Accounting Policies of Silly Monks Entertainment Ltd. Company

Mar 31, 2025

1. Corporate information

Silly Monks Entertainment Limited (“the Company”), was incorporated September 20, 2013, in accordance with the provisions of the Companies Act, 1956 (“the Act”). With effect from May 24, 2017 the company was converted from a Private Limited Company to a Public Limited Company and consequently, the name of the company changed from Silly Monks Entertainment Private Limited to Silly Monks Entertainment Limited.

The registered office of the Company is Survey No. 91, 3rd Floor, Technical Block, Sundarayya Vignana Kendram (SVK), Gachibowli, Hyderabad, Rangareddi, Telangana - 500032. The Company is primarily engaged in the business of motion picture, radio, television and other entertainment activities.

2. Material accounting policies

2.1 Statement of Compliance

The financial statements of the company have been prepared to comply with the Indian Accounting Standards (‘Ind AS’), notified under the relevant provisions of the Companies Act, 2013 (the Act).

2.2 Basis of accounting and preparation of financial statements

The financial statements have been prepared on the historical cost basis except for certain financial assets and liabilities which have been measured at fair value.

Company’s financial statements are presented in Indian Rupees (?), which is its functional currency.

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle (twelve months) and other criteria set out in the Schedule III to the Act.

2.3 Use of estimates

The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.

2.4 Summary of Material Accounting Policies

(a) Property, Plant & Equipment

Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow the entity and the cost can be measured reliably.

Cost incurred on Property, Plant and Equipment not ready for their intended use is disclosed as Capital Work-in-Progress. Advances paid towards the acquisition of Property, Plant and Equipment outstanding at each

balance sheet date are classified as capital advances under other non-current assets. Unpaid amounts towards acquisition of Property, Plant and Equipment outstanding at each balance sheet date are classified under other current financial liabilities if due within one year from the date of these financial statements and under other non-current financial liabilities if due after a year from the date of these financial statements.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if deemed appropriate.

Gains or losses arising from derecognition of a property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.

(b) Intangible assets

Intangible Assets are stated at cost of acquisition net of recoverable taxes, trade discount and rebate less accumulated amortisation/ depletion and impairment loss, if any. Such cost includes purchase price development costs, borrowing costs and any cost directly attributable to bringing the asset to its working condition for the intended use and net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the items will flow to the Company and cost and cost can be measured reliably.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.

(c) Depreciation and amortisation

Depreciation on property, plant and equipment is provided using straight-line basis using the rates arrived at based on the useful lives estimated by the management, or those prescribed under Part C of Schedule II of the Companies Act, 2013.

Depreciation for property, plant and equipment purchased/sold during a period is proportionately charged. Fixed Assets individually costing ? 5,000/- or less are fully depreciated in the year of acquisition. The Company has estimated the useful lives for the fixed assets as follows:

Asset	Useful life (in years)
Computers	3
Furniture and fixtures	10
Office equipment	5
Vehicles	10

* In case of office equipment, useful life is estimated to approximate their expected wear & tear, which is higher than the one prescribed under Part C of Schedule II.

(d) Borrowing Costs

Borrowing Cost includes interest expense calculated using the effective interest method under Ind AS 109 and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective asset.

All other borrowing costs are charged to the Statement of Profit and Loss in the period in which they are incurred.

(e) Impairment of non-financial assets - property, plant and equipment, investment property and intangible assets

The Company assesses at each reporting dates as to whether there is any indication that any property, plant and equipment and intangible assets may be impaired. If any such indication exists, the recoverable amount of an asset is estimated to determine the extent of impairment, if any.

If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than it’s carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is recognized in the Statement of the Profit and Loss to the extent, asset’s carrying amount exceeds its recoverable amount.

The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

(f) Investments Investments are carried at cost.

(g) Inventories

The media content (copyrights) is stated at lower of cost/carrying cost or net realisable value. The Company evaluates the net realisable value and/or revenue potential of inventory based on management estimate of market conditions and future demand and appropriate impairment is made in cases where accelerated impairment is warranted.

The copyrights are valued at a percentage of cost based on the nature of rights, as estimated by the Management. The Company evaluates the net realisable value and/or revenue potential of inventory based on management estimate of market conditions and future demand and appropriate write down is made in cases where accelerated write down is warranted.

