are no restrictions imposed by lease arrangements and there are no contingent rents recognised as income for the period. These lease arrangements inter alia include escalation clause/option for renewal.
The Company obtains independent valuations for its investment properties at least annually. The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available, the Company consider information from a variety of sources including:
4 current prices in an active market for properties of different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences
4 discounted cash flow projections based on reliable estimates of future cash flows
4 capitalised income projections based upon a property''s estimated net market income, and a capitalisation rate derived from an analysis of market evidence
The fair values of investment properties have been determined by external, independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued.
(a) No trade receivables are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade receivables are due from firms or private companies respectively in which any director is a partner, a director or a member.
(b) Information about the Company''s exposure to credit and currency risks, and loss allowances related to trade receivables are disclosed in Note 32.
(c) For balances of trade receivables owing from related parties (Refer note 34).
* During the year, the Company has issued 2,000 equity shares (Previous Year: 2,000 equity shares) of face value of Rs.10/-each under the Employee Stock Option Scheme 2013. Further during the year, the Company has allotted 18,50,937 equity shares (Previous Year: Nil) of face value of Rs.10/- each through Qualified Institutions Placement aggregating to Rs.74,999.97 Lakhs (Previous Year: Nil).
** Pursuant to the Special Resolution passed by the Shareholders of the Company by way of Postal Ballot through electronic means on 31 March 2022, the Company has sub-divided its equity share of face value of Rs.10/- (Rs. Ten only) each fully paid up, into 10 (Ten) equity shares of face value Re.1/- (Rupee One only) each fully paid-up, effective from 28 April 2022. Hence, shares have now been adjusted on account of sub-division of share done by the Company.
R''ghts issue
Out of 53,38,628 equity shares of face value Rs.10/- each issued for cash at a premium of Rs.35/- (issue price- Rs.45/-) pursuant to the Rights Issue in 2005, allotment of 5,290 equity shares of face value Rs.10/- each (31 March 2021 - 5,290 equity shares of face value Rs.10/- each) (relating to cases under litigation/ pending clearance from the concerned authorities) are kept in abeyance as on 31 March 2022.
Rights, preferences and restrictions attached to shares
The Company has only one class of equity shares having a par value of Re.1/- per share (previous year Rs.10/- per share). Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting except in case of interim dividend.
In the event of liquidation of the Company, the holder of equity shares are eligible to receive remaining assets of the Company in proportion to their shareholding.
*Quest Capital Markets Limited (formerly BNK Capital Markets Limited) is added in the promoter group list of Saregama India Limited pursuant to the transaction between Lebnitze Real Estates Private Limited and Quest Capital Markets Limited (formerly BNK Capital Markets Limited).
Stock option schemes and stock appreciation rights
Information relating to Employee Option Plan, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting period, is set out in Note 30.
(i) General reserve : Under the erstwhile Companies Act 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, 2013 (the "Companies Act"), the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn. The amount credited to the reserve can be utilised by the Company in accordance with the provisions of the Companies Act.
29 Assets and liabilities relating to employee benefits
(I) Post-employment defined benefit plans:
(A) Gratuity (funded)
The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. As per the plan, the Saregama India Limited Employees Group Gratuity Fund (Gratuity Fund), administered and managed by the Trustees and funded primarily with Life Insurance Corporation of India (LICI) and ICIQ Prudential Life Insurance Company Limited, make payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. The Trustees are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. Each year an Asset-Liability matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles. Investment and contribution policies are integrated within this study. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as set out in Note 1(r)(iii) in significant accounting policies, based upon which, the Company makes contributions to the Employees'' Gratuity Funds.
The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied when calculating the defined benefit obligation recognised in the Balance Sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
(k) The Company expects to contribute Rs.100 Lakhs (previous year - Rs.96 Lakhs) to the funded gratuity plans during the next financial year.
(l) The weighted average duration of the defined benefit obligation as at 31 March 2022 is 8 years (31 March 2021 -6 years).
(II) Post-employment defined contribution plans
(A) Superannuation fund
Certain categories of employees of the Company participate in superannuation, a defined contribution plan administered by the Trust set up by the Company. The Company makes yearly contributions based on a specified percentage of each covered employee''s salary. The Company has no further obligations under the plan beyond its annual contributions.
During the year, an amount of Rs.10.16 Lakhs (previous year- Rs.15.49 Lakhs) has been recognised as expenditure towards above defined contribution plan of the Company.
(B) Provident fund
All categories of employees of the Company receive benefits from a provident fund, a defined contribution plan. Both the employee and employer make monthly contributions to a government administered fund at specified percentage of the covered employee''s qualifying salary. The Company has no further obligations under the plan beyond its monthly contributions.
During the year, an amount of Rs.192.27 Lakhs (previous year- Rs.178.92 Lakhs) has been recognised as expenditure towards above defined contribution plan of the Company.
(III) Leave obligations
The Company provides for accumulation of leave by certain categories of its employees. These employees can carry forward a portion of the unutilised leave balances and utilise it in future periods or receive cash (only in case of earned leave) in lieu thereof as per the Company''s policy. The Company records a provision for leave obligations in the period in which the employee renders the services that increases this entitlement.
The total closing provision towards this obligation was Rs.437.41 Lakhs and Rs.428.67 Lakhs as at 31 March 2022 and 31 March 2021 respectively. The amount of the provision is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.
Through its defined benefit plans, the Company is exposed to some risks, the most significant of which are detailed below: Discount rate risk
The Company is exposed to the risk of fall in discount rate. A fall in discount rate will eventually increase the ultimate cost of providing the above benefit thereby increasing the value of the liability.
Salary growth risks
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.
Demographic risk
In the valuation of the liability, certain demographic (mortality and attrition rates) assumptions are made. The Company is exposed to this risk to the extent of actual experience eventually being worse compared to the assumptions thereby causing an increase in the benefit cost.
30 Share based payments (a) Stock appreciation rights
The Nomination and Remuneration Committee of the Board of Directors has granted Stock Appreciation Rights (âSARâ) to certain eligible employees pursuant to the Company''s Stock Appreciation Rights Scheme 2018 (hereinafter referred to as âSchemeâ). The grant price is determined as defined in the Scheme. The Scheme has different performance linked vesting schedules. The exercise period commences from the date of vesting of the Options and expires at the end of 10 years from the date of vesting. Under the Scheme, the specified eligible employees are entitled to receive cash payment, being the difference in the share price between the date of grant and the date of exercise subject to certain conditions. The Schemes are administered by Nomination and Remuneration Committee.
*The Nomination and Remuneration Committee in its meeting held on 30 June 2020 cancelled 1,00,000 Stock Appreciation rights issued to eligible employees on 31 July 2018 under the Saregama Stock Appreciation Rights Scheme 2018 (âSAR 2018â).
In accordance with the aforesaid shareholders approval w.r.t. modification of employee share benefit schemes, the Nomination and Remuneration Committee has granted 1,00,000 Options to the eligible employees under the Saregama Employee Stock Option Scheme 2013 in lieu of SAR 2018 keeping all other terms and conditions of the replaced awards remain the same as the original award, being in line with the requirements of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, as amended.
The aforesaid Options would vest as per the vesting schedule approved by the Nomination and Remuneration Committee and the exercise period is 10 years from the date of vesting.
Employee stock option scheme
The establishment of the Employee Stock Option Scheme 2013 (Scheme) was approved by the shareholders at the Annual General Meeting held on 26 July 2013. The Scheme is designed to provide incentives to eligible employees to deliver long term returns. Under the Scheme each Option entitles the holder thereof to apply for and be allotted one equity shares of the Company of Rs.10 each upon payment of the exercise price during the exercise period as defined in the Scheme.
The exercise period commences from the date of vesting of the Options and expires at the end of 10 years from the date of vesting. The Options have been granted at the âmarket price'' as defined under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, as amended.
@ Exercise of options by the option holders shall entail issuance of equity shares by the Company on compliance / completion of related formalities on the basis of 1:1.
** The Nomination and Remuneration Committee of the Board of Directors in its meeting held on 8 May 2019, has recommended amendments to the clauses in the ESOS 2013 to effect implementation of the said scheme through Saregama Welfare Trust and the same has been approved by the shareholders in the Annual General Meeting held on 19 July 2019. Basis the above modification, ESOS 2013 is being implemented through a trust viz. Saregama Welfare Trust (âTrustâ) in accordance with the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, as amended (âSEBI SBEB Regulationsâ). This involves secondary market acquisition of the Company''s equity shares by the Trust.
The fair value of Employee Stock Options as on the date of grant was determined using the Black Scholes Model which takes into account the share price at the measurement date, expected price volatility of the underlying share, the expected dividend yield and risk free interest rate and carrying amount of liability included in employee benefit obligations.
During the year ended 31 March 2021, the Company issued ESOP as replacement for outstanding stock appreciation rights awards. The replacement was pursuant to SEBI (Share Based Employee Benefits) Regulations, 2014, as amended. The awards were granted after necessary approvals from the Nomination and Remuneration Committee, all other terms and conditions of the replaced awards remain the same as the original award.
The replacement awards was accounted as a modification and the fair value on the date of modification of Rs.150.61 Lakhs recognized as equity with a corresponding adjustment to financial liability. The movement in the fair value of Stock Appreciation Rights till the date of its cancellation has been charged to the statement of profit and loss.
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows below.
Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.
Level 2: Inputs other than quoted price included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
The fair value of financial instruments that are not traded in an active market is determined using market approach and valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty.
The fair value of trade receivables, cash and cash equivalents, other bank balances, loans and deposits, trade payables, borrowings, lease liabilities and other financial assets and liabilities is considered to be equal to the carrying amounts of these items due to their short-term nature. The fair values of unquoted equity instruments were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.
There has been no change in the valuation methodology for Level 3 inputs during the year. The Company has classified certain financial instruments under Level 3 of the fair value hierarchy. There were no transfers between Level 1 and Level 2 during the year ended 31 March 2022 and 31 March 2021.
The Company has a system-based approach to risk management, anchored to policies and procedures aimed at ensuring early identification, evaluation and management of key financial risks (such as market risk, credit risk and liquidity risk) that may arise as a consequence of its business operations as well as its investing and financing activities.
Accordingly, the Company''s risk management framework has the objective of ensuring that such risks are managed within acceptable and approved risk parameters in a disciplined and consistent manner and in compliance with applicable regulation. It also seeks to drive accountability in this regard.
This Note explains the sources of risk which the entity is exposed to and how the entity manages the risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:
(A) Credit risk
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The Company is exposed to credit risk from its operating activities (primarily Trade Receivables) and from its investing activities (primarily Deposits with Banks).
Trade receivables are typically unsecured and are derived from revenue earned from customers. Customer credit risk is managed by respective segment subject to the Company''s policy and procedures which involve credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. The Company''s customer base is large and diverse limiting the risk arising out of credit concentration. Further, credit is extended in business interest in accordance with business-specific credit policies. The Company''s exposure to trade receivables on the reporting date, net of expected loss provisions, stood at Rs.10,751.04 Lakhs as on 31 March 2022 (31 March 2021 - Rs.8,959.04 Lakhs).
Credit risk from balances with banks, term deposits and investments is managed by Company''s finance department. Investments in fixed deposits are held with highly rated banks. Investments of surplus are made within assigned credit limits with approved counterparties who meet the threshold requirements with respect to ratings, financial strength, credit spreads etc. Counterparty credit limits are set to minimize concentration risk and are reviewed periodically by the Board of Directors.
The Company''s maximum exposure to credit risk for the components of the Balance Sheet as of 31 March 2022 and 31 March 2021 is the carrying amounts as disclosed in Note 8.1, 8.2, 11.1, 11.3, 11.4, 11.5 and 11.6.
Liquidity risk
Liquidity risk refers to the risk that the Company fails to honour its financial obligations in accordance with terms of contract. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions.
Management monitors rolling forecasts of the company''s liquidity position (including the undrawn credit facilities extended by banks and financial institutions) and cash and cash equivalents on the basis of expected cash flows. In addition, the Company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
The Company is having cash credit facility and the same carries interest of 7.70% to 8.40% p.a. (2020-21: 7.70% to 8.40% p.a.). The facility is unutilised as on 31 March 2022 and 31 March 2021. Cash Credit facility was secured by first pari passu charge (ranking pari passu with all consortium bankers) over the whole of the current assets of the Company including its inventories, bills receivable and book debts and all other movables, both present and future whether now lying loose or in cases wherever they may be situated and also by the second charge on the Company''s movable fixed assets, both present and future ranking pari passu without any preference or priority of one over the others.
(C) Market risk
(i) Foreign currency risk
Foreign currency risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company transacts business in local currency and in foreign currencies (primarily US Dollars and GBP). The Company has foreign currency trade receivables, trade payables and advances and is therefore exposed to foreign currency risk. The risk is measured through a forecast of highly probable foreign currency cash flows. The Company''s risk management policy is hedging of net foreign currency exposure at all points in time through foreign exchange forward contracts. The objective of the hedging is to eliminate the currency risk due to volatility in exchange rates.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to risk of changes in market interest rates relates primarily to the Company''s debt interest obligation. Further the Company engages in financing activities at market linked rates, any changes in the interest rate environment may impact future rates of borrowings.
Increase/ decrease of 50 basis points (holding all other variables constant) in interest rates at the balance sheet date would result in increase/decrease of Rs.Nil (31 March 2021 - Rs.Nil) in interest expense on financial liabilities with floating interest rate and corresponding impact on profit before tax for the year ended 31 March 2022.
The Company invests its surplus funds in fixed deposits and mutual funds. Fixed deposits are held with highly rated banks and have a short tenure and are not subject to interest rate volatility.
Securities price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded prices. The Company is not an active investor in equity markets; it continues to hold certain investments in equity for long term value accretion which are accordingly measured at fair value through Other Comprehensive Income. The value of investments in such equity instruments (including quoted and unquoted) as at 31 March 2022 is Rs.14,528.26 Lakhs (31 March 2021 - Rs.9,120.58 Lakhs). Accordingly, fair value fluctuations arising from market volatility is recognised in Other Comprehensive Income.
The Company also invests in mutual fund schemes of leading fund houses. Such investments are susceptible to market price risk that will fluctuate due to changes in market traded prices, which may impact the return and value of such investments. The value of investments in such mutual fund schemes as at 31 March 2022 is Rs.50,570.95 Lakhs (31 March 2021 - Rs.2,516.38 Lakhs). Accordingly, fair value fluctuations arising from market volatility is recognised in Statement of profit and loss.
(a) Risk management
The Company''s objectives when managing capital are to:
⢠safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
⢠maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Company monitors capital on the basis of net debt to equity ratio and maturity profile of overall debt portfolio of the Company.
Net debt implies total borrowings of the Company as reduced by Cash and Cash Equivalent and Equity comprises all components attributable to the owners of the Company.
* The above compensation does not include perquisite value of interest free loan and perquisite value of shares options exercised during the year aggregating to Rs.2,919.15 Lakhs (31 March 2021: Rs.1,341.75 Lakhs) for the year ended 31 March 2022, as defined under the Income-tax Act,1961.
The total managerial remuneration paid/payable to Managing Director of the Company including the aforesaid perquisite value of interest free loan and perquisite value of shares options exercised during the year, as defined under the Income-tax Act, 1961, has exceeded the prescribed limits under Section 197 read with Schedule V to the Companies Act, 2013. The Company has obtained necessary approvals as required under the relevant provisions of the Companies Act, 2013.
Terms and conditions of transactions with related parties :
4 Sales to related parties are made in the ordinary course of business and on terms equivalent to those that prevail in arm''s length transactions with other customers. Outstanding balances at the year-end are unsecured and will be settled in cash and cash equivalents.
4 The loan given to related parties is made in the ordinary course of business and on terms at arm''s length price. Outstanding balances at the year-end is unsecured and will be settled in cash and cash equivalents.
Estimated amount of contract remaining to be executed on Capital account and not provided for [net of advances of Rs.2,874.47 Lakhs (31 March 2021 - Rs.1,058.38 Lakhs)] as at 31 March 2022 are estimated at Rs.2,278.00 Lakhs (31 March 2021- 1,376.43 Lakhs).
36 Contingent liabilities in respect of -
(i) Income Tax Matter
The Company has ongoing disputes with income tax authorities in India. The disputes relate to tax treatment of certain expenses claimed as deductions, computation or eligibility of allowances. The Company has contingent liability of Rs.2,808.68 Lakhs as at 31 March 2022 (31 March 2021 - Rs.1,050.74 Lakhs) in respect of tax demands which are being contested by the Company based on the management evaluation and advice of tax consultants.
(ii) Indirect Tax Matter
The Company has ongoing disputes with Indian tax authorities mainly relating to treatment of characterisation and classification of certain items. The Company have demands amounting to Rs.463.52 Lakhs as at 31 March 2022 (31 March 2021 - Rs.463.63 Lakhs) relating to Excise duty, Custom duty, Service tax, Sales tax/VAT and Other indirect taxes from respective indirect tax authorities which are being contested by the Company based on the management evaluation and advice of tax consultants.