Inventories of Raw material Stock are valued at cost or estimated net realizable value whichever is lower. Projects in progress and movies under production are stated at cost. Cost comprises the cost of materials, the cost of services, labour and other expenses, to the extent they are incurred for creating an asset.

Inventories of physical media which consists of DVDs, Blu-ray, Physical Equipment & Merchandising are valued on FIFO basis.

The borrowing costs directly attributable to a movie is capitalised as part of the cost.

(h) Trade receivables

Trade receivable represents the Company’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due or payments are already due but yet to be realized).

(i) Cash and cash equivalents

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

(j) Cash Flow Statement

Cash flows from operating activities are stated using the indirect method, whereby profit/(loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated in a manner which is most appropriate to the business.

(k) Financial Assets

A. Initial recognition and measurement:

All financial assets are initially recognised at fair value. Transaction costs that are directly attributable to the acquisition of financial assets, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition. Purchase and sale of financial assets are recognised using trade date accounting.

B. Subsequent measurement:

(a) Financial assets carried at amortised cost

A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(b) Financial assets at fair value through other comprehensive income (FVTOCI)

A financial asset is measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(c) Financial assets carried at fair value through profit or loss (FVTPL)

A financial asset which is not classified in the above categories are fair valued through profit or loss.

C. Investment in subsidiaries, associates and joint ventures:

The Company has accounted for its investments in subsidiaries, associates and joint venture at cost.

D. Impairment of Financial assets:

In accordance with Ind AS 109, the Company uses ‘Expected Credit Loss’ (ECL) model, for evaluating impairment assessment of financial assets other than those measured at fair value through profit and loss (FVTPL).

The Company measures the expected credit loss associated with its assets based on historical trend, industry practices and the business environment in which the entity operates or any other appropriate basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk. As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. Every year, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed l) Financial Liabilities A. Initial recognition and measurements:

All financial liabilities are recognized initially at fair value and in case of loans net of directly attributable cost. Fees of recurring nature are directly recognised in profit or loss as finance cost.

B. Subsequent measurement:

Financial liabilities are carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

(m) Leases

The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset; (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease; and (iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that the option to extend will be exercised and the option to terminate will not be exercised.

The right-of use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e., the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cashflows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs to the lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment of whether it will exercise an extension or a termination option. Lease liability and ROU Asset are separately presented in the Balance Sheet and lease payments are classified as financing cash flows.

(n) Employee Benefits

Short Term Employee Benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services.

Long Term Employee Benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the Balance Sheet date on the basis of actuarial valuation.

Post-employment Benefits Defined Contribution Plans

A Defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions towards Provident Fund and Pension Scheme. The Company’s contribution is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.

Defined Benefit Plans: -Gratuity

The liability in respect of gratuity and other postemployment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employee ’ s services.

Re-measurement of Defined benefit plans in respect of post-employment and other long-term benefits are charged to the Other Comprehensive Income.

(o) Tax Expenses

The tax expense for the period comprises current and deferred tax. Tax is recognised in Statement of Profit and Loss, except to the extent that it relates to items recognised in the comprehensive income or in equity. Current Tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the Balance Sheet date.

Deferred Tax

Deferred Tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are recognised for all taxable temporary differences except to the extent they arise from the initial recognition of goodwill or from initial recognition of an asset or liability in a transaction which is not a business combination & at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).

Deferred income tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax assets to be utilised.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.

(p) Foreign currencies transactions and translation

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Exchange differences arising on settlement or translation of monetary item are recognised in Statement of Profit and Loss.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.

(q) Revenue recognition

Revenue is recognised to the extent that it is probable that economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the transaction value.

1. Sale of Content, Content Production, Film Distribution and Syndication - Revenue is recognised, when the Company satisfies the performance obligation by transferring the control over the item in accordance with the agreed terms.

Contract assets - Unbilled Revenue

A contract asset is the right to consideration in exchange for services transferred to the customer. If the Company transfers services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled revenues (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.

2. Broadcasting revenue - Advertisement revenue (net of discount and volume rebates) is recognised when the related advertisement or commercial appears before the public i.e. on telecast. Subscription revenue (net of share to broadcaster) is recognised on time basis on the provision of television / digital broadcasting service to subscribers.

3. Sale of goods

Revenue from sale of goods (ACDs/VCDs/ DVDs/ACS/BRDs) is recognised when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of goods measured at the transaction value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates and excluding taxes or duties collected on behalf of the government.

4. Subscription Revenue

A contract liability is the obligation to transfer services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers services to the customer, a contract liability is recognised when the payment is made, or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company satisfies its performance obligation under the contract. Unearned and deferred revenue is recognised when there are billings in excess of revenues

(r) Other income

(i) Interest Income

Interest Income from a financial asset is recognised based on Effective Interest Rate (EIR). Interest Income is included under the head "other income" in the statement of profit and loss.

(ii) Dividend Income

Dividend income is recognised when the Group''s right to receive the payment has been established, it is probable that the economic benefits associated with the dividend will flow to the company & the amount of dividend can be measured reliably.

(iii) Rent Income

Rent Income is recognised on accrual basis as per the agreed terms on straight line basis.

(s) Earnings per share

Basic earnings per share is computed by dividing the profit/(loss) attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For calculating diluted earnings per share, the profit or (loss) for the period attributable to equity shareholders and the weighted average number of shares outstanding are adjusted for the effects of all dilutive potential equity shares.

(t) Provisions, contingent liabilities & contingent assets

Provisions are recognised when the Company has a present obligation as a result of a past events; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a financial cost.

Contingent liabilities are disclosed unless the possibility of outflow of resources is remote. Provisions and contingent liabilities are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Contingent assets are neither recognised nor disclosed in the financial statements.

(u) Investment property

Investment in buildings that is not intended to be occupied substantially for use by, or in the operations of the Company, are classified as investment property. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any. All repairs and maintenance costs incurred for the investment properties are charged to statement of profit and loss account when incurred.

Investment properties are depreciated using the straight-line basis over its estimated useful lives. Useful life of the same is estimated as 58 years after considering estimated residual value as 5%.

Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes (Refer Note 3(b)). Fair values are determined based on ready reckoner rates as specified by State Government. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical carrying value. Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.

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Mar 31, 2024

2. Summary of significant accounting policies

2.1 Basis of preparation and presentation
Compliance with Ind AS

These financial statements have been prepared in accordance with Indian Accounting Standards (''Ind
AS'') prescribed under section 133 of the Companies Act, 2013 (‘the Act’) read with Rule 3 of the
Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time and other
relevant provisions of the Act.

Historical cost convention

The financial statements have been prepared on a historical cost basis, except for the following:

Recent pronouncements:

Ministry of Corporate Affairs (“MCA”) notifies new standard or amendment s to the existing standards
under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2023,
MCA Issued the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from
April 1, 2023, as below:

Ind AS 1 - Presentation of Financial Statements

The amendments require companies to disclose the material accounting policies rather than significant
accounting policies. Accounting policy information, together with other information, is material when it
can reasonably be expected to influence decisions of primary users of general purpose financial
statements.

Ind AS 12 - Income Taxes

The amendments clarify how companies account for deferred tax on transactions such as leases and
decommissioning obligations. The amendments narrowed the scope of the recognition exemption in
paragraphs 15 and 24 of Ind AS 12 so that it no longer applies to transactions that, on initial recognition,
give rise to equal taxable and deductible temporary differences.

Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

The amendments will help entities to distinguish between accounting policies and accounting estimates.
The definition of a change in accounting estimates has been replaced with a definition of accounting
estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements
that are subject to measurement uncertainty”. Entities develop accounting estimates if accounting
policies require items in financial statements to be measured in a way that involves measurement
uncertainty. The Company is assessing the impact of these changes and will accordingly incorporate the
same in the financial statements for the year ending March 31, 2024.

2.2 Foreign currency translation

a) Functional and presentation currency

These financial statements are presented in Indian rupees (Rs.) which is also the Company''s
functional currency.

b) Transactions and balances

Foreign currency transactions are translated into functional currency using the exchange rates at
the dates of transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates are generally recognised in profit or loss.

Non-monetary items that are measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined. Translation differences on assets
and liabilities carried at fair value are reported as part of the fair value gain or loss.

2.3 Property, plant and equipment
Recognition and measurement

On transition to Ind AS, the Company has adopted previous GAAP carrying amount as deemed cost
for all the categories of property, plant and equipment.