(iii) Copyright Matter
The Company has received legal notices of claims / lawsuits filed against it relating to infringement of copyrights in relation to the music used / other matters. Based on management evaluation and advice from legal solicitors, Rs.20.25 Lakhs as at 31 March 2022 (31 March 2021 - Rs.20.25 Lakhs) is considered as contingent on account of such claims / law suits.
(iv) Other matters including claims related to property related demands Rs.5,018.66 Lakhs as at 31 March 2022 (31 March 2021 - Rs.4,295.04 Lakhs).
In order to lay specific focus on the e-commerce distribution business of the Company alongwith identified non-core assets (including investment(s) in publication business) and other activities and/ or arrangements incidental or relating thereto, the Board of the Directors of the Company at its meeting held on 30 March 2022 approved, subject to necessary approvals, Scheme of Arrangement between the Company and Digidrive Distributors Limited (âResulting Companyâ) and their respective shareholders and creditors under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 (âActâ) (âSchemeâ) which inter alia provides for the demerger, transfer and vesting of the Demerged Undertaking (as defined in the Scheme) from the Company into the Resulting Company, on a going concern basis. The appointed date being 1 April 2022. Upon implementation of the Scheme, each shareholder of the Company would be entitled to fully paid shares of the respective companies in the ratio set out in the Scheme. Necessary accounting effect of the Scheme will be given in due course, upon receipt of the requisite approvals.
Saregama Regency Optimedia Private Limited (SROPL), a joint venture of the Company had been directed to be wound up vide Order dated 19 September 2016 by the Hon''ble High Court at Calcutta and the Official Liquidator attached to this Court has forthwith taken into his custody all the property, effects, books of accounts, other documents and actionable claims. Accordingly, the financial statements of SROPL has been prepared up to the date preceding the date of Court Order.
In view of the above, information relating to the Company''s interest in the Joint Venture has not been disclosed in the current year as well as in the previous year.
(2) Profit for the year Depreciation and amortisation expense Finance costs
(3) Lease payments during the year
(4) Current assets - Current liabilities
(5) Profit for the year Tax Expense Finance costs
(6) Net worth deferred tax liabilities Lease liabilities
I. The increase is on account of unutilised amount out of fund raised though QIP which has been invested in mutual funds and fixed deposits with Banks resulting in increase on current assets.
II. On account of increase in net profit after taxes during the year ended 31 March 2022.
III. During the year ended 31 March 2022, Company has raised fresh equity amounting to Rs.74,999.97 Lakhs by allotting 18,50,937 equity shares of face value of Rs.10/- each on a Qualified Institutional Placement basis resulting in increase in Average total equity and capital employed for the current year.
IV. Increase in inventory turnover ratio by 40.26% is in line with increase in operations of the Company during the current year.
V. Revenue growth coupled with better collection of receivables has resulted in an improvement in the ratio.
VI. Improvement in the ratio is on account of increase in operations coupled with timely payment of liabilities.
VII. Based on the marked to market valuation of the investments.
45 Disclosure of investments made in related parties required under section 186(4) of the Companies Act, 2013:
(a) The Company has invested in equity of Rs.1 Lakh (2020-21 Rs.Nil) during the year in its subsidiary, Digidrive Distributors Limited for its principal business activities.
Mar 31, 2019
BACKGROUND
Saregama India Limited (âthe Companyâ) is a Company limited by shares, incorporated and domiciled in India. The Company is engaged in the business of manufacturing and sale of Music storage device viz. Carvaan, Mini Carvaan, Music Card, Audio Compact Discs, Digital Versatile Discs and dealing with related music rights. The Company is also engaged in production and sale/telecast/broadcast of films/Tv Serials, pre-recorded programmes and dealing in film rights. Equity shares of the Company are listed on the Bombay Stock Exchange (BSE), the National Stock Exchange (NSE) and the Calcutta Stock Exchange (CSE). The registered office of the Company is located in Kolkata, West Bengal, India.
The standalone financials statements were approved and authorised for issue with the resolution of the Board of Directors on 08 May 2019.
1 Critical estimates and judgements
The preparation of standalone financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the date of these standalone financial statements and the reported amounts of revenues and expenses for the years presented. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed at each Balance Sheet date. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.
This Note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the standalone financial statements.
The areas involving critical estimates or judgements are:
Employee benefits (estimation of defined benefit obligations) - Notes 1(r) and 30
Post-employment benefits represent obligations that will be settled in future and require assumptions to estimate benefit obligations. Post-employment benefit accounting is intended to reflect the recognition of benefit costs over the employeesâ approximate service period, based on the terms of the plans and the investment and funding decisions made. The accounting requires the Company to make assumptions regarding variables such as discount rate and salary growth rate. Changes in these key assumptions can have a significant impact on the defined benefit obligations.
Impairment of trade receivables â Notes 1 (j)(iii) and 33
For impairment of trade receivable, Company applies the simplified approach permitted by Ind AS 109, âFinancial Instrumentsâ, which requires expected lifetime losses to be recognised from initial recognition of the receivables. The assumptions and estimates applied for determining the provision for impairment are reviewed periodically.
Estimation of expected useful lives of property, plant and equipment - Notes 1(c) and 3
Management reviews its estimate of useful lives of property, plant and equipment at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of property, plant and equipment.
Contingencies - Notes 1(u) and 37
Legal proceedings covering a range of matters are pending against the Company. Due to the uncertainty inherent in such matters, it is often difficult to predict the final outcome. The cases and claims against the Company often raise factual and legal issues that are subject to uncertainties and complexities, including the facts and circumstances of each particular case/ claim, the jurisdiction and the differences in applicable law. The Company consults with legal counsel and other experts on matters related to specific litigations where considered necessary. The Company accrues a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated. In the event an adverse outcome is possible or an estimate is not determinable, the matter is disclosed.
Valuation of deferred tax assets - Notes 1(t) and 15
Deferred income tax expense is calculated based on the differences between the carrying value of assets and liabilities for financial reporting purposes and their respective tax bases that are considered temporary in nature. Valuation of deferred tax assets is dependent on managementâs assessment of future recoverability of the deferred tax benefit. Expected recoverability may result from expected taxable income in the future, planned transactions or planned optimising measures. Economic conditions may change and lead to a different conclusion regarding recoverability.
Fair value measurements â Notes 1(j)(viii) and 32
When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair values are measured using valuation techniques, including the discounted cash flow model, which involve various judgements and assumptions.
2.1 The Company has chosen the revaluation model for land and cost model for other items of PPE as its accounting policy [Refer Note 1(c)]. The carrying amount of land that would have been recognised had it been carried under the cost model is Rs.6,567.47 Lakhs.
2.2 Title deeds of the immovable properties as set out in the above table are in the name of the Company.
2.3 The Company has borrowed from banks which carry charge over certain of the above PPE (Refer Note 16.1 for details).
2.4 Aggregate amount of depreciation has been included under âDepreciation and amortisation expenseâ in the Statement of Profit and Loss (Refer Note 27).
The Company obtains independent valuations for its investment properties at least annually. The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available, the Company consider information from a variety of sources including:
- current prices in an active market for properties of different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences
- discounted cash flow projections based on reliable estimates of future cash flows
- capitalised income projections based upon a propertyâs estimated net market income, and a capitalisation rate derived from an analysis of market evidence
The fair values of investment properties have been determined by external, independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued.
3.1 The amortisation expense of intangible assets have been included under âDepreciation and amortization expenseâ in the Statement of Profit and Loss (Refer Note 27).
Note: Pursuant to the Composite Scheme of Arrangement involving CESC Limited (CESC) and nine other CESC subsidiaries as approved by the Honâble National Company Law Tribunal, Kolkata Bench, the Company is entitled to receive 5 equity shares of Rs.10 each of the Haldia Energy Limited for every 10 equity shares held in CESC Limited, allotment of the same is pending as on 31 March 2019. Hence, pending such allotment no adjustment has been made in the financial statements.
Notes:
(a) No trade or other receivables are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade or other receivables are due from firms or private companies respectively in which any director is a partner, a director or a member.
(b) Information about the Companyâs exposure to credit and currency risks, and loss allowances related to trade receivables are disclosed in Note 33.
(c) For terms and conditions and balances of trade receivables owing from related parties (Refer note 35).
Out of 53,38,628 equity shares issued for cash at a premium of Rs.35/- (issue price - Rs.45/-) pursuant to the Rights Issue in 2005, allotment of 5,290 (31 March 2018 - 5,290) equity shares (relating to cases under litigation/ pending clearence from the concerned authorities) are kept in abeyance as on 31 March 2019.
Rights, preferences and restrictions attached to shares
The Company has only one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting except in case of interim dividend.
In the event of liquidation of the Company, the holder of equity shares are eligible to receive remaining assets of the Company in proportion to their shareholding.
Stock option schemes and stock appreciation rights
Information relating to Employee Option Plan, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting period, is set out in Note 31.
(i) General reserve : Under the erstwhile Companies Act 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, 2013 (the âCompanies Actâ), the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn. The amount credited to the reserve can be utilised by the Company in accordance with the provisions of the Companies Act.
There is no movement in general reserve during the current and previous year.
*Cash Credit from Banks bearing interest rate between 9.25% to 10.00% p.a. (2017-18: 9.25% to 10.70% p.a.) are secured by first pari passu charge (ranking pari passu with all consortium bankers) over the whole of the current assets of the Company including its stocks of finished goods, work in progress, bills receivable and book debts, other financial assets and all other movables, both present and future whether now lying loose or in cases wherever they may be situated and also by the second charge on the Companyâs movable fixed assets, both present and future ranking pari passu without any preference or priority of one over the others.
Refer Note (3), (9), (10.1), (10.2), (10.4) and (10.5) for details of carrying amount of assets pledged as security for secured borrowings and Note 33 for information about liquidity risk and market risk on borrowings.
Disaggregation of revenue from contracts with customers
In the following table, revenue from contracts with customers is disaggregated by primary geography market, major products and service lines and timing of revenue recognition. The Company believes that this disaggregation best depicts how the nature, amount, timing of our revenues and cash flows are affected by geography and other economic factors :
The contract assets primarily relate to the Companyâs rights to consideration for services rendered but not billed at the reporting date. The contract assets are transferred to receivables when the rights become unconditional. This usually occurs when the Company issues an invoice to the customer.
A receivable is a right to consideration that is unconditional upon passage of time. Revenue from the sale of products is recognised at the point in time when control is transferred to the customer. Revenue for fixed price licence fees contracts is recognised on a straight line basis over the period of the contract. Revenues in excess of billings is recorded as unbilled revenue and is classified as a financial asset for these cases as right to consideration is unconditional upon passage of time.
Invoicing in excess of earnings are classified as unearned revenue.
Unbilled revenues are presented net of impairment in the Standalone Balance Sheet.
The Company has entered into a few contracts where the period between the transfer of the promised goods or services to the customer and payments by the customer exceeds one year and hence, there exists a financing component included in such contracts. On evaluation of the terms of the contracts, the effects of financing have not been found to be significant and the same has been adjusted accordingly.
Revenue recognised
The reduction towards variable consideration comprises of volume discounts, incentives, etc.
Performance obligation
The following table provides information about the nature and timing of performance obligation in contracts with customers, including significant payment terms and related revenue recognition policies:
4.1 Charge for previous year include bad debts / advances written off of Rs.1,473.65 Lakhs offset with provision for doubtful debts / advances no longer required written back of the equivalent amount.
The tax rate used in the above reconciliation for the year 2018-19 is the tax rate of 29.12% (25% surcharge @ 12% and education cess @ 4%) as against tax rate of 34.61% (30% surcharge @ 12% and education cess @ 3%) for the year 2017-18 payable on taxable profits under the Income Tax Act, 1961.
5 ASSETS AND LIABILITIES RELATING TO EMPLOYEE BENEFITS
(I) Post-employment defined benefit plans:
(A) Gratuity (funded)
The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. As per the plan, the Saregama India Limited Employees Group Gratuity Fund (Gratuity Fund), administered and managed by the Trustees and funded primarily with Life Insurance Corporation of India (LICI) and ICICI Prudential Life Insurance Company Limited, make payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employeeâs salary and the tenure of employment. The Trustees are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. Each year an Asset-Liability matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles. Investment and contribution policies are integrated within this study. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as set out in Note 1(r)(iii) above, based upon which, the Company makes contributions to the Employeesâ Gratuity Funds.
The following table sets forth the particulars in respect of the Gratuity Plan (funded) of the Company:
Assumptions regarding future mortality experience are based on mortality tables of âIndian Assured Lives Mortality (2006-2008)â published by the Institute of Actuaries of India.
The estimate of future salary increases takes into account inflation, seniority, promotion and other relevant factors, such as demand and supply in the employment market.
The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied when calculating the defined benefit obligation recognised in the Balance Sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period. (k) The Company expects to contribute Rs.65 Lakhs (previous year - Rs.30 Lakhs) to the funded gratuity plans during the next financial year.
(l) The weighted average duration of the defined benefit obligation as at 31 March 2019 is 6 years (31 March 2018 - 11 years).
(II) Post-employment defined contribution plans
(A) Superannuation fund
Certain categories of employees of the Company participate in superannuation, a defined contribution plan administered by the Trustees. The Company makes yearly contributions based on a specified percentage of each covered employeeâs salary. The Company has no further obligations under the plan beyond its annual contributions.
During the year, an amount of Rs.13.22 Lakhs (previous year- Rs.12.03 Lakhs) has been recognised as expenditure towards above defined contribution plan of the Company. (Refer note 25)
(B) Provident fund
All categories of employees of the Company receive benefits from a provident fund, a defined contribution plan. Both the employee and employer make monthly contributions to a government administered fund at specified percentage of the covered employeeâs qualifying salary. The Company has no further obligations under the plan beyond its monthly contributions.
During the year, an amount of Rs.143.02 Lakhs (previous year- Rs.120.62 Lakhs) has been recognised as expenditure towards above defined contribution plan of the Company. (Refer note 25)
(III) Leave obligations
The Company provides for accumulation of leave by certain categories of its employees. These employees can carry forward a portion of the unutilised leave balances and utilise it in future periods or receive cash (only in case of earned leave) in lieu thereof as per the Companyâs policy. The Company records a provision for leave obligations in the period in which the employee renders the services that increases this entitlement.
The total provision recorded by the Company towards this obligation was Rs.298.53 Lakhs and Rs.251.70 Lakhs as at 31 March 2019 and 31 March 2018 respectively. The amount of the provision is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.
(IV) Risk exposure
Through its defined benefit plans, the Company is exposed to some risks, the most significant of which are detailed below:
Discount rate risk
The Company is exposed to the risk of fall in discount rate. A fall in discount rate will eventually increase the ultimate cost of providing the above benefit thereby increasing the value of the liability.
Salary growth risks
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.
Demographic risk
In the valuation of the liability, certain demographic (mortality and attrition rates) assumptions are made. The Company is exposed to this risk to the extent of actual experience eventually being worse compared to the assumptions thereby causing an increase in the benefit cost.
6 SHARE BASED PAYMENTS
(a) Employee stock option scheme
The establishment of the Employee Stock Option Scheme 2013 (Scheme) was approved by the shareholders at the Annual General Meeting held on 26 July 2013. The Scheme is designed to provide incentives to eligible employees to deliver long term returns. Under the Scheme each Option entitles the holder thereof to apply for and be allotted one equity shares of the Company of Rs.10 each upon payment of the exercise price during the exercise period.
The exercise period commences from the date of vesting of the Options and expires at the end of 10 years from the date of vesting. The Options have been granted at the âmarket priceâ as defined under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.
Performance linked vesting schedule of the said options is as follows
- After 1 year from the date of grant : 20 % of the options granted
- After 2 years from the date of grant : 20 % of the options granted
- After 3 years from the date of grant : 20 % of the options granted
- After 4 years from the date of grant : 20 % of the options granted
- After 5 years from the date of grant : 20 % of the options granted Information in respect of Options granted under the Scheme :
Pursuant to approved Scheme, the Compensation Committee / Nomination and Remuneration Committee of the Board of Directors has granted shares / options during 2013-14, 2016-17 and 2017-18 to certain eligible employees and outstanding as on 31 March 2019 at the following exercise price, being prevailing market price as on date ofjoining / revision of salary of respective employee:
Exercise of options by the option holders shall entail issuance of equity shares by the Company on compliance / completion of related formalities on the basis of 1:1.
During the year 2018-19, 10000 Options granted in 2017-18 to Mr.Rohit Chopra with exercise price of Rs.717.00 per share was lapsed in 2018-19 on his resignation. Further, 471 options out of 10000 options granted to Mr.G.B.Aayeer with exercise price of Rs.69.85 per share was lasped on his retirement.