Post transition to Ind AS, property, plant and equipment are measured at cost, which includes
capitalised borrowing costs, less accumulated depreciation and accumulated impairment losses, if any.

Cost of an item of property, plant and equipment comprises its purchase price, including import duties
and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly
attributable cost of bringing the item to its working condition for its intended use and estimated costs
of dismantling and removing the item and restoring the site on which it is located.

The cost of a self-constructed item of property, plant and equipment comprises the cost of materials
and direct labor and any other costs directly attributable to bringing the item to working condition for
its intended use, and estimated costs of dismantling and removing the item and restoring the site on
which it is located.

The costs of the property plant and equipment, which are not ready for their intended use on such
date, are disclosed as capital work-in-progress.

An item of property, plant and equipment and any significant part initially recognised is derecognised
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or
loss arising on derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when
the asset is derecognised.

If significant parts of an item of property, plant and equipment have different useful lives, then they
are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in the
Statement of Profit or Loss.

Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the future economic benefits
associated with the expenditure will flow to the Company.

Depreciation

Depreciation is calculated on cost of items of property, plant and equipment less their estimated
residual values over their estimated useful lives using the straight-line method, and is generally
recognised in the Statement of Profit and Loss. Assets acquired under finance leases are depreciated
over the shorter of the lease term and their useful lives unless it is reasonably certain that the
Company will obtain ownership by the end of the lease term. Freehold land is not depreciated.

Depreciation method, useful lives and residual values are reviewed at each financial year-end and
adjusted if appropriate. Based on internal assessment and supported by technical advice, the
management believes that its estimates of useful lives as given above best represent the period over
which management expects to use these assets which is different from the useful lives as prescribed
under Part C of Schedule II of the Companies Act, 2013.

Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (up to) the date on
which asset is ready for use (disposed off).

2.4 Impairment

i. Impairment of financial assets

The Company recognises loss allowances for expected credit losses on financial assets measured at
amortised cost.

At each reporting date, the Company assesses whether financial assets carried at amortised cost are
credit impaired. A financial asset is ‘credit impaired’ when one or more events that have a
detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit impaired includes the following observable data:

- significant financial difficulty of the borrower or issuer;

- a breach of contract such as a default or being past due for one year or more;

- the restructuring of a loan or advance by the Company on terms that the Company would not
consider otherwise;

- it is probable that the borrower will enter bankruptcy or other financial reorganisation; or

- the disappearance of an active market for a security because of financial difficulties.

Loss allowances for trade receivables are always measured using the simplied approach.

The Company considers a financial asset to be in default when:

- the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by
the Company to actions such as realising security (if any is held); or

- the financial asset is one year or more past due.

Measurement of expected credit losses:

Expected credit losses are a probability weighted estimate of credit losses. Credit losses are
measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due
to the Company in accordance with the contract and the cash flows that the Company expects to
receive).

Presentation of allowance for expected credit losses in the balance sheet:

Loss allowances for financial assets measured at amortised cost are deducted from the gross
carrying amount of the assets.

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent
that there is no realistic prospect of recovery. This is generally the case when the Company
determines that the debtor does not have assets or sources of income that could generate sufficient
cash flows to repay the amounts subject to the write off. However, financial assets that are written
off could still be subject to enforcement activities in order to comply with the Company’s
procedures for recovery of amounts due.

ii) Impairment of non-financial assets:

The Company’s non-financial assets, other than inventories and deferred tax assets, are reviewed at
each reporting date to determine whether there is any indication of impairment. If any such
indication exists, then the asset’s recoverable amount is estimated.

For impairment testing, assets that do not generate independent cash inflows are grouped together
into cash-generating units (CGUs). Each CGU represents the smallest group of assets that
generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its
fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time

value of money and the risks specific to the CGU (or the asset). In determining fair value less costs
of disposal, recent market transactions are taken into account. If no such transactions can be
identified, an appropriate valuation model is used. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded companies or other available fair value
indicators.

The Company’s corporate assets (e.g., central office building for providing support to various
CGUs) do not generate independent cash inflows. To determine impairment of a corporate asset,
recoverable amount is determined for the CGUs to which the corporate asset belongs. An
impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated
recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated
recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss.
Impairment loss recognised in respect of a CGU is allocated to reduce the carrying amounts of
assets of the CGU (or group of CGUs) on a pro rata basis.