Measurement of fair value
The fair value of Employee Stock Options as on the date of grant was determined using the Black Scholes Model which takes into account the share price at the measurement date, expected price volatility of the underlying share, the expected dividend yield and risk free interest rate and carrying amount of liability included in employee benefit obligations. :
The fair value of the options and the inputs used in the measurement of fair value as on the grant date are as follows:
Expected volatility has been based on the evaluation of the historical volatility of the Companyâs share price, particularly over the historical period commensurate with the expected term. The Expected term of the instruments has been based on the historical experience and general option holder behaviour.
The Options were exercised during the period permitted under the Scheme, and weighted average share price of shares arising upon exercise of Options, based on the closing market price on NSE on the date of exercise of Options for the year ended 31 March 2018 was Rs.498.80. No options has been exercised during the year ended 31 March 2019.
(b) Stock appreciation rights
The Nomination and Remuneration Committee of the Board of Directors has granted Stock Appreciation Rights (âSARâ) to certain eligible employees pursuant to the Companyâs Stock Appreciation Rights Scheme 2014 and Stock Appreciation Rights Scheme 2018 (together referred to as âSchemesâ). The grant price is determined as defined in the Scheme. The Schemes have different performance linked vesting schedules. Under the Scheme, the specified eligible employees are entitled to receive cash payment, being the difference in the share price between the date of grant and the date of exercise subject to certain conditions. The Schemes are administered by Nomination and Remuneration Committee.
(ii) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are
(a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows below. Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.
Level 2: Inputs other than quoted price included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
The fair value of financial instruments that are not traded in an active market is determined using market approach and valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty.
The fair value of trade receivables, trade payables, cash and cash equivalents, other bank balances, loans and other financial assets and liabilities is considered to be equal to the carrying amounts of these items due to their short-term nature. Similarly, unquoted equity instruments where most recent information to measure fair value is insufficient, or if there is a wide range of possible fair value measurements, cost has been considered as the best estimate of fair value.
There has been no change in the valuation methodology for Level 3 inputs during the year. The Company has classified certain financial instruments under Level 3 of the fair value hierarchy. There were no transfers between Level 1 and Level 2 during the year.
7 FINANCIAL RISK MANAGEMENT
The Company has a system-based approach to risk management, anchored to policies and procedures and internal financial controls aimed at ensuring early identification, evaluation and management of key financial risks (such as market risk, credit risk and liquidity risk) that may arise as a consequence of its business operations as well as its investing and financing activities.
Accordingly, the Companyâs risk management framework has the objective of ensuring that such risks are managed within acceptable and approved risk parameters in a disciplined and consistent manner and in compliance with applicable regulation. It also seeks to drive accountability in this regard.
This Note explains the sources of risk which the entity is exposed to and how the entity manages the risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:
(A) Credit risk
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The Company is exposed to credit risk from its operating activities (primarily Trade Receivables) and from its investing activities (primarily Deposits with Banks).
Trade receivables
Trade receivables are typically unsecured and are derived from revenue earned from customers. Customer credit risk is managed by respective segment subject to the Companyâs policy and procedures which involve credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. The Companyâs customer base is large and diverse limiting the risk arising out of credit concentration. Further, credit is extended in business interest in accordance with business-specific credit policies. The Companyâs exposure to trade receivables on the reporting date, net of expected loss provisions, stood at Rs.11,295.88 Lakhs as on 31 March 2019 (31 March 2018 - Rs.7,810.11 Lakhs).
All overdue customer balances are evaluated taking into account the age of the dues, specific credit circumstances, the track record of the counterparty etc. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors and the Companyâs historical experience with customers.
The movement of the expected loss provision (allowance for bad and doubtful receivables) made by the Company are as under:
Other financial assets
Credit risk from balances with banks, term deposits and investments is managed by Companyâs finance department. Investments of surplus are made within assigned credit limits with approved counterparties who meet the threshold requirements with respect to ratings, financial strength, credit spreads etc. Counterparty credit limits are set to minimize concentration risk and are reviewed periodically by the Board of Directors.
The Companyâs maximum exposure to credit risk for the components of the Balance Sheet as of 31 March 2019 and 31 March 2018 is the carrying amounts as disclosed in Note 7.3, 10.3 and 10.5.
(B) Liquidity risk
Liquidity risk refers to the risk that the Company fails to honour its financial obligations in accordance with terms of contract. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions.
Management monitors rolling forecasts of the companyâs liquidity position (including the undrawn credit facilities extended by banks and financial institutions) and cash and cash equivalents on the basis of expected cash flows. In addition, the Companyâs liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
The following table shows a maturity analysis of the anticipated cash flows including interest obligations for the Companyâs nonderivative financial liabilities on an undiscounted basis (all payable within 12 months), which therefore does not differ from their carrying value as the impact of discounting is not significant.
The Company does not have derivative financial liabilities as at the end of above mentioned reporting periods.
(C) Market risk
(i) Foreign currency risk
Foreign currency risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company transacts business in local currency and in foreign currencies (primarily US Dollars and GBP). The Company has foreign currency trade receivables, trade payables and advances and is therefore exposed to foreign currency risk. The risk is measured through a forecast of highly probable foreign currency cash flows.
The Companyâs risk management policy is hedging of net foreign currency exposure at all points in time through foreign exchange forward contracts. The objective of the hedging is to eliminate the currency risk due to volatility in exchange rates.
(a) Foreign currency risk exposure:
The Companyâs exposure to foreign currency risk at the end of the reporting period expressed in INR, are as follows:
(b) Sensitivity
The sensitivity of profit or loss to changes in the foreign exchange rates arises mainly from foreign currency denominated financial instruments. 10 % appreciation / depreciation of the respective foreign currencies with respect to functional currency (holding all other variables constant) of the Company would result in increase / decrease in the Companyâs profit before tax as computed below:
(ii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to risk of changes in market interest rates relates primarily to the Companyâs debt interest obligation. Further the Company engages in financing activities at market linked rates, any changes in the interest rate environment may impact future rates of borrowings.
The Companyâs investments in term deposits with bank are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of changes in market interest rates.
The exposure of the Companyâs financial assets and financial liabilities to interest rate risk is as follows:
Increase/ decrease of 50 basis points (holding all other variables constant) in interest rates at the balance sheet date would result in increase/decrease of Rs.17.90 Lakhs (31 March 2018 - Rs.6.46 Lakhs) in interest expense on financial liabilities with floating interest rate and corresponding impact on profit before tax for the year ended 31 March 2019.
The Company invests its surplus funds in fixed deposits. Fixed deposits are held with highly rated banks and have a short tenure and are not subject to interest rate volatility.
(iii) Securities price risk
Securities price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded prices. The Company is not an active investor in equity markets; it continues to hold certain investments in equity for long term value accretion which are accordingly measured at fair value through Other Comprehensive Income. The value of investments in such equity instruments (including quoted and unquoted) as at 31 March 2019 is Rs.12,123.59 Lakhs (31 March 2018 -â12,339.83 Lakhs). Accordingly, fair value fluctuations arising from market volatility is recognised in Other Comprehensive Income.
8 CAPITAL MANAGEMENT
(a) Risk management
The Companyâs objectives when managing capital are to:
- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
- maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Company monitors capital on the basis of net debt to equity ratio and maturity profile of overall debt portfolio of the Company.
Net debt implies total borrowings of the Company as reduced by Cash and Cash Equivalent and Equity comprises all components attributable to the owners of the Company.
The following table summarises the capital of the Company:
Under the terms of the borrowing facilities, the Company has complied with the financial covenants as imposed by the bank and financial institutions.
No changes were made to the objectives, policies or processes for managing capital during the years ended 31 March 2019 and 31 March 2018.
Terms and conditions of transactions with related parties :
- Sales to related parties are made in the ordinary course of business and on terms equivalent to those that prevail in armâs length transactions with other customers. Outstanding balances at the year-end are unsecured and will be settled in cash and cash equivalents.
- The loan given to related parties is made in the ordinary course of business and on terms at armâs length price. Outstanding balances at the year-end is unsecured and will be settled in cash and cash equivalents.
9 COMMITMENTS
Estimated amount of contract remaining to be executed on Capital account and not provided for [net of advances of Rs.70.00 Lakhs (31 March 2018 - Rs.958.50 Lakhs)] as at 31 March 2019 are estimated at Rs.94.00 Lakhs (31 March 2018- Rs.1,271.00 Lakhs).
10 CONTINGENT LIABILITIES IN RESPECT OF -
(i) Income Tax Matter
The Company has ongoing disputes with income tax authorities in India. The disputes relate to tax treatment of certain expenses claimed as deductions, computation or eligibility of allowances. The Company has contingent liability of Rs.1,986.02 Lakhs as at 31 March 2019 (31 March 2018 - Rs.1,461.19 Lakhs) in respect of tax demands which are being contested by the Company based on the management evaluation and advice of tax consultants.
(ii) Indirect Tax Matter
The Company has ongoing disputes with Indian tax authorities mainly relating to treatment of characterisation and classification of certain items. The Company have demands amounting to Rs.889.99 Lakhs as at 31 March 2019 (31 March 2018 - Rs.1,065.07 Lakhs) relating to Excise duty, Custom duty, Service tax, Sales tax/VAT and Other indirect taxes from respective indirect tax authorities which are being contested by the Company based on the management evaluation and advice of tax consultants.
(iii) Copyright Matter
The Company has received legal notices of claims / lawsuits filed against it relating to infringement of copyrights in relation to the music used / other matters. Based on management evaluation and advice from legal solicitors, Rs.39.03 Lakhs (31 March 2018 - Rs.138.78 Lakhs) is considered as contingent on account of such claims / law suits.
(iv) There has been a Supreme Court Judgement dated 28 Feb 2019, relating to components of salary structure that need to be taken into account while computing the contribution to provident fund under the EPF act. There are interpretative aspects related to the judgement including the effective date of application. The Company will continue to assess any further developments in this matter for the implications on financial statements, if any.
(v) Other matters including claims related to property related demands Rs.3,017.79 Lakhs (31 March 2018 - Rs.1,847.16 Lakhs).
In respect of above, it is not practicable for the Company to estimate the timings of cash outflows, if any, pending resolution of the respective proceedings. The Company does not expect any reimbursements in respect of the above.
11.1 The Company has cancellable operating lease arrangements for certain accommodation. Terms of such lease include option for renewal on mutually agreed terms. There are no restrictions imposed by lease arrangements and there are no purchase options or sub leases or contingent rents. Operating lease rentals for the year recognised in Statement of Profit and Loss amounts to Rs.334.44 Lakhs (previous year - Rs.315.54 Lakhs).
1.2 Rent income includes payments of Rs.22.79 Lakhs (previous year - Rs.21.75 Lakhs) for the year relating to agreements entered into by the Company. There are no restrictions imposed by lease arrangements and there are no contingent rents recognised as income for the period. These lease arrangements inter alia include escalation clause/option for renewal.
12 Saregama Regency Optimedia Private Limited (SROPL), a joint venture of the Company had been directed to be wound up vide Order dated 19 September 2016 by the Honâble High Court at Calcutta and the Official Liquidator attached to this Court has forthwith taken into his custody all the property, effects, books of accounts, other documents and actionable claims. Accordingly, the financial statements of SROPL has been prepared up to the date preceding the date of Court Order. In view of the above, information relating to the Companyâs interest in the Joint Venture has also been disclosed till the above period.
13 The Company has following un-hedged exposures in foreign currencies
14 In terms of Indian Accounting Standard (Ind AS) 108 on âOperating Segmentâ notified in the Act, segment information has been presented in the Consolidated Financial Statements, prepared pursuant to Indian Accounting Standard (Ind AS) 110 on âConsolidated Financial Statementsâ and Indian Accounting Standard (Ind AS) 28 on âInvestments in Associates and Joint Venturesâ notified in the Act, included in the Annual Report for the year.
15 Details of loans and investments covered under Section 186(4) of the Companies Act, 2013 :
15 (a) The Company has provided loans and advances [repayable on demand at the interest rate of 9.25% p.a. (2017-18 - 10.70% p.a)] of Rs.4.23 Lakhs (2017-18 - Rs.9.48 Lakhs) during the year to its subsidiary, Kolkata Metro Networks Limited for financial assistance and its principal business activities.
15 (b) The Company has provided loans and advances [repayable on demand at the interest rate of 9.25% p.a. (2017-18 - 10.70% p.a.)] of Rs.1,720.45 Lakhs (2017-18 Rs.1,538.99 Lakhs) during the year to its subsidiary Open Media Network Private Limited for financial assistance and its principal business activities. However, the same has been provided fuly in the books of account for the current year.
15 (c) The Company has invested in equity of Rs.20.19 Lakhs (2017-18 âNil) and provided loans and advances [repayable on demand at the interest rate of 9.25% p.a. of Rs.121.78 Lakhs (2017-18 âNil) during the year to its subsidiary Saregama FZE for financial assistance and its principal business activities.
16 On 2 April 2018, there was a fire in the godown (of third party service provider) damaging stocks of the Company. As per the best estimate of the management, the Company had recognised insurance claim receivable as âOther Incomeâ and the corresponding loss of such stocks was charged off. The Company has subsequently realised Rs.3,218.72 Lakhs from the insurance company on 12 April 2019 against the said claim.
17 Tax expenses is net of Minimum Alternate Tax (MAT) credit of â Nil (2017-18 Rs.728.20 Lakhs) based on income tax computation set out in accounting policy [Note 1(t)] and Companyâs return of income.
18 The disclosures regarding details of specified bank notes held and transacted during 8th November 2016 to 30th December 2016 has not been made in these financial statements since the requirement does not pertain to financial year ended 31 March 2019.
19 Previous years figures have been regrouped/reclassified to conform to current yearâs presentation.
Mar 31, 2018
1 CRITICAL ESTIMATES AND JUDGEMENTS
The preparation of standalone financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the date of these standalone financial statements and the reported amounts of revenues and expenses for the years presented. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed at each Balance Sheet date. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.
This Note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the standalone financial statements.
The areas involving critical estimates or judgements are:
- Employee benefits (estimation of defined benefit obligations) - Note 1(r) and Note 30
Post-employment benefits represent obligations that will be settled in future and require assumptions to estimate benefit obligations. Post-employment benefit accounting is intended to reflect the recognition of benefit costs over the employeesâ approximate service period, based on the terms of the plans and the investment and funding decisions made. The accounting requires the Company to make assumptions regarding variables such as discount rate and salary growth rate. Changes in these key assumptions can have a significant impact on the defined benefit obligations.
- Impairment of trade receivables - Note 1 (j)(iii) and Note 33
Impairment of trade receivables is primarily estimated based on prior experience with and the past due status of receivables, based on factors that include ability to pay and payment history. The assumptions and estimates applied for determining the provision for impairment are reviewed periodically.
- Estimation of expected useful lives of property, plant and equipment - Note 1(c) and Note 3
Management reviews its estimate of useful lives of property, plant and equipment at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of property, plant and equipment.
- Contingencies - Note 1(u) and Note 37
Legal proceedings covering a range of matters are pending against the Company. Due to the uncertainty inherent in such matters, it is often difficult to predict the final outcome. The cases and claims against the Company often raise factual and legal issues that are subject to uncertainties and complexities, including the facts and circumstances of each particular case/claim, the jurisdiction and the differences in applicable law. The Company consults with legal counsel and other experts on matters related to specific litigations where considered necessary. The Company accrues a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated. In the event an adverse outcome is possible or an estimate is not determinable, the matter is disclosed.
- Valuation of deferred tax assets - Note 1(t) and Note 15
Deferred income tax expense is calculated based on the differences between the carrying value of assets and liabilities for financial reporting purposes and their respective tax bases that are considered temporary in nature. Valuation of deferred tax assets is dependent on managementâs assessment of future recoverability of the deferred tax benefit. Expected recoverability may result from expected taxable income in the future, planned transactions or planned optimising measures. Economic conditions may change and lead to a different conclusion regarding recoverability.
- Fair value measurements - Notes 1(j)(ii),(v) and Note 32
When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair values are measured using valuation techniques, including the discounted cash flow model, which involve various judgements and assumptions.
2 The Company has chosen the revaluation model for land and cost model for other items of PPE as its accounting policy. Accordingly, Companyâs land was revalued during the previous year by registered valuer using market approach. Resultant incremental value amounting to '' 11,640.29 lakhs were added to the book value of related land with corresponding credit to OCI and other equity.
3 Title deeds of the immovable properties as set out in the above table are in the name of the Company.
4 The Company has borrowings from banks which carry charge over certain of the above property, plant and equipment. (Refer Note 16.1 for details)
5 Aggregate amount of depreciation has been included under ''Depreciation and amortisation expense'' in the Statement of Profit and Loss (Refer Note 27).
Estimation of fair value
The Company obtains independent valuations for its investment properties at least annually. The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available, the Company consider information from a variety of sources including:
- current prices in an active market for properties of different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences
- discounted cash flow projections based on reliable estimates of future cash flows
- capitalised income projections based upon a propertyâs estimated net market income, and a capitalisation rate derived from an analysis of market evidence
The fair values of investment properties have been determined by external, independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued.
- Rs. 701.03 Lakhs (net of provision Rs. 96.89 Lakhs); 31 March 2017 - Rs. 489.92 Lakhs (net of provision Rs. 107.73 Lakhs) ; 1 April 2016 - Rs. 448.44 Lakhs (net of provision Rs. 136.10 Lakhs) due from Saregama Plc (subsidiary company);
- Rs. 69.33 Lakhs (net of provision Rs. Nil); 31 March 2017 - Rs. Nil (net of provision Rs. Nil) ; 1 April 2016 - Rs. Nil (net of provision Rs. Nil) due from Saregama INC (Step-down subsidiary company) ;
- Rs. Nil (net of provision Rs. 1.76 Lakhs); 31 March 2017 - Rs. 0.88 Lakhs (net of provision Rs. Nil) ; 1 April 2016 - Rs. Nil (net of provision '' Nil) due from Open Media Network Private Limited (subsidiary company).
Rights issue
Out of 53,38,628 equity shares issued for cash at a premium of Rs. 35/- (issue price- Rs. 45/-) pursuant to the Rights Issue in 2005, allotment of 5,290 [31 March 2017 - 5,290; 1 April 2016-5,290] equity shares (relating to cases under litigation/ pending clearence from the concerned authorities) are kept in abeyance as on 31 March 2018.
Rights, preferences and restrictions attached to shares
The Company has only one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting except in case of interim dividend.
In the event of liquidation of the Company, the holder of equity shares are eligible to receive remaining assets of the Company in proportion to their shareholding.
Stock option schemes and stock appreciation rights
Information relating to Employee Option Plan, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting period, is set out in Note 31.
(i) General reserve : Under the erstwhile Companies Act 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, 2013 (the âCompanies Actâ), the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn. The amount credited to the reserve can be utilised by the Company in accordance with the provisions of the Companies Act.
There is no movement in general reserve during the current and previous year.
28.2 Include bad debts / advances written off of Rs. 1,473.65 Lakhs offset with provision for doubtful debts / advances no longer required written back of the equivalent amount.
6. ASSETS AND LIABILITIES RELATING TO EMPLOYEE BENEFITS
(I) Post-employment defined benefit plans:
(A) Gratuity (funded)
The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. As per the plan, the Saregama India Limited Employees Group Gratuity Fund (Gratuity Fund), administered and managed by the Trustees and funded primarily with Life Insurance Corporation of India (LICI) and ICICI Prudential Life Insurance Company Limited, make payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employeeâs salary and the tenure of employment. The Trustees are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. Each year an Asset-Liability matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles. Investment and contribution policies are integrated within this study. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as set out in Note 1(r)(iii) above, based upon which, the Company makes contributions to the Employeesâ Gratuity Funds.
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit obligation recognised in the Balance Sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period. (k) The Company expects to contribute Rs. 30 Lakhs (previous year - Rs. 118 Lakhs) to the funded gratuity plans during the next financial year.
(l) The weighted average duration of the defined benefit obligation as at 31 March 2018 is 11 years (31 March 2017 - 8 years).
(II) Post-employment defined contribution plans
(A) Superannuation fund
Certain categories of employees of the Company participate in superannuation, a defined contribution plan administered by the Trustees. The Company makes quarterly contributions based on a specified percentage of each covered employeeâs salary. The Company has no further obligations under the plan beyond its annual contributions.
During the year, an amount of Rs. 12.03 Lakhs (previous year- Rs. 10.96 Lakhs) has been recognised as expenditure towards above defined contribution plans of the Company.
(B) Provident fund
Certain categories of employees of the Company receive benefits from a provident fund, a defined contribution plan. Both the employee and employer make monthly contributions to a government administered fund at specified percentage of the covered employeeâs qualifying salary. The Company has no further obligations under the plan beyond its monthly contributions.
During the year, an amount of Rs. 120.62 Lakhs (previous year- Rs. 103.45 Lakhs) has been recognised as expenditure towards above defined contribution plan of the Company.
(III) Leave obligations
The Company provides for accumulation of leave by certain categories of its employees. These employees can carry forward a portion of the unutilised leave balances and utilise it in future periods or receive cash (only in case of earned leave) in lieu thereof as per the Companyâs policy. The Company records a provision for leave obligations in the period in which the employee renders the services that increases this entitlement.
The total provision recorded by the Company towards this obligation was Rs. 251.70 Lakhs, Rs. 232.65 Lakhs and Rs. 163.48 Lakhs as at 31 March 2018, 31 March 2017 and 1 April 2016 respectively. The amount of the provision is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.
(IV) Risk exposure
Through its defined benefit plans, the Company is exposed to some risks, the most significant of which are detailed below:
Discount rate risk
The Company is exposed to the risk of fall in discount rate. A fall in discount rate will eventually inrease the ultimate cost of providing the above benefit thereby increasing the value of the liability.
Salary growth risks
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.
Demographic risk
In the valuation of the liability, certain demographic (mortality and attrition rates) assumptions are made. The Company is exposed to this risk to the extent of actual experience eventually being worse compared to the assumptions thereby causing an increase in the benefit cost.
31 SHARE BASED PAYMENTS
(a) Employee stock option scheme
The establishment of the Employee Stock Option Scheme 2013 (Scheme) was approved by the shareholders at the Annual General Meeting held on 26 July 2013. The Scheme is designed to provide incentives to eligible employees to deliver long term returns. Under the Scheme each Option entitles the holder thereof to apply for and be allotted one equity shares of the Company of ''10 each upon payment of the exercise price during the exercise period.
The exercise period commences from the date of vesting of the Options and expires at the end of 10 years from the date of vesting. The Options have been granted at the ''market price'' as defined under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.
Performance linked vesting schedule of the said options is as follows :-
- After 1 year from the date of grant : 20 % of the options granted
- After 2 years from the date of grant : 20 % of the options granted
- After 3 years from the date of grant : 20 % of the options granted
- After 4 years from the date of grant : 20 % of the options granted
- After 5 years from the date of grant : 20 % of the options granted
(b) Stock appreciation rights
On October 27, 2014 (being the grant date), the Nomination and Remuneration Committee of the Board of Directors has granted 2,00,000 Stock Appreciation Rights (SAR) to the Managing Director, pursuant to Stock Appreciation Rights Scheme 2014. The rights entitle the managing director to a cash payment, being the difference in the share price between the date of grant and the date of exercise as per the following performance linked vesting schedule :-
- After one year from the date of grant:- 66%
- After two years from the date of grant:- 34%
The exercise period shall commence from the date of vesting and expire at the end of ten years from the relevant vesting date.
During the year 2016-17, the Nomination and Remuneration Committee of the Board of Directors has approved vesting of 2,00,000 SARs to its Managing Director.
(ii) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are
(a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows below.
Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.
Level 2: Inputs other than quoted price included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
The fair value of financial instruments that are not traded in an active market is determined using market approach and valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty.
The fair value of trade receivables, trade payables and other financial assets and liabilities is considered to be equal to the carrying amounts of these items due to their short-term nature. Where such items are Non-current in nature, the same has been classified as Level 3 and fair value determined using discounted cash flow basis. Similarly, unquoted equity instruments where most recent information to measure fair value is insufficient, or if there is a wide range of possible fair value measurements, cost has been considered as the best estimate of fair value.
There has been no change in the valuation methodology for Level 3 inputs during the year. The Company has not classified any material financial instruments under Level 3 of the fair value hierarchy. There were no transfers between Level 1 and Level 2 during the year.
7. FINANCIAL RISK MANAGEMENT
The Company has a system-based approach to risk management, anchored to policies and procedures and internal financial controls aimed at ensuring early identification, evaluation and management of key financial risks (such as market risk, credit risk and liquidity risk) that may arise as a consequence of its business operations as well as its investing and financing activities.
Accordingly, the Companyâs risk management framework has the objective of ensuring that such risks are managed within acceptable and approved risk parameters in a disciplined and consistent manner and in compliance with applicable regulation. It also seeks to drive accountability in this regard.
This Note explains the sources of risk which the entity is exposed to and how the entity manages the risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:
(A) Credit risk
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The Company is exposed to credit risk from its operating activities (primarily Trade Receivables) and from its investing activities (primarily Deposits with Banks).
Trade receivables
Trade receivables are typically unsecured and are derived from revenue earned from customers. Customer credit risk is managed by respective segment subject to the Company''s policy and procedures which involve credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. The Companyâs customer base is large and diverse limiting the risk arising out of credit concentration. Further, credit is extended in business interest in accordance with business-specific credit policies. The Companyâs exposure to trade receivables on the reporting date, net of expected loss provisions, stood at Rs. 7,810.11 Lakhs as on 31 March 2018 (31 March 2017 - Rs. 5,558.64 Lakhs ; 1 April 2016 - Rs. 4,914.60 Lakhs).
All overdue customer balances are evaluated taking into account the age of the dues, specific credit circumstances, the track record of the counterparty etc. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors and the Company''s historical experience with customers.
Other financial assets
Credit risk from balances with banks, term deposits and investments is managed by Company''s finance department. Investments of surplus are made within assigned credit limits with approved counterparties who meet the threshold requirements with respect to ratings, financial strength, credit spreads etc. Counterparty credit limits are set to minimize concentration risk and are reviewed periodically by the Board of Directors.
The Company''s maximum exposure to credit risk for the components of the Balance Sheet as of 31 March 2018, 31 March 2017 and 1April 2016 is the carrying amounts as disclosed in Note 7.3 and 10.5.
(B) Liquidity risk
Liquidity risk refers to the risk that the Company fails to honour its financial obligations in accordance with terms of contract. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions.
Management monitors rolling forecasts of the company''s liquidity position (including the undrawn credit facilities extended by banks and financial institutions) and cash and cash equivalents on the basis of expected cash flows. In addition, the Company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
The following table shows a maturity analysis of the anticipated cash flows including interest obligations for the Companyâs nonderivative financial liabilities on an undiscounted basis (all payable within 12 months), which therefore does not differ from their carrying value as the impact of discounting is not significant.
(C) Market risk
(i) Foreign currency risk
Foreign currency risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company transacts business in local currency and in foreign currencies (primarily US Dollars and GBP). The Company has foreign currency trade receivables and trade payables and is therefore exposed to foreign currency risk.
The Company strives to achieve asset-liability offset of foreign currency exposures and only the net position is hedged where considered necessary. The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimise the volatility of the INR cash flows of highly probable forecast transactions.
(ii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to risk of changes in market interest rates relates primarily to the Companyâs debt interest obligation. Further the Company engages in financing activities at market linked rates, any changes in the interest rate environment may impact future rates of borrowings.
The Companyâs investments in term deposits with bank are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of changes in market interest rates.
Increase/ decrease of 50 basis points (holiding all other variables constant) in interest rates at the balance sheet date would result in increase/decrease of '' 6.46 Lakhs in interest expense on financial liabilities and corresponding impact on profit before tax for the year ended 31 March 2018.
- The exposure of the Companyâs financial liabilities (both floating and fixed rate) as at 31 March 2017 and as at 1 April 2016 was '' Nil. Accordingly impact on profit and loss on account of change in interest rate is not computed.
(iii) Securities price risk
Securities price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded prices. The Company is not an active investor in equity markets; it continues to hold certain investments in equity for long term value accretion which are accordingly measured at fair value through Other Comprehensive Income. The value of investments in such equity instruments as at 31 March 2018 is Rs. 12,339.83 Lakhs ( 31 March 2017 - Rs. 10,764.07 Lakhs; 1 April 2016 - Rs. 6,120.70 Lakhs). Accordingly, fair value fluctuations arising from market volatility is recognised in Other Comprehensive Income.
The Company invests its surplus funds in fixed deposits. Fixed deposits are held with highly rated banks and have a short tenure and are not subject to interest rate volatility.
8 CAPITAL MANAGEMENT
(a) Risk management
The Companyâs objectives when managing capital are to:
- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
- maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Company monitors capital on the basis of net debt to equity ratio and maturity profile of overall debt portfolio of the Company.
Net debt implies total borrowings of the Company as reduced by Cash and Cash Equivalent and Equity comprises all components attributable to the owners of the Company
9. COMMITMENTS
Estimated amount of Contract remaining to be executed on Capital account and not provided for (net of advances of Rs. 958.50 Lakhs; 31 March 2017 - Rs. 25.00 Lakhs; 1 April 2016 - Rs. 17.42 Lakhs) as at 31 March 2018 are estimated at Rs. 1,271.00 Lakhs (31 March 2017'' 75.00 Lakhs; 1 April 2016 - Rs. 26.92 Lakhs).
10. The Company has cancellable operating lease arrangements for certain accommodation. Terms of such lease include option for renewal on mutually agreed terms. There are no restrictions imposed by lease arrangements and there are no purchase options or sub leases or contingent rents. Operating lease rentals for the year recognised in Statement of Profit and Loss amounts to Rs. 315.54 Lakhs (previous year - Rs. 313.91 Lakhs).
11. Rent income includes sub-lease payments of Rs. 21.75 Lakhs (previous year - Rs. 4.38 Lakhs) for the year relating to sub-lease agreements entered into by the Company. There are no restrictions imposed by lease arrangements and there are no contingent rents recognised as income for the period. These lease arrangements inter alia include escalation clause/option for renewal.
12. Saregama Regency Optimedia Private Limited (SROPL), a joint venture of the Company had been directed to be wound up vide Order dated 19 September 2016 by the Hon''ble High Court at Calcutta and the Official Liquidator attached to this Court has forthwith taken into his custody all the property, effects, books of accounts, other documents and actionable claims. Accordingly, the financial statements of SROPL has been prepared up to the date, preceding the date of Court Order. In view of the above, information relating to the Company''s interest in the Joint Venture has also been disclosed till the above period.
13 In terms of Indian Accounting Standard (Ind AS) 108 on ''Operating Segment'' notified in the Act, segment information has been presented in the Consolidated Financial Statements, prepared pursuant to Indian Accounting Standard (Ind AS) 110 on ''Consolidated Financial Statements'' and Indian Accounting Standard (Ind AS) 28 on ''Investments in Associates and Joint Ventures'' notified in the Act, included in the Annual Report for the year.
14 (a) The Company has provided loans and advances [repayable on demand at the interest rate of 10.70 % p.a. (2016-17 - 10.70% p.a)] of Rs. 9.48 Lakhs (2016-17 - Rs. 15.66 Lakhs) during the year to its subsidiary, Kolkata Metro Networks Limited for financial assistance and its principal business activities.
(b) The Company has provided loans and advances [repayable on demand at the interest rate of 10.70 % p.a. (2016-17- 10.70% p.a.)] of Rs. 1,538.99 Lakhs (2016-17 Rs. 1,382.18 Lakhs) during the year to its subsidiary Open Media Network Private Limited for financial assistance and its principal business activities.
(c) During the year ended 31 March 2018, the Company has duly recovered / adjusted the total amount being held in trust as on 31 March 2017 on account of amount held in trust as excess manegerial remuneration paid to the Managing Director.
15 On 2 April 2018 (around 12:00 AM) there was a fire in the godown (of third party service provider) damaging stocks of the Company aggregating to '' 3,758 Lakhs. In the opinion of the management, no material financial impact on account of the inventory loss is envisaged in view of the adequate insurance cover by the Company and accordingly, no adjustments have been made in the financial statements as at 31 March 2018. The insurance claim is currently being processed by the insurance company.
16 Tax Expenses is net of Minimum Alternate Tax (MAT) credit of Rs. 728.20 Lakhs (2016-17 Rs. Nil) based on income tax computation set out in accounting policy [Note 1(t)] and Company''s return of income.
17 FIRST-TIME ADOPTION OF IND AS
These are the Company''s first standalone financial statements prepared in accordance with Ind AS.
The accounting policies set out in Note 1 have been applied in preparing the standalone financial statements for the year ended 31 March 2018, the comparative information presented in these standalone financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS standalone balance sheet as at 1 April 2016 (the Company''s date of transition). In preparing its opening Ind AS standalone balance sheet, the Company has adjusted the amounts reported previously in the standalone financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from Previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and notes.
A Exemptions and exceptions availed
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from Previous GAAP to Ind AS.
A.1 Ind AS optional exemptions
A.1.1 Business combinations
Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.
The Company has elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.
A.1.2 Prospective application of Ind AS 21 to Business Combinations
Ind AS 101 allows a first-time adopter not to apply Ind AS 21 - The Effects of Changes in Foreign Exchange Rates retrospectively for business combinations that occurred before the date of transition to Ind AS.
The Company has elected to apply this exemption.
A.1.3 Deemed Cost for property, plant and equipment and intangible assets
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the standalone financial statements as at the date of transition to Ind AS, measured as per the Previous GAAP and use that as its deemed cost as at the date of transition. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and Investment Property covered by Ind AS 40 Investment Properties.
Accordingly, the Company has elected to measure all of its property, plant and equipment, intangible assets and investment properties at their previous GAAP carrying value. The Company does not have any de-commissioning liabilities as on the date of transition and accordingly no adjustment have been made for the same.