In respect of assets for which impairment loss has been recognised in prior periods, the Company
reviews at each reporting date whether there is any indication that the loss has decreased or no
longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. Such a reversal is made only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.

2.5 Inventories

Inventories are measured at the lower of cost and net realisable value. In case of finished goods and
work-in-progress, costs include an appropriate share of fixed overhead based on normal operating
capacity.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated
costs of completion and selling expenses. The net realisable value of work-in-progress is determined
with reference to the selling prices of related finished products.

The comparison of cost and net realisable value is made on an item-by-item basis.

2.6 Revenue recognition
Services

Revenue from services is recognised in the accounting period in which the services are rendered. For
fixed-price contracts, revenue is recognised based on the actual service provided to the end of the
reporting period as a proportion of the total services to be provided.

Estimates of revenues, costs or extent of progress towards completion are revised if circumstances
change. Any resulting increase or decrease in estimated revenue or costs reflected in profit or loss in
the period in which the circumstances that give rise to the revision becomes known by management.

Interest

Interest income is recognised using the time proportion basis taking into account the amount
outstanding and the interest rate applicable.

2.7 Leases

As a lessee

The Company’s lease asset classes primarily consist of leases for buildings. The Company assesses
whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset,
the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the
Company has substantially all of the economic benefits from use of the asset through the period of the
lease and (iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognises a right-of-use asset (“ROU”) and
a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with
a term of year or less (short-term leases) and low value leases. For these short-term and low value
leases, the Company recognises the lease payments as an operating expense on a straight-line basis
over the term of the lease.

As a lessee, the Company determines the lease term as the non-cancellable period of a lease adjusted
with any option to extend or terminate the lease, if the use of such option is reasonably certain. The
Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby
assesses whether it is reasonably certain that any options to extend or terminate the contract will be
exercised. In evaluating the lease term, the Company considers factors such as any significant
leasehold improvements undertaken over the lease term, costs relating to the termination of the lease
and the importance of the underlying asset to I nfosys’s operations taking into account the location of
the underlying asset and the availability of suitable alternatives. The lease term in future periods is
reassessed to ensure that the lease term reflects the current economic circumstances.

The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or prior to the commencement date of the lease plus
any initial direct costs less any lease incentives. They are subsequently measured at cost less
accumulated depreciation and impairment losses. Right-of-use assets are depreciated from the
commencement date on a straight-line basis over the shorter of the lease term and useful life of the
underlying asset.

As a lessor

Lease income from operating leases where the Company is a lessor is recognised in income on a
straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are
added to the carrying amount of the underlying asset and recognised as expense over the lease term on
the same basis as lease income. The respective leased assets are included in the balance sheet based
on their nature.

2.8 Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial period of time to get ready for their intended
use or sale, are added to the cost of those assets, until such time as the assets are substantially ready
for their intended use or sale.

Interest income earned on the temporary investment of specific borrowings pending their expenditure
on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in the Statement of Profit or Loss in the period in which they
are incurred.

2.9 Employee benefits

Defined contribution plan

A defined contribution plan is a post-employment benefit plan under which the Company pays fixed
contributions and will have no legal or constructive obligation to pay further amounts. The Company
makes specified monthly contributions towards Government administered provident fund scheme.
Obligations for contributions to defined contribution plans are recognised as an employee benefit
expense in the Statement of Profit or Loss in the periods during which the related services are
rendered by employees.

Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The
Company’s net obligation in respect of defined benefit plans is calculated by estimating the amount of
future benefit that employees have earned in the current and prior periods, discounting that amount
and deducting the fair value of any plan assets.

The Company''s gratuity plan is a defined benefit plan. The present value of gratuity obligation under
such defined benefit plans is determined based on actuarial valuations carried out by an independent
actuary using the Projected Unit Credit Method, which recognizes each period of service as giving
rise to additional unit of employee benefit entitlement and measure each unit separately to build up
the final obligation. The obligation is measured at the present value of estimated future cash flows.
The discount rates used for determining the present value of obligation under defined benefit plans, is
based on the market yields on Government securities as at the Balance Sheet date, having maturity
periods approximating to the terms of related obligations.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the
return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest),
are recognised in OCI. The Company determines the net interest expense (income) on the net defined
benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit
obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking
into account any changes in the net defined benefit liability (asset) during the period as a result of
contributions and benefit payments. Net interest expense and other expenses related to defined benefit
plans are recognised in the Statement of Profit or Loss.