A.1.4 Investments in subsidiaries and joint venture
Ind AS 101 permits a first-time adopter to elect to measure its investments in subsidiaries and joint ventures at fair value of such investments at the Companyâs date of transition to Ind AS or Previous GAAP carrying amount at that date and use that as its deemed cost as at the date of transition.
Under previous GAAP, Investment in subsidiaries and joint venture were stated at cost and provisions made to recognise the decline, other than temporary. Under Ind AS, the Company has considered their previous GAAP carrying amount as their deemed cost.
A.1.5 Designation of previously recognised financial instruments
Ind AS 101 permits an entity to designate particular equity instruments (other than equity investments in subsidiaries and joint arrangements) as at fair value through other comprehensive income (FVOCI) based on facts and circumstances at the date of transition to Ind AS (rather than initial recognition). Other equity investments are classified at fair value through profit or loss (FVTPL). The Company has opted to avail this exemption to designate certain equity investments as FVOCI on the date of transition.
A.2 Ind AS mandatory exceptions
A.2.1 Estimates
An entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with Previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under previous GAAP, those estimates should be made to reflect conditions that existed at the date of transition (for preparing opening Ind AS balance sheet) or at the end of the comparative period (for presenting comparative information as per Ind AS)
On assessment of estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise such estimates under Ind AS, as there is no objective evidence of an error in those estimates.
A.2.2 Derecognition of financial assets and liabilities
Ind AS 101 requires a first-time adopter to apply the derecognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the derecognition requirements in Ind AS 109 retrospectively from a date of the entity''s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.
The Company has elected to apply the derecognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.
A.2.3 Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS. The Company has assessed the same accordingly.
Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exists on the date of transition. Measurement of the financial assets accounted at amortised cost has been done retrospectively except where the same is impracticle.
C. Notes to First-time Adoption
a (i) Fair valuation of investments (other than investments in subsidiaries and joint venture)
Under previous GAAP, non-current investments were stated at cost. Where applicable, provision was made to recognise a decline, other than temporary, in valuation of such investments. Under Ind AS, equity instruments (other than investment in subsidiaries and joint ventures) have been classified as Fair Value through Other Comprehensive Income (FVOCI) through an irrevocable election at the date of transition.
Fair value changes with respect to investments in equity instruments designated as at FVOCI have been recognised in Equity Instrument through OCI reserve as at the date of transition and subsequently in the other comprehensive income for the year ended 31 March 2017.
Consequent to the above, the total equity as at 31 March 2017 has increased by Rs. 7,524.63 Lakhs (1 April 2016 - Rs. 2,881.26 Lakhs) and other comprehensive income for the year ended 31 March 2017 has increased by Rs. 4,643.36 Lakhs.
(ii) Investment in subsidiaries and joint venture
On transition to Ind AS, the Company has elected to measure its investments in all its subsidiaries and joint venture at its previous GAAP carrying value and use those values as the deemed cost of such investments.
Consequently, provision for diminution in one of its subsidiary amounting to Rs. 17.87 Lakhs written back under previous GAAP stands reversed under Ind AS. Accordingly, total comprehensive income for the year ended 31 March 2017 is reduced by Rs. 17.87 Lakhs.
b Proposed dividend
Under the Previous GAAP, dividend proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend including dividend distribution tax thereon was recognised as a provision. Under Ind AS, such dividend is recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend (including tax) of '' 314.18 Lakhs as at 1 April 2016 included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, total equity has been increased by an equivalent amount.
c Remeasurements on post-employment benefit obligations
Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on net defined benefit obligations are recognised in other comprehensive income instead of profit or loss. Under the Previous GAAP, these remeasurements were forming part of the profit or loss for the year. However, this has no impact on the total comprehensive income and total equity as on 1 April 2016 or as on 31 March 2017.
d Deferred tax
Under the Previous GAAP, deferred tax was accounted using the income statement approach, on timing differences between the taxable profit and accounting profit for the year. Under Ind AS, deferred tax is recognised following balance sheet approach on the temporary differences between the carrying amount of asset or liability in the balance sheet and its tax base. In addition, various transitional adjustments have also led to recognition of deferred taxes on new temporary differences.
Further, under previous GAAP, no deferred tax asset/liability was recognized on revalued amount of Property, Plant and Equipment since this was considered as permanent difference. Under Ind AS, deferred tax liability was recognized on such revalued amount.
e Provisions
Under Previous GAAP, discounting of provisions was not allowed. Under Ind AS, provisions are measured at discounted amounts, if the effect of time value is material. Accordingly, provision have been discounted to their present values. This change reduced the provision as at 31 March 2017 by Rs. 535.69 Lakhs (1 April 2016 - Rs. 451.18 Lakhs). Consequent to the same, the profit for the year and equity as at 31 March 2017 increased by an equivalent amount.
f Security deposits
Under the previous GAAP, interest free security deposits (that are refundable in cash on completion of the agreement term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value. Accordingly, Company has fair valued security deposits for rented properties and deposits with telecasting channel under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognised as prepaid expense. Consequent to this change, the amount of security deposit decreased by '' 108.55 Lakhs (1 April 2016 - Rs. 124.69 Lakhs). The prepaid Expense increased by Rs. 98.72 Lakhs as at 31 March 2017 (1 April 2016 - Rs. 116.03 Lakhs). Total equity decreased by Rs. 8.65 Lakhs as on 1 April 2016. The profit for the year and total equity as at 31 March 2017 decreased by Rs. 1.17 Lakhs due to amortisation of prepaid expense of Rs. 35.24 Lakhs which is partially off-set by the notional interest income of '' 34.07 Lakhs recognised on security deposit.
g Employee share based payment
(i) Under the previous GAAP, the cost of options granted under the Saregama Employee Stock Option Scheme 2013 (Scheme) [equity - settled] was recognised using the intrinsic value method. Under this method, no expenses were recognised in the Statement of Profit and Loss as the fair value of the shares on the date of grant equalled the exercise price. Under Ind AS, the cost of options granted under the Scheme is recognised based on the fair value of the options as on the grant date. In terms of the exemptions, the fair value of unvested options as at the date of transition have been accounted for as part of reserves. Accordingly, cost of share options totaling Rs. 7.83 lakhs which were granted before and still vesting at 1 April 2016, have been recognised as a separate component of equity in share option outstanding account against retained earnings at 1 April 2016.
Further, the amount recognised in share option outstanding account increased to Rs. 8.34 Lakhs as at 31 March 2017 (1 April 2016 - Rs. 7.83 Lakhs). The profit for the year ended 31 March 2017 decreased by Rs. 3.23 Lakhs. There is no impact on total equity.
(ii) Under the previous GAAP, the cost of Stock Appreciation Rights (SAR) granted pursuant to Stock Appreciation Rights Scheme 2014 (Scheme) [cash - settled] was recognised based on difference in the share price between the date of grant and reporting date. Under Ind AS, cost of SAR granted is recognised based on fair value of SAR as on the reporting date. This change increased the employee benefits payable at 31 March 2017 by Rs. 130.80 Lakhs (1 April 2016 - Rs. 124.04 Lakhs) and consequently Equity as at 31 March 2017 and 1 April 2016 decreased by an equivalent amount and profit for the year ended 31 March 2017 was decreased by Rs. 6.76 Lakhs.
h Property, plant and equipment
Under the previous GAAP, Property, plant and equipment were stated at revalued amount (for items revalued)/cost of acquisition (for items not revalued) less accumulated depreciation/amortisation and impairment loss, if any.
Under Ind AS, the Company elected to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. Subsequently, as on 31 March 2017, the Company has chosen the revaluation model for land and cost model for other items of PPE as its accounting policy. Accordingly, Companyâs land was revalued on 31 March 2017 by registered valuer using market approach. Resultant incremental value amounting to Rs. 11,640.29 lakhs were added to the book value of related land with corresponding credit to Revaluation Surplus. Further, revaluation reserve aggregating Rs. 50.87 lakhs which has been adjusted with the carrying amount of related items of PPE under previous GAAP is reversed and added to the equity as on 31 March 2017 under Ind AS. Consequently, profit for the year ended 31 March 2017 decreased by Rs. 13.43 Lakhs on account of depreciation charge on the increased value of PPE.
i Investment property
Under the previous GAAP, Investment Property were presented as part of property, plant and equipment. Under Ind AS, Investment properties are required to be separately presented on the face of the balance sheet. Accordingly, carrying amount PPE reduced by Rs. 247.18 Lakhs as at 31 March 2017 (1 April 2016 - Rs. 252.71 Lakhs) and same is disclosed as Investment Property in the respective period. However, there is no impact on the total equity or profit as a result of this adjustment.
j Other comprehensive income
Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of Income and expense that are not recognised in profit or loss but are shown in the Statement of Profit and Loss as âOther Comprehensive Incomeâ includes remeasurements of defined benefit plans and fair value gains or (losses) on equity instruments designated at FVOCI. The concept of other comprehensive income did not exist under previous GAAP.
Mar 31, 2017
1. Out of53,38,628 equity shares issued for cash at a premium of Rs.35/- (issue price- Rs.45/-) pursuant to the Rights Issue in 2005, allotment of 5,290 (31.03.2016- 5,290) equity shares (relating to cases under litigation / pending clearence from the concerned authorities) are kept in abeyance as on 31st March, 2017.
2. Number of Equity Shares outstanding as at the beginning and as at the end of the year
3. Rights, preferences and restrictions attached to shares
The Company has only one class of equity shares having a par value of ''10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting except in case of interim dividend.
In the event of liquidation of the Company, the holder of equity shares are eligible to receive remaining assets of the Company in proportion to their shareholding.
4. Stock Option Schemes
Pursuant to approved Saregama Employee Stock Option Scheme 2013 (Scheme), the Compensation Committee of the Board of Directors has granted shares / options during 2013-14 and 2016-17 to certain eligible employees and outstanding as on 31st March, 2017 at the following exercise price, being prevailing market price as on date of joining / revision of salary of respective employee :
Exercise period is 10 years from the vesting date. Exercise of options by the option holders shall entail issuance of equity shares by the Company on compliance / completion of related formalities on the basis of 1:1.
During the year 2015-16, the Nomination and Remuneration Committee of the Board of Directors has approved vesting of 4,000 options each to Mr. G.B. Aayeer and Mr. Avinash Mudaliar respectively.
Option granted in 2015-16 for 10,000 shares to Mr.Troy Lobo with exercise price of ''195.40 per share was lapsed in 2016-17.
5. Stock Appreciation Rights
Pursuant to Stock Appreciation Rights Scheme 2014,the Nomination and Remuneration Committee of the Board of Directors has granted 2,00,000 Stock Appreciation Rights (SAR) (being the difference in the share price between the date of grant and the date of exercise) to the Managing Director on October 27, 2014 (being the date of grant) with the following performance linked vesting schedule :-
- After one year from the date of grant: - 66%
- After two years from the date of grant: - 34%
The exercise period shall commence from the date of vesting and expire at the end of ten years from the relevant vesting date.
During the year 2016-17, the Nomination and Remuneration Committee of the Board of Directors has approved vesting of 200000 SARs [including 132000 SARs which was vested in 2015-16 but reversed in 2016-17 for reasons as stated in Note 36.1(b)] to its Managing Director.
6. Based on valuation reports of valuers, the Companyâs land was revalued on 31st March, 1984 and 30th September, 1987 by Rs.199.73 lakhs and Rs.59.69 lakhs respectively, after considering the then current market value /derived rates attributable to land with corresponding credit to Revaluation Reserve.
7. The Companyâs land was revalued in June 2003 by registered valuers at the lower of current replacement cost and realizable value. Resultant incremental value amounting to Rs.1,868.97 lakhs were added to the book value of related land with utilization of corresponding credit amount pursuant to an approved scheme of arrangement.
8. The Companyâs land was revalued on 31st March, 2007 by registered valuers, at lower of current replacement cost and realizable value. Resultant incremental value amounting to Rs.4,421.30 lakhs were added to the book value of related land with corresponding credit to Revaluation Reserve of Rs.2,697.56 lakhs and utilization of the balance amount of Rs.1,723.74 lakhs pursuant to a sanctioned scheme of amalgamation of erstwhile Saregama Films Limited with the Company in 2006-07.
9. Pursuant to requirements as stated in paragraph 32 of accounting Standard 10 on Property, Plant and Equipment (PPE) as notified by the Ministry of Corporate Affairs vide Notification No. G.S.R. 364(E) dated 30th March, 2016 ( Notification) effective 1st April, 2016, the Company has chosen the revaluation model for land and cost model for other items of PPE as its accounting policy. Accordingly, Companyâs land was revalued on 1st April, 2016 by registered valuer using market approach. Resultant incremental value amounting to Rs.11,640.29 lakhs were added to the book value of related land with corresponding credit to Revaluation Reserve. In respect of those items of PPE having previous revaluation and where cost model is adopted, the amount outstanding in the Revaluation Reserve as on 1st April, 2016 aggregating Rs.50.87 lakhs has been adjusted with the carrying amount of related items in keeping with the requirements as stated in the above Notification. Had the cost model is not adopted in respect of above assets, depreciation charge for the year would have been higher by Rs.13.43 lakhs with corresponding decremental impact on the net profit of the Company.
10. Title deeds of the immovable properties as set out in the above table are in the name of the Company.
11. Based on valuation reports of valuers, appointed for the purpose, the tangible fixed assets (other than furniture and fittings, office equipment, vehicles and certain items of plant and equipment) were revalued on 31st March, 1984 and again (except for those relating to record making machinery items) on 30th September, 1987 after considering the then (a) current market value/ derived rates attributable to land (b) current replacement cost after depreciation etc. and an amount of Rs.587.31 Lakhs and Rs.628.19 Lakhs were added to the book value of the related assets (with corresponding credit to Fixed Asset Revaluation Reserve) on 31st March, 1984 and 30th September, 1987 respectively.
12. Certain tangible fixed assets of the Company viz Land and Buildings were revalued in June 2003 by registered valuers at the lower of current replacement cost and realizable value. Resultant incremental value amounting to Rs.2,374.11 Lakhs were added to the book value of the related assets with utilization of the corresponding credit amount pursuant to an approved scheme of arrangement.
13. Companyâs land was revalued on 31st March, 2007 by registered valuers, at lower of current replacement cost and realizable value. Resultant incremental value amounting to Rs.4,421.30 Lakhs were added to the book value of land with corresponding credit to Revaluation Reserve of Rs.2,697.56 Lakhs and utilization of the balance amount of Rs.1,723.74 Lakhs pursuant to a sanctioned scheme of amalgamation of erstwhile Saregama Films Limited with the Company in 2006-07.
14. In respect of tangible fixed asset covered by revaluation made in the earlier years, depreciation has been calculated on their respective revalued amounts. Depreciation on account of incremental amount to the extent of Rs.13.43 Lakhs ( Previous year - Rs.13.68 Lakhs) has been transferred from Revaluation Reserve to General Reserve.
15. Title deeds of the immovable properties as set out in the above table are in the name of the Company.
16. In keeping with the Companyâs gratuity scheme (a defined benefit plan-funded), eligible employees are entitled to gratuity benefit (at one half months eligible salary for each completed year of service) on retirement / death / incapacitation / resignation etc. Also refer Note 1(g) for accounting policy relating to gratuity. Following are the further particulars with respect to gratuity.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The expected rate of return on plan assets is based on the composition of plan assets held, assessed risks of asset management, historical results of the return on plan assets, the Companyâs policy for plan asset management and other relevant factors.
17. Capital commitments (net of advances of Rs.25.00 Lakhs; 31.03.16 - Rs.17.42 Lakhs) as at 31st March, 2017 are estimated at Rs.75.00 Lakhs (31.03.16 - Rs.26.92 Lakhs).
18. The Company has adopted the intrinsic value method in keeping with the applicable regulatory pronouncements for accounting the stock options granted as referred to in Note 2.6, which has no impact on the financial results of the Company. Had the fair value method been used in keeping with the said pronouncements, net profit for the year would have been lower by about Rs.3.44 Lakhs (Previous Year Rs.3.97 Lakhs), without any significant impact on basic and diluted earning per share.
19. Rent expenditure includes lease payments of '' 247.29 Lakhs (previous year - Rs.151.93 Lakhs) relating to operating leases taken on or after 1st April ,2001. These leasing arrangements range from one year to ten years and are primarily in respect of accommodation for employees / office premises. The significant leasing arrangements inter alia include escalation clause and option for renewal.
20. Rent income includes sub-lease payments of Rs.4.38 Lakhs (previous year - Rs.3.92 Lakhs) for the year relating to sub-lease agreements entered into by the Company on or after 1st April, 2001. These lease arrangements inter alia include escalation clause/option for renewal.
21. (a) The Central Government vide its Order dated 5th October, 2016 (âOrderâ) has approved remuneration payable to Managing Director for the period from 27th October, 2014 to 26th October, 2017. According to the Board of Directors, remuneration for 2014-15 was paid within the limit as specified in Section 197 read with Schedule V of the Act. However, the same has exceeded by Rs.78.98 Lakhs as against the limit as set out in the aforesaid Order. In the opinion of the Board of Directors, the Companyâs application to Central Government in April 2016 was with the intention of getting approval relating to the remuneration paid/payable for the financial year 2015-16 and inadvertently sought the approval from the date of appointment of the Managing Director. The Company has applied / sought clarification to / from the Central Government vide its letter dated 10th May, 2017 stating that the aforesaid Order would not be applicable (also in keeping with the legal opinion obtained by the Company) to the Company for the financial year 2014-15, as the amount of remuneration for that year was within the limits of the Act, as aforesaid. The Company, however, on a prudent basis, has kept the aforesaid excess in receivable (recoverable from Managing Director holding it in trust for the Company) in these accounts and for till such time clarification is obtained from Central Government in this regard.
(b) In respect of financial year 2015-16, the Company has paid/ provided remuneration in excess of the limit specified in Section 197 read with Schedule V of the Act. The Company has subsequently made necessary application to the Central Government and received the aforesaid Order for an amount of Rs.179.94 Lakhs as against the amount paid /provided of Rs.489.92 Lakhs. The excess remuneration of Rs.179.10 Lakhs and Rs.130.88 Lakhs as against the aforesaid limit set out in the Order is in the process of recovery from the Managing Director with such excess been treated as receivable (recoverable from Managing Director holding it in trust for the Company) and written back respectively in these accounts.
22. Remuneration for financial year 2016-17 aggregating Rs.530.81 Lakhs has been paid / provided in the accounts in accordance with shareholdersâ approval read with Notification No. S.O.2922 (E) dated 12th September, 2016 issued by the Ministry of Corporate Affairs (Notification). However, the same has exceeded by Rs.332.88 Lakhs as against the limit set out in the aforesaid Order in 36.1(a) above. According to the Board of Directors and a legal opinion obtained by the Company, remuneration for the financial year 2016-17 shall be governed by the Notification, although it has specific Order as mentioned in 36.1(a) above and approval from the Central Government is not required. However, the Company, on a prudent basis, has applied / sought clarification to / from the Central Government vide its letter dated 10th May, 2017 on the application of the aforesaid Notification in place of the aforesaid Order for remuneration paid / payable to the Managing Director for the financial year ended 31st March, 2017.
23. Saregama Regency Optimedia Private Limited (SROPL), a joint venture (JV) company of the Company has been directed to be wound up vide Order dated 19 September 2016 by the Honâble High Court at Calcutta and the Official Liquidator attached to this Court has forthwith taken into his custody all the property, effects, books of accounts, other documents and actionable claims. Accordingly, the financial statements of SROPL has been prepared up to the date, preceding the date of Court Order.
In view of the above, information relating to the Companyâs interest in the Joint Venture has also been disclosed till the above period.
24. The Companyâs interest as a venturer in the jointly controlled entity (incorporated joint venture) is :-
25. The Companyâs interest in the joint venture is reported as Non Current Investments (Note 9) and stated at cost less write down. The Companyâs share of each of the assets, liabilities, income and expenses (each without elimination of the effect of transactions between the Company and Joint Venture) related to its interest in the joint venture are:-
26. In terms of Accounting Standard (AS) 17 on âSegment Reportingâ notified in the Companies Act, segment information has been presented in the Consolidated Financial Statements(prepared pursuant to Accounting Standard (AS) 21 on âConsolidated Financial Statementsâ and Accounting Standard (AS) 27 on âFinancial Reporting of Interests in Joint Venturesâ notified in the Companies Act ) included in the Annual Report for the year.
27. (a) The Company has provided loans and advances [repayable on demand at the interest rate of 10.70 % p.a.(2015-16 - 10.95% p.a)] of Rs.15.66 Lakhs (2015-16 - Rs.7.27 Lakhs) during the year to its subsidiary, Kolkata Metro Networks Limited for financial assistance and its principal business activities.
28. (b) The Company has invested in equity of Rs. Nil ( 2015-16 Rs.2.67 Lakhs ) and provided loans and advances [repayable on demand at the interest rate of 10.70 % p.a. (2015-16- 10.95% p.a.)] of Rs.1382.18 Lakhs (2015-16 Rs.1201.38 Lakhs) during the year in / to its subsidiary Open Media Network Private Limited for financial assistance and its principal business activities.
29. Current Tax provision is net of Minimum Alternate Tax (MAT) credit of Rs. Nil (2015-16 Rs.452.32 Lakhs) based on income tax computation set out in accounting policy [ Note 1 (m) ] and Companyâs Return of Income.
30. Proposed Dividend
31. Previous yearâs figures have been regrouped or rearranged, where considered necessary, to conform to current yearâs classification.
Mar 31, 2016
1. Rights, preferences and restrictions attached to shares
The Company has only one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting except in case of interim dividend.
In the event of liquidation of the Company, the holder of equity shares are eligible to receive remaining assets of the Company in proportion to their shareholding.
2. Based on valuation reports of valuers, appointed for the purpose, the tangible fixed assets (other than furniture and fittings, office equipment, vehicles and certain items of plant and equipment) were revalued on 31st March, 1984 and again (except for those relating to record making machinery items) on 30th September, 1987 after considering the then (a) current market value/ derived rates attributable to land (b) current replacement cost after depreciation etc. and an amount of Rs. 587.31 lacs and Rs. 628.19 lacs were added to the book value of the related assets (with corresponding credit to Fixed Asset Revaluation Reserve) on 31st March, 1984 and 30th September, 1987 respectively.
3. Certain tangible fixed assets of the Company viz Land and Buildings were revalued in June 2003 by registered valuers at the lower of current replacement cost and realizable value. Resultant incremental value amounting to Rs. 2,374.11 lacs were added to the book value of the related assets with utilization of the corresponding credit amount pursuant to an approved scheme of arrangement.
4. Company''s land was revalued on 31st March, 2007 by registered valuers, at lower of current replacement cost and realizable value. Resultant incremental value amounting to Rs. 4,421.30 lacs were added to the book value of land with corresponding credit to Revaluation Reserve of Rs. 2,697.56 lacs and utilization of the balance amount of '' 1,723.74 lacs pursuant to a sanctioned scheme of amalgamation of erstwhile Saregama Films Limited with the Company in 2006-07.
5. In respect of tangible fixed asset covered by revaluation made in the earlier years, depreciation has been calculated on their respective revalued amounts. Depreciation on account of incremental amount to the extent of Rs 13.68 lacs ( Previous year - Rs.13.68 lacs) has been transferred from Revaluation Reserve to General Reserve.
6. Title deeds of the immovable properties as set out in the above table are in the name of the Company.
7. In keeping with the Company''s gratuity scheme (a defined benefit plan-funded), eligible employees are entitled to gratuity benefit (at one half months eligible salary for each completed year of service) on retirement / death / incapacitation / resignation etc. Also refer Note 1 (g) for accounting policy relating to gratuity. Following are the further particulars with respect to gratuity.
8 As a part of restructuring activities undertaken by OMNPL during the year 2013-14, advances aggregating Rs.3203.36 lacs have been considered as contributions for investments in equity shares of OMNPL. Upon conversion of advances into Investments, the provision for doubtful advances was written back and provision for diminution in value of investments was created to the recognize decline, other than temporary, in the carrying amount of company''s long term investments in OMNPL''s Publication business. During the year 2014-15, face value per share of OMNPL of Rs. 10/- each has been reduced to Re 0.15/- per share. The above reduction has been sanctioned by the Hon''ble Calcutta High Court on 3rd March, 2015.
Such reduction of share capital by OMNPL, has resulted in write off of Rs.4141.20 lacs, being amount of investments in equity shares of OMNPL. Accordingly, the carrying amount of provision for diminution in value of investments in OMNPL of Rs.3204.26 lacs has been written back. Further, the Hon''ble High Court at Calcutta , has also approved consolidation of equity shares of OMNPL of Re. 0.15 each into equity share of ''10/- each.
9. Capital commitments (net of advances of Rs.17.42 lacs; 31.03.15 - Rs.25.38 lacs) as at 31st March, 2016 are estimated at Rs. 26.92 lacs (31.03.15 - Rs.45.68 lacs).
10. The Company has adopted the intrinsic value method in keeping with the applicable regulatory pronouncements for accounting the stock options granted as referred to in Note 2.6, which has no impact on the financial results of the Company. Had the fair value method been used in keeping with the said pronouncements, net profit for the year would have been lower by about Rs.'' 3.97 lac (Previous Year Rs. 1.94 lac), without any significant impact on basic and diluted earning per share.
11. Rent expenditure includes lease payments of Rs.151.93 lacs (previous year - Rs.156.53 Lacs) relating to operating leases taken on or after 1st April, 2001. These leasing arrangements range from less than an year to ten years and are primarily in respect of accommodation for employees / office premises. The significant leasing arrangements inter alia include escalation clause and option for renewal.
12. Rent income includes sub-lease payments of Rs.3.92 Lacs (previous year - Rs. 3.89 Lacs) for the year relating to sub-lease agreements entered into by the Company on or after 1st April, 2001. These lease arrangements inter alia include escalation clause/option for renewal.
13. ''The Company has applied to the Central Government seeking approval for managerial remuneration paid/payable for the year ended 31st March, 2016, aggregating Rs.304.29 Lacs in excess of the limits specified in Section 197 read with Schedule V of the Companies Act, 2013, response to which is awaited.
14. In terms of Accounting Standard (AS) 17 on ''Segment Reporting'' notified in the Companies Act, segment information has been presented in the Consolidated Financial Statements(prepared pursuant to Accounting Standard (AS) 21 on ''Consolidated Financial Statements'' and Accounting Standard (AS) 27 on ''Financial Reporting of Interests in Joint Ventures'' notified in the Companies Act ) included in the Annual Report for the year.
15. (a) The Company has infused fresh equity of Rs.Nil (2014-15 Rs. 1700 lacs) and provided loans and advances [repayable on demand at the interest rate of 10.95 % p.a.(2014-15 - 14.25% p.a)] of Rs. 7.27 lacs (2014-15 - advances Rs.14.33 lacs) during the year in / to its subsidiary, Kolkata Metro Networks Limited for events business and financial assistance.
(b) The Company has invested in equity of Rs. 2.67 lacs ( 2014-15 Rs. 17.80 lacs ) and provided loans and advances [repayable on demand at the interest rate of 10.95 % p.a. (2014-15- 14.25% p.a.)] of Rs. 1201.38 lacs (2014-15 Rs.826.16 lacs) during the year in / to its subsidiary Open Media Network Private Limited for financial assistance.
16. Current Tax provision is net of Minimum Alternate Tax (MAT) credit Rs. 452.32 lacs (2014-15 Rs. 996.03 lacs) relating to earlier years based on income tax computation set out in accounting policy [ Note 1 (m) ] and Company''s Return of Income.
17. Previous year''s figures have been regrouped or rearranged, where considered necessary, to conform to current year''s classification.
Mar 31, 2015
1.1 In keeping with the Company''s gratuity scheme (a defined benefit
plan-funded), eligible employees are entitled to gratuity benefit (at
one half months eligible salary for each completed year of service) on
retirement / death / incapacitation / resignation etc. Also refer Note
1 (g) for accounting policy relating to gratuity. Following are the
further particulars with respect to gratuity.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
The expected rate of return on plan assets is based on the composition
of plan assets held, assessed risks of asset management, historical
results of the return on plan assets, the Company''s policy for plan
asset management and other relevant factors.
2.1 . As apart of restructuring activities undertaken by OMNPL during
the year 2013-14, advances aggregating Rs.3203.26 lacs have been
considered as contributions for investments in equity shares of
OMNPL.Upon conversion of advances into Investments, the provision for
doubtful advances was written back and provision for diminution in
value of investments was created to recognize decline,other than
temporary, in the carrying amount of company''s long term investments in
OMNPL''s Publication business.
During the year 2014-15, face value per share of OMNPL ofRs. 10/- each
has been reduced to Rs. 0.15/- per share. The above reduction has been
sanctioned by the Hon''ble Calcutta High Court on 3rd March, 2015.
Such reduction of share capital by OMNPL, has resulted in write
offofRs.4141.20 Lacs, being amount of investments in equity shares of
OMNPL. Accordingly, the carrying amount of provision for diminution in
value of investments in OMNPL of Rs.3204.26 Lacs has been written back.
Further, the Hon''ble High Court at Calcutta, has also approved
consolidation of equity shares of OMNPL ofRs. 0.15 each into equity share
of Rs.10/- each.
3. Capital commitments (net of advances of Rs.25.38 Lacs; 31.03.14 -
Rs.11.18 Lacs) as at 31 st March, 2015 are estimated at Rs. 45.68 Lacs
(31.03.14-Rs. 14.18 Lacs).
4. Contingent liabilities in respect of (Rs. in Lacs)
As at As at
31st March, 31st March,
2015 2014
(i) Guarantees given by Banks 1.50 1.50
(ii) Claims against the Company not
acknowledged as debts in respect of
-
- Copyright Matters 20.00 20.00
- Income Tax Matters 1,532.76 857.94
- Sales Tax/Value Added Tax /
Entry Tax Matters 588.37 593.00
- Excise Duty Matters 112.16 56.08
- Custom Duty Mutters 266.75 266.75
4.1 Rent expenditure includes lease payments ofTl 56.53 lacs (previous
year - Rs.161.03 Lacs) relating to operating leases taken on or after 1st
April 2001. These leasing arrangements range from less than an year to
ten years and are primarily in respect of accommodation for employees /
offio premises. The significant leasing arrangements inter alia include
escalation clause and option for renewal.
4.2 Rent income includes sub-lease payments of Rs.3.89 Lacs (previous
year - Rs. 52.38 Lacs) for the year relating to sub-lease agreements
entered inti by the Company on or after 1 st April, 2001. These lease
arrangements inter alia include escalation clause/option for renewal.
5. In terms of Accounting Standard (AS) 17 on ''Segment Reporting''
notified in the Companies Act, 1956, segment information has been
presented in the Consolidated Financial Statements(prepared pursuant to
Accounting Standard (AS) 21 on ''Consolidated Financial Statements'' and
Accounting Standard (AS) 27 on ''Financial Reporting of Interests in
Joint Ventures'' notified in the Companies Act, 1956) included in the
Annual Report for the year.
6. (a) The Company has infused fresh equity ofRs.1700 Lacs (2013-14 Rs.
Nil) and provided loans and advances [repayable on demand at the
interest rate of 14.25 % p.a.(2013-14 - Nil p.a)] ofRs. 14.33 Lacs
(2013-14 - advances Rs.10.63 Lacs) during the year in / to its wholly
owned subsidiary, Kolkata Metro Networks Limited for events business
and financial assistance.
(b) The Company has infused in equity ofRs. 17.80 Lacs [2013-14 Rs.4203.26
Lacs (including conversion of advance Rs. 3203.26 Lacs given till 27th
March, 2014)] and provided loans and advances [repayable on demand at
the interest rate of 14.25% p.a. (2013-14- Nil p.a.)] ofRs. 826.16 Lacs
(2013-14 Rs.758.66 Lacs) during the year in / to its subsidiary Open
Media Network Private Limited for financial assistance.
7. Current Tax provision is net of Minimum Alternate Tax (MAT) credit
Rs.996.03 Lacs (2013-14 Rs. 233.98 Lacs) relating to earlier years based on
income tax computation set out in accounting policy [ Note 1 (1) ] and
Company''s Return of Income.
8. Previous year''s figures have been regrouped or rearranged, where
considered necessary, to conform to current year''s classification.
Mar 31, 2014
1. Contingent liabilities in respect of - (Rs.in Lacs)
As at As at
31st March, 2014 31st March, 2013
(i) Guarantees given by Banks 1.50 1.50
(ii) Claims against the Company not
acknowledged as debts in respect of
- Copyright Matters 20.00 24.85
- Income Tax Matters 857.94 667.93
- Sales Tax /Value Added Tax /Entry
Tax Matters 593.00 635.82
- Excise Duty Matters 56.08 56.08
- Custom Duty Matters 266.75 266.75
2. Pending completion of the relevant formalities of transfer of
certain assets and liabilities acquired pursuant to the Scheme of
Amalgamation of RPG Music International Limited and Gramco Music
Publishing Limited with The Gramophone Company of India Limited (now
Saregama India Limited) in 1999-2000, such assets and liabilities
remain included in the books of the Company under the name of the
Transferor Companies.
2.1 The Company has adopted the intrinsic value method in keeping with
the applicable regulatory pronouncements for accounting the stock
options granted as referred to in Note 2.5, which has no impact on the
financial results of the Company. Had the fair value method been used
in keeping with the said pronouncements, net profit for the year would
have been lower by about Rs. 0.08 Lac (Previous Year Rs. 0.06 Lac), without
any significant impact on basic and diluted earning per share.
3.1 Rent expenditure includes lease payments of Rs.161.03 lacs (previous
year Rs. 162.59 Lacs) relating to operating leases taken on or after 1st
April, 2001. These leasing arrangements range from less than an year to
ten years and are primarily in respect of accommodation for employees /
office premises. The significant leasing arrangements inter alia
include escalation clause and option for renewal.
3.2 Rent income includes sub-lease payments of Rs.52.38 Lacs (previous
year Rs.112.28 Lacs) for the year relating to sub-lease agreements
entered into by the Company on or after 1 st April, 2001. These lease
arrangements inter alia include escalation clause/option for renewal.
3.3 As on 31 st March, 2014, Rs.NIL (previous year Rs.22.46 Lacs) is
expected to be received in respect of future minimum sublease payments
under non cancellable sub-lease.
3.4 The total of future minimum lease payments under non-cancellable
operating leases: i) not later than one year- Rs.NIL (previous year Rs.
20.18 Lacs)
ii) later than one year and not later than five years Rs.NIL (previous
year Rs.44.70 Lacs) iii) more than five years -Rs. NIL (previous year Rs.
NIL)
4. Related Party Disclosures in keeping with Accounting Standard (AS)
18 notified in the Companies Act, 1956
Name of Related Party A Where control exists
Current Year
Saregama Pic. (SPLC)
RPG Global Music Limited (RPGG)
Kolkata Metro Networks Ltd (KMNL)
Open Media Network Pvt. Ltd (OMNPL)
Saregama Regency Optimedia Private Ltd
(SROPL)
S. Mantha** (Managing Director) G B. Aayeer (Executive Director)
B Others
Previous Year
Saregama Pic. (SPLC) RPG Global Music Limited (RPGG) Kolkata Metro
Networks Ltd (KMNL) Open Media Network Pvt. Ltd (OMNPL)
Saregama Regency Optimedia Private Ltd (SROPL)
A. Nagpal* (Managing Director)
S. Mantha# (Managing Director)
G B. Aayeer@ (Executive Director)
Nature of Relationship
Subsidiary Company Subsidiary Company Subsidiary Company Subsidiary
Company Joint Venture Company
Key Management Personnel
Key Management Personnel
Key Management Personnel
5. In terms of Accounting Standard (AS) 17 on ''Segment Reporting''
notified in the Companies Act, 1956, segment information has been
presented in the Consolidated Financial Statements(prepared pursuant to
Accounting Standard (AS) 21 on ''Consolidated Financial Statements'' and
Accounting Standard (AS) 27 on ''Financial Reporting of Interests in
Joint Ventures'' notified in the Companies Act, 1956) included in the
Annual Report for the year.
6. Previous year''s figures have been regrouped or rearranged, where
considered necessary, to conform to current year''s classification.
Mar 31, 2013
1.1 Based on valuation reports of valuers, appointed for the purpose,
the tangible fixed assets (other than furniture and fittings, office
equipment, v ehicles and certain items of plant and equipment) were
revalued on 31st March, 1984 and again (except for those relating to
record making machinery items) on 30th September, 1987 after
considering the then (a) current market value/ derived rates
attributable to land (b) current replacement cost after depreciation
etc. and an amount of Rs.587.31 Lacs and Rs.628.19 Lacs were added to
the book value of the related assets (with co r responding credit to
Fixed Asset Revaluation Reserve) on 31 st March, 1984 and 30th
September, 1987 respectively.
1.2 Certain tangible fixed assets of the Company viz Land and
Buildings were revalued in June 2003 by registered valuers at the lower
of current replacement cost and realisable value. Resultant incremental
value amounting to Rs.2,374.11 Lacs were added to the book value of the
related assets with u t ilisation of the corresponding credit amount
pursuant to an approved scheme of arrangement.
1.3 Company''s laud was revalued on 31st March, 2007 by registered
valuers, at lower of current replacement cost and realisable value.
Resultant incremental va lue amounting to Rs.4,421.30 Lacs were added
to the book value of land with corresponding credit to Revaluation
Reserve of Rs.2,697.56 Lacs and utilisation of the balance amount of
Rs. 1,723.74 Lacs pursuant to a sanctioned scheme of amalgamation of
erstwhile Saregama Films limited with the Company in 2006-07.
1.4 In respect of tangi ble fixed asset covered by re valuation made
in the earlier years,depreciation has been calculated on their
respective amounts and includes additional charge of T 3.05 Lacs
(Rrevious year-Rs. 3.07 Lacs) which has been transferred from
Revaluation Reserve.
2.1 In keeping with the Company''s gratuity scheme (a defined benefit
plan-funded), eligible employees are entitled to gratuity benefit (at
one half months eligible salary for each completed year of service) on
retirement / death / incapacitation / resignation etc. Also refer Note
1 (f) for accounting policy relating to gratuity. Following are the
further particulars with respect to gratuity.
3 Capital commitments (net of advances ofRs.14.72 Lacs;
31.03.12-Rs.11.05 Lacs) as at 31st March, 2013 are estimated at Rs.
22.53 Lacs (31.03.12 -Rs.13.3 8 Lacs).
4 Pending completion of the relevant formalities of transfer of
certain assets and liabilities acquired pursuant to the Scheme of
Amalgamation of RPG Music International Limited and Gramco Music
Publishing Limited with The Gramophone Company of India Limited (now
Saregama India Limited) in 1999-2000, such assets and liabilities
remain included in the books of the Company under the name of the
Transferor Companies.
5.1 The Company has adopted the intrinsic value method in keeping with
the applicable regulatory pronouncements for accounting the stock
options granted as referred to in Notes 2.5, which has no impact on the
financial results of the Company. Had the fair value method been used
in keeping with the said pronouncements, net profit and earning per
share (basic and diluted) for the year would have been lower by about
Rs. 0.06 lac (Previous Year - net loss higher by Rs. 2.01 Lacs) and by
Re. Nil (Previous Year - loss per share higher by Re 0.01)
respectively.
6.1 Rent expenditure includes lease payments of Rs.162.59 Lacs
(previous year - Rs.150.85 Lacs) relating to operating leases taken on
or after 1 st April, 2001. These leasing arrangements range from less
than an year to ten years and are primarily in respect of accommodation
for employees / office premises. The significant leasing arrangements
inter alia include escalation clause and option for renewal.
6.2 Rent income includes sub-lease payments of Rs.112.28 Lacs
(previous year - Rs. 167.52 Lacs) for the year relating to sub-lease
agreements entered into by the Company on or after 1 st April, 2001.
These lease arrangements inter alia include escalation clause/option
for renewal.
6.3 As on 31 st March, 2013, Rs.22.46 Lacs (previous year - Rs. 67.39
Lacs) is expected to be received in respect of future minimum sub-lease
payments under non cancellable sub-lease.
6.4 The total of future minimum lease payments under non-cancellable
operating leases:
i) not later than one year- Rs.20.18 Lacs (previous year Rs. 28.98
Lacs)
ii) later than one year and not later than five years - Rs.44.70 Lacs
(previous year Rs. 64.88 Lacs)
iii) more than five years -Rs.NIL (previous year Rs. NIL)
7 In terms of Accounting Standard (AS) 17 on ''Segment Reporting''
notified in the Companies Act, 1956, segment information has been
presented in the Consolidated Financial Statements(prepared pursuant to
Accounting Standard (AS) 21 on ''Consolidated Financial Statements'' and
Accounting Standard (AS) 27 on ''Financial Reporting of Interests in
Joint Ventures'' notified in the Companies Act, 1956) included in the
Annual Report for the year.
8 Previous year''s figures have been regrouped or rearranged, where
considered necessary,to conform to current year''s classification.
Mar 31, 2012
1.1 Out of 53,38,628 equity shares issued for cash at a premium of
Rs.35/- (issue price- Rs.45/-) pursuant to the Rights Issue in
2005,allotment of 5,290 (31.03.2011- 5,290) equity shares (relating to
cases under litigation/pending clearance from the concerned
authorities) are kept in abeyance as on 31st March, 2012.
1.2 Terms/Rights attached to Equity Shares
The Company has only one class of equity shares having a par value of
Rs.10 per share. Each Shareholder is eligible for one vote per share
held. The dividend proposed by the Board of Directors is subject to
the approval of shareholders in the ensuing Annual General Meeting
except in case of interim dividend.
In the event of liquidation of the Company, the holder of equity shares
are eligible to receive remaining assets of the Company, in proportion
to their shareholding.
1.3 Stock Option Schemes
(i) 2001-02 Employee Stock Option Scheme
The Company has granted stock options in 2001-02 under the Employees
Stock Option Scheme All the options have already vested in earlier
years. No vested options have been exercised during the year. Pending
completion of related regulatory formalities, the 9282 (previous year
9282) exercised options are yet to be allotted by the Company.
Exercise Price per option is Rs. 119.-85. Exercise period is 10 years
from the vesting date. Exercise of options by the option holders shall
entail issuance of equity shares by the Company on
compliance/completion of related formalities on the basis of 1:1
(ii) 2006-07 Employee Stock Option Scheme
The Company has granted (net of options lapsed) Nil (31.03.2011-26,000
) stock options in 2006-07 under Employee Stock Option Scheme, to
eligible employees / the then Managing Director at an exercise price
ofRs. 184.85 per option, as determined by the Board of Directors, in
keeping with the requirements of Securities and Exchange Board of India
( Employee Stock Option Scheme and Employee Stock Option Purchase
Scheme) Guidelines, 1999.
Vesting schedule linked to performances of the said options granted is
as below
- after 1 year from the date of grant: 20 % of the options
- after 2 years from the date of grant: 20% of the options*
- after 3 years from the date of grant: 20 % of the options *
- after 4 years from the date of grant: 20% of the options*
- after 5 years from the date of grant: 20 % of the options *
Exercise period is 10 years from the vesting date. Exercise of options
by the option holders shall entail issuance of equity shares by the
Company on compliance/completion of related formalities on the basis of
1:1. No option has been exercised during the year.
* Based on the decision of the Compensation Committee, options have not
vested in 2008-09,2009-10,2010-11 and 2011 -12.
(iii) 2008-09 Employee Stock Option Scheme
The Company has granted 25,000 stock options in 2008-09 under Employee
Stock Option Scheme to Managing Director (Mr. A. Nagpal)@. The exercise
price per option is Rs.56.20 as determined by the Board of Directors, in
keeping with the requirements of Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999. Of the aforesaid 25,000 options 7,500 options are not
linked to performance and the balance are linked to performance.
Vesting schedule of the said options granted is as below :-
- after 1 year from the date of grant: 20 % of the options *
- after 2 years from the date of grant: 20 % of the options *
- after 3 years from the date of grant: 20 % of the options *
- after 4 years from the date of grant: 20 % of the options
- after 5 years from the date of grant: 20 % of the options
Exercise period is 10 years from the vesting date. Exercise of options
by the option holder shall entail issuance of equity shares by the
Company on compliance/completion of related formalities on the basis of
1:1. 4500 (previous year-3000) options not linked to performance have
vested. No option has been exercised during the year/till date.
* Based on the decision of the Compensation Committee, options linked
to performance have not vested in 2009-10, 2010-11 and 2011-12.
@ Mr. ANagpal resigned with effect from 9th April,2012.
(iv) 2010-11 Employee Stock Option Scheme
The Company has granted 12,000 stock options in 20 V 0-11 under
Employee Stock Option Scheme to eligible employees under Employee Stock
Option Scheme. The exercise price per option is Rs. 100.80 as determined
by the Board of Directors, in keeping with the requirements of
Securities and Exchange Board of India {Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999. Vesting schedule
of the said options granted is as below :-
- after 1 year from the date of grant: 20 % of the options *
- after 2 years from the date of grant: 20 % of the options
- after 3 years from the date of grant: 20 % of the options
- after 4 years from the date of grant: 20 % of the options
- after 5 years from the date of grant: 20 % of the options ,
Exercise period is 10 years from the vesting date. Exercise of options
by the option holders shall entail issuance of equity shares by the
Company on compliance/completion of related formalities on the basis of
1:1.
* Based on the decision of the Compensation Committee, options linked
to performance have not vested in 2011-12,which will be considered
along with the next trance of vesting in 2012-13.
2.1 Term Loan:-
Nature of Security
Long-term loan from IDBI Bank Limited is secured by revenue from
Phonographic Performance Limited (by way of escrow account), demand
promissory note and first charge created on three properties in Mumbai
and one property in Kolkata in terms of the related agreement.
Terms of Repayment
Term loan availed from IDBI Bank Limited Rs. 2100 lacs is repayable in 9
equal quarterly installments ofRs. 208.33 lacs and final installment of Rs.
225.03 lacs, commencing from 1st October,2010 along with interest at 50
basis point below the Bank Prime Lending Rate per annum compounded
monthly with an option of annual reset. Year end balance is Rs. 850
Lacs(previous year- Rs. 1683.33 Lacs)
2.2 Term Loans for Vehicle
Nature of Security
Vehicle Loans from Bank/Non Banking Financial Company are secured by
hypothecation of the Vehicles financed.
Terms of Repayment
Vehicle Loans are repayable in 36 equated monthly installments from the
date of respective loans with interest rate ranging between 9.5% and
10.45%.
3.1 Cash Credit from Banks bearing interest rate between 13.5% to 15.6%
per annum are secured by first charge of entire stocks of taw
materials, stock in process, finished goods, receivables/book debts and
other current assets of the Company ranking pari passu with other
consortium banks.
4.1 Income received in advance represents advance from sub-leases
adjustable over the sub-lease period
4.2 There are no amount due and out standing to be credited to Investor
Education and Protection Fund under section 205C of the Companies
Act,1956 as at yearend.
5.1 Based on valuation reports of valuers, appointed for the purpose,
the tangible fixed assets (other than furniture and fittings, Office
equipment, vehicles and certain items of plant and machinery) were
revalued on 31st March, 1984 and again (except for those relating to
record making machinery items) on 30th September, 1987 after
considering the then (a) current market value/ derived rates
attributable to land (b) current replacement cost after depreciation
etc. and an amount of Rs.587.31 lacs and Rs.628.19 lacs were added to the
book value of the related assets (with corresponding credit to Fixed
Asset Revaluation Reserve) on 31st March, 1984 and 30th September,
1987 respectively.
5.2 Certain tangible fixed assets of the Company viz Land and
Buildings were revalued in June 2003 by registered valuers at the lower
of current replacement cost and realizable value. Resultant incremental
value amounting to Rs.2374.11 lacs were added to the book value of the
related assets with utilization of the corresponding credit amount
pursuant to an approved scheme of arrangement.
5.3 Company's land was revalued on 31st March, 2007 by registered
valuers, at lower of current replacement cost and realizable value.
Resultant incremental value amounting to Rs.4421.30 lacs were added to
the book value of land with corresponding credit to Revaluation Reserve
of Rs.2697.56 lacs and utilization of the balance amount of Rs.1723.74 lacs
pursuant to a sanctioned scheme of amalgamation of erstwhile Saregama
Films Limited with the Company in 2006-07.
5.4 In respect of tangible fixed asset covered by revaluation made in
the earlier years, depreciation has been calculated on their respective
amounts 'and includes additional charge ofRs. 3.07 lacs (Previous year-Rs.
5.25 lacs) which has been transferred from Revaluation Reserve.
6.1 In keeping with the Company's gratuity schcme (a defined benefit
plan-funded), eligible employees are entitled to gratuity benefit (at
one half months eligible salary for each completed year of service) on
retirement / death/incapacitation / resignation etc. Also refer Note 1
(f) for accounting policy relating to gratuity. Following are the
further particulars with respect to gratuity.
7.1 Capital commitments (net of advances of Rs.l 1.05 Lacs; 31.03.11 -
Rs.10.38 Lacs) as at 31st March, 2012 are estimated at Rs. 13.38 Lacs
(31.03.11 - Rs.17.83 Lacs).
7.2 The Company has decided to continue providing financial support to
one of its wholly-owned subsidiaries, if required.
8 Contingent liabilities in respect of -
(a) Any unpaid amount out of specified liabilities of the Company
amounting to 749.06 Lacs (31.03.11 - Rs. 1749.06 Lacs) against certain
receivables of Rs.1704.06 Lacs (31.03.11 - Rs.1704.06 Lacs) of the Company
taken over by the assignee in 2006-07 has to be discharged by the
Company.
9 Pending completion of the relevant formalities of transfer of
certain assets and liabilities acquired pursuant to the Scheme of
Amalgamation of RPG Music International Limited and Gram co Music
Publishing Limited with The Gramophone Company of India Limited (now
Saregama India Limited) in 1999-2000, such assets and liabilities
remain included in the books of the Company under the name of the
Transferor Companies.
10.1 The Company has adopted the intrinsic value method in keeping with
the applicable regulatory pronouncements for accounting the stock
options granted as referred to in Notes 2.5(ii) to 2.5(iv), which has
no impact on the financial results of the Company. Had the fair value
method been used in keeping with the said pronouncements, net loss and
loss per share (basic and diluted) for the year would have been higher
by about Rs.2.01 Lacs (Previous Year-net profit lower byRs. 13.75
Lacs)andbyRe.0.01 (Previous Year-earnings per share lower by Re 0.08)
respectively.
11.1 Rent expenditure includes lease payments of Rs.150.85 Lacs (previous
year - Rs. 183.96 Lacs) relating to operating leases taken on or after
1st April, 2001. These leasing arrangements range from less than an
year to ten years and are primarily in respect of accommodation for
employees / office premises. The significant leasing arrangements inter
alia include escalation clause and option for renewal.
11.2 Rent income includes sub-lease payments of Rs.167.52 Lacs (previous
year - Rs. 114.34 Lacs) for the year relating to sub-lease agreements
entered into by the Company on or after 1st April, 2001. These lease
arrangements inter alia include escalation clause/option for renewal.
11.3 As on 31st March, 2012, Rs.67.39 Lacs (previous year-Rs. 112.32 Lacs)
is expected to be received in respect of future minimum sub-lease
payments under non cancellable sub-lease.
11.4 The total of future minimum lease payments under non-cancellable
operating leases:
i) not later than one year- Rs.28.98 Lacs (previous year Rs. 17.94 Lacs)
ii) later than one year and not later than five years - Rs.64.88 Lacs
(previous year Rs. 79.38 Lacs)
iii) more than five years -Rs. NIL (previous year Rs. 3.44 Lacs)
12 Remuneration to Managing Director Mr.A.Nagpal include:- Rs. 52.81 Lacs
pertaining to increase in salary with effect from 1st July 2011 as
approved by the Compensation Committee of Directors in its meeting held
on 27th October 2011,subject to the approval of shareholders in the
forthcoming Annual General Meeting.
13 In terms of Accounting Standard (AS) 17 on 'Segment Reporting'
notified in the Companies Act, 1956, segment information has been
presented in the Consolidated Financial Statements(prepared pursuant to
Accounting Standard (AS) 21 on 'Consolidated Financial Statements' and
Accounting Standard (AS) 27 on 'Financial Reporting of Interests in
Joint Ventures' notified in the Companies Act, 1956) included in the
Annual Report for the year.
14 The financial statements for the year ended March 31, 2011 had been
prepared as per the then applicable, pre-revised Schedule VI to the
Companies Act, 1956. Consequent to the notification of Revised Schedule
VI under the Companies Act, 1956, the financial statements for the year
ended March 31,2012 are prepared as per Revised Schedule VI.
Accordingly, the previous year figures have also been reclassified to
conform to this year's classification. The adoption of Revised Schedule
VI for previous year figures does not impact recognition and
measurement principles followed for preparation of financial
statements.
Mar 31, 2011
Nature of Security
Term Loan from Scheduled bank is secured by revenue from Phonographic
Performance Limited (by way of escrow account), demand promissory note
and first charge created on three properties in Mumbai and one property
in Kolkata in terms of the related agreement.
Bank borrowings for working capital are secured by first charge of
entire stocks of raw materials, stock in process, finished goods,
receivables/book debts and other current assets of the Company ranking
pari passu with other consortium banks.
Vehicle loans from Banks/Non Banking Financial Company are secured by
hypothecation of the vehicles financed.
2 Other Liabilities (Schedule XII) include -
a) Rs. 9,853 thousands (31.03.10 - Rs.13,074 thousands) being advance from
sub-lessees adjustable over the sub-lease period.
b) Rs. 2,500 thousands (31.03.10 - Rs. 2,500 thousands) being advance from
a party against proposed sale of certain fixed assets.
3 Capital commitments (net of advances of Rs. 1,408 thousands; 31.03.10 -
Rs. 975 thousands) as at 31st March, 2011 are estimated at Rs. 1,783
thousands (31.03.10 - Rs. 675 thousands).
4 Contingent liabilities in respect of -
(a) Any unpaid amount out of specified liabilities of the Company
amounting to Rs. 1,74,906 thousands (31.03.10 - Rs. 1,74,906 thousands)
against certain receivables of Rs. 1,70,406 thousands (31.03.10 - Rs.
1,70,406 thousands) of the Company taken over by the assignee in
2006-07 has to be discharged by the Company.
(b) (Rs. in Thousands)
As at As at
31st March, 2011 31st March, 2010
(i) Guarantees given by Banks 5,150 150
(ii) Claims against the Company
not acknowledged as debts in respect of
-
à Copyright matters à 7,500
à Income Tax matters 43,256 20,100
à Sales tax/value added tax/entry
tax matters 70,165 68,527
à Excise duty matters 5,608 5,608
à Customs duty matters 26,675 26,675
Interest at appropriate rate relating to excise duty matter, which is
not readily ascertainable. (c) The Company has decided to continue
providing financial support to one of its wholly-owned subsidiaries, if
required.
5 (a) Based on valuation reports of valuers, appointed for the purpose,
the fixed assets (other than furniture, fittings and equipment,
vehicles and certain items of plant and machinery) were revalued on
31st March, 1984 and again (except for those relating to record making
machinery items) on 30th September, 1987 after considering the then (a)
current market value/ derived rates attributable to land (b) current
replacement cost after depreciation etc. and Rs. 58,731 thousands and Rs.
62,819 thousands were added to the book value of the related assets
(with corresponding credit to Fixed Asset Revaluation Reserve) on 31st
March, 1984 and 30th September, 1987 respectively.
(b) Certain assets of the Company viz Land and Buildings were revalued
in June 2003 by registered valuers at the lower of current replacement
cost and realisable value. Resultant incremental value amounting to Rs.
237,411 thousands were added to the book value of the related assets
with utilisation of the corresponding credit amount pursuant to an
approved scheme of arrangement.
(c) Companys land was revalued on 31st March, 2007 by registered
valuers, at lower of current replacement cost and realisable value.
Resultant incremental value amounting to Rs. 442,130 thousands were added
to the book value of land with corresponding credit to Revaluation
Reserve of Rs. 269,756 thousands and utilisation of the balance amount of
Rs. 172,374 thousands pursuant to a sanctioned scheme of amalgamation of
erstwhile Saregama Films Limited with the Company in 2006-07.
(d) In respect of fixed asset covered by revaluation made in the
earlier years, depreciation has been calculated on their respective
amounts and includes additional charge of Rs. 525 thousands (previous
year - Rs. 596 thousands) which has been transferred from Revaluation
Reserve.
6 Total consumption of stores and spares during the year amounted to Rs.
2,360 thousands (previous year - Rs. 842 thousands).
7 (b) Managing Directors remuneration [Note 8(a) above] include Rs. 864
thousands for which Shareholders approval is pending.
8 (c) The Company has granted 25,000 stock options to the Managing
Director (Mr. Apurv Nagpal) in 2008-09 under Employee Stock
Option Scheme, of which 1500 options have been vested in 2009-10 and
1500 options have been vested in 2010-11. No options have been
excercised by the said Managing Director.
9 Pending completion of the relevant formalities of transfer of certain
assets and liabilities acquired pursuant to the Scheme of Amalgamation
of RPG Music International Limited and Gramco Music Publishing Limited
with The Gramophone Company of India Limited (now Saregama India
Limited) in 1999-2000, such assets and liabilities remain included in
the books of the Company under the name of the Transferor Companies.
10 Expenses (Schedule XVII) include reimbursements.
11 (b) In keeping with the Companys leave benefit scheme (a defined
benefit plan - unfunded), eligible employees are entitled to leave
benefit (at 90 days eligible salary for management employees and 100
days eligible salary for non management employees after completion of
one year of continuous service) on retirement / death / incapacitation
/ resignation. Also refer Note 1 (f) for accounting policy relating to
leave benefit. Following are the further particulars with respect to
leave benefit.
12 Value of Imports on C.I.F. basis :
There have been no imports of raw materials, spares and capital goods
in the current year and in the previous year.
13 (a) Rent expenditure includes lease payments of Rs. 18,396 thousands
(previous year - Rs. 24,136 thousands) relating to operating
leases taken on or after 1st April ,2001. These leasing arrangements
range from less than a year to ten years and are primarily in respect
of accommodation for employees / office premises. The significant
leasing arrangements inter alia include escalation clause and option
for renewal.
(b) Rent income includes sub-lease payments of Rs. 11,434 thousands
(previous year - Rs. 11,276 thousands) for the year relating to sub-lease
agreements entered into by the Company on or after 1st April, 2001.
These lease arrangements inter alia include escalation clause/option
for renewal.
(c) As on 31st March, 2011, Rs. 11,232 thousands (previous year - Rs.
15,725 thousands) is expected to be received in respect of future
minimum sublease payments under non cancellable sublease.
(d) The total of future minimum lease payments under non-cancellable
operating leases: i) not later than one year- Rs. 1,794 thousands (
previous year Rs. 5,831 thousands)
ii) later than one year and not later than five years - Rs. 7,938
thousands ( previous year Rs. 9,021 thousands) iii) more than five years
-Rs. 344 thousands(previous year Rs. 2,407 thousands)
14 Related Party Disclosures in keeping with Accounting Standard (AS)
18 notified in the Companies Act, 1956
15 (a) The Company is engaged in the production/making of serials
(media software) / films, which requires various types, qualities and
quantities of raw materials and inputs in different denominations.Due
to the multiplicity and complexity of items,it is not practicable to
maintain the quantitative records/continuous stock register, as the
process of making programme software/film is not amenable to it.Hence
quantitative details are not maintained by the Company as is the
practice generally followed by companies in the industry.
16 Current tax represents provision made under Minimum Alternate Tax in
terms of Section 115 JB of the Income Tax Act, 1961.
17 Previous years figures have been regrouped or rearranged, where
considered necessary.
Mar 31, 2010
Nature of Security
Term Loan from Scheduled bank is secured by revenue from Phonographic
Performance Limited (by way of escrow account), demand promissory note
and first charge created on three properties in Mumbai and one property
in Kolkata in terms of the related agreement.
Bank borrowings for working capital are secured by first charge of
entire stocks of raw materials, stock in process, finished goods,
receivable / book debts and other current assets of the Company ranking
pari passu with other consortium banks.
Vehicle loans from Banks/Non Banking Financial Company are secured by
hypothecation of the vehicles financed.
1 Other Liabilities (Schedule XII) include -
a) Rs. 13,074 thousands ( 31.03.09 - Rs. 16,374 thousands ) being
advance from sub-lessees adjustable over the sub-lease period.
b) Rs. 2,500 thousands ( 31.03.09 - Rs. 2,500 thousands ) being advance
from a party against proposed sale of fixed assets.
2 Capital commitments (net of advances of Rs. 975 thousands; 31.03.09 -
Rs.1,100 thousands) towards outright acquisition of copyrights and
software as at 31st March, 2010 is Rs. 500 thousands (31.03.09 -
Rs.3,200 thousands) and Rs. 175 thousands (31.03.09 - Rs. Nil)
respectively.
3 Provision for Current Tax includes Rs. 18,613 thousands (Previous
year - Rs. Nil) in respect of earlier years consequent to amendment in
Section 115JB of Income Tax Act, 1961 with retrospective effect vide
Finance (No.2) Act, 2009.
4 Contingent liabilities in respect of -
(a) Any unpaid amount out of specified liabilities of the Company
amounting to Rs. 1,74,906 thousands (31.03.09 - Rs. 1,74,906 thousands
) against certain receivables of Rs. 1,70,406 thousands (31.03.09 - Rs.
1,70,406 thousands) of the Company taken over by the assignee in
2006-07 has to be discharged by the Company.
(b) (Rupees in Thousands)
31st March, 31st March
2010 2009
(i) Guarantees given by Banks 150 650
(ii) Claims against the Company not
acknowledged as debts in respects in
respects of-
- Copyright matters 7,500 -
- Income Tax matters 20,100 23,500
- Sales tax/value added tax/entry tax
matters 68,527 55,903
- Excise duty matters 5,608 5,608
- Customs duty matters 26,675 26,675
Inyerest at appropriate rate relating to excise duty matters. which is not
readily ascertainable.
Notes to the Accounts
5 (a) Based on valuation reports of valuers, appointed for the purpose,
the fixed assets (other than furniture, fittings and equipment,
vehicles and certain items of plant and machinery) were revalued on
31st March, 1984 and again (except for those relating to record making
machinery items) on 30th September, 1987 after considering the then (a)
current market value/ derived rates attributable to land (b) current
replacement cost after depreciation etc. and Rs. 58,731 thousands and
Rs. 62,819 thousands were added to the book value of the related assets
(with corresponding credit to Fixed Asset Revaluation Reserve) on 31st
March, 1984 and 30th September, 1987 respectively.
(b) Certain assets of the Company viz Land and Buildings were revalued
in June 2003 by registered valuers at the lower of current replacement
cost and realisable value. Resultant incremental value amounting to Rs
237,411 thousands were added to the book value of the related assets
with utilisation of the corresponding credit amount pursuant to an
approved scheme of arrangement.
(c) Companys land was revalued on 31st March,2007 by registered
valuers, at lower of current replacement cost and realisable value.
Resultant incremental value amounting to Rs 442,130 thousands were
added to the book value of land with corresponding credit to
Revaluation Reserve of Rs 269,756 thousands and utilisation of the
balance amount of Rs 172,374 thousands pursuant to a sanctioned scheme
of amalgamation of erstwhile Saregama Films Limited with the Company in
2006-07.
(d) Depreciation for the year ended 31st March, 2009 on items of
depreciable fixed assets revalued has been calculated on the respective
revalued amounts at the rates applicable based on useful balance life
of the assets. Depreciation so calculated include an additional charge
of Rs.1,844 thousands(previous year - Rs. 1,856 thousands) over that
calculated on original cost at rates prescribed under Schedule XIV of
the Companies Act, 1956 as amended during 1993-1994 and an amount of
Rs.596 thousands (previous year - Rs. 608 thousands) being the related
available balance in Revaluation Reserve in respect of the aforesaid
revaluation has been transferred to Profit and Loss Account from
Revaluation Reserve.
6 Total consumption of stores and spares during the year amounted to
Rs. 842 thousands (previous year - Rs. 770 thousands).
The Company has granted 25,000 stock options to the Managing Director
(Mr. Apurv Nagpal) in 2008-09 under Employee Stock Option Scheme, of
which 1,500 options have vested in 2009-10. No option has been
exercised by the said Managing Director.
7 (b) Managing Directorsà remuneration [Note 9(a) above] include Rs.
11,917 thousands (previous year - Rs. 2,549 thousands) is subject to
the approval of Central Government.
8 Pending completion of the relevant formalities of transfer of
certain assets and liabilities acquired pursuant to the Scheme of
Amalgamation of RPG Music International Limited and Gramco Music
Publishing Limited with The Gramophone Company of India Limited (now
Saregama India Limited) in 1999-2000, such assets and liabilities
remain included in the books of the Company under the name of the
Transferor Companies.
On a prudent basis Deferred Tax on unabsorbed depreciation, business /
capital loss and others have not been recognised in these accounts.
9 Expenses (Schedule XVII) include reimbursements.
10 In keeping with the Companys gratuity scheme (a defined benefit
plan), eligible employees are entitled to gratuity benefit (at one half
months eligible salary for each completed year of service) on
retirement / death / incapacitation / resignation. Also refer Note 1
(f) for accounting policy relating to gratuity. Following are the
further particulars with respect to gratuity :-
11 (a) The Company has adopted the Intrinsic value method in keeping
with the applicable regulatory pronouncements for accounting the stock
options granted as referred to in Notes 4 and 5 on Schedule 1, which
has no impact on the financial results of the Company. Had the fair
value method been used in keeping with the said pronouncements, net
result and earnings per share (basic and diluted) for the year would
have been higher by about Rs. 250 thousands (Previous Year - Rs. 289
thousands) and Re.0.02 (Previous Year - Re. 0.02) respectively.
12 (a) Rent expenditure includes lease payments of Rs. 24,136 thousands
(previous year - Rs. 30,555 thousands) relating to operating leases
taken on or after 1st April, 2001. These leasing arrangements range
from less than an year to ten years and are primarily in respect of
accommodation for employees / office premises. The significant leasing
arrangements inter alia include escalation clause and option for
renewal.
(b) Rent income includes sub-lease payments of Rs. 11,276 thousands
(previous year - Rs. 10,649 thousands) for the year relating to
sub-lease agreements entered into by the Company on or after 1st April,
2001. These lease arrangements inter alia include escalation
clause/option for renewal.
(c) As on 31st March, 2010, Rs. 15,725 thousands (previous year - Rs.
20,218 thousands) is expected to be received in respect of future
minimum sublease payments under non cancellable sublease.
(d) The total of future minimum lease payments under non-cancellable
operating leases:
i) Not later than one year- Rs. 5,831 thousands (previous year
Rs. 3,955 thousands)
ii) later than one year and not later than five years - Rs. 9,021
thousands (previous year Rs. 11,029 thousands)
iii) more than five years -Rs.2,407 thousands (previous year
Rs. 4,470 thousands)
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