2.10 Income tax

Income tax comprises current and deferred tax. It is recognised in the statement of profit and loss
except to the extent that it relates to an item recognised directly in equity or in other comprehensive
income.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the
year and any adjustment to the tax payable or receivable in respect of previous years. The amount of
current tax reflects the best estimate of the tax amount expected to be paid or received after
considering the uncertainty, if any related to income taxes. It is measured using tax rates (and tax
laws) enacted or substantively enacted by the reporting date.

Minimum alternate tax (‘MAT’) paid in a year is charged to the statement of profit and loss as current
tax. The Company recognises MAT credit available as an asset only to the extent that there is
convincing evidence that the Company will pay normal income tax during the specified period, i.e.,
the period for which MAT credit is allowed to be carried forward. In the year in which the Company
recognises MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit
Available in respect of Minimum Alternative Tax under the Income tax Act, 1961, the said asset is
created by way of credit to the statement of profit and loss and shown as ‘MAT Credit Entitlement’.
The Company reviews the ‘MAT credit entitlement’ asset at each reporting date and writes down the
asset to the extent the Company does not have convincing evidence that it will pay normal tax during
the specified period.

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and
liabilities in the Ind AS financial statements and the corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary
differences. Deferred tax assets are generally recognised for all deductible temporary differences to
the extent that it is probable that taxable profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the
temporary difference arises from the initial recognition (other than in a business combination) of
assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In
addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial
recognition of goodwill.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period
in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow
from the manner in which the Company expects, at the end of the reporting period, to recover or settle
the carrying amount of its assets and liabilities.

Current and deferred tax are recognised in profit or loss, except when they relate to items that are
recognised in other comprehensive income or directly in equity, in which case, the current and
deferred tax are also recognised in other comprehensive income or directly in equity respectively.

---

Mar 31, 2018

1. Company Overview:

Silly Monks Entertainment Limited (Formerly Known as Silly Monks Entertainment Private limited) Limited Company engaged in digital marketing solutions to businesses, agencies and online publishers. The Company connects Advertisers with their Audience across any form of Digital Media, using its massive local presence to deliver appropriate messages to the right audience, through the most relevant Digital channels. The Company was incorporated on 20^th September, 2013 in Hyderabad and listed on NSE (MSME Segment) dated 18th January, 2018.

2. Basis of Preparation of Financial Statements:

The Financial statements have been prepared under the historical cost convention on accrual basis. The mandatory applicable accounting standards in India and the provisions of the companies Act, 2013 have been followed in preparation of these financial statements.

All assets and liabilities have been classified as current or non-current as per the operating cycle criteria set out in the Revised Schedule III to the Companies Act, 2013.

3. Use of Estimates:

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

4. Revenue Recognition: Digital Marketing Services:

a) The Contracts between the Company and its Customers are either time or material contracts or fixed price contracts.

b) Revenue from fixed price contracts is recognized according to the milestones achieved as specified in the contracts on the proportionate-completion method based on the work completed. Any anticipated losses expected upon the contract based on the work completed. Any anticipated losses expected upon the contract completion are recognized immediately. Changes in job performance, condition and estimates profitability may result in revisions and corresponding revenues and cost are recognized in the period in which such changes are identified.

c) In respect of time and material contract, revenue is recognized in the period in which the services are provided.

d) Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and revenue can be reliably measured.

e) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable rates.

5. Fixed Assets:

Tangible Assets:

Fixed assets are carried at cost of acquisition less accumulated depreciation. Cost includes non-refundable taxes, duties, freight, borrowing costs and other incidental expenses related to the acquisition and installation of the respective assets.

Intangible Assets:

Intangible assets are recorded at consideration paid for acquisition and other direct costs that can be directly attributed, or allocated on a reasonable and Consistent basis, to creating, producing and making the asset ready for its intended use.

6. Depreciation:

Depreciation on fixed assets is provided on straight-line method using the lives of assets given in Schedule II of the Companies Act, 2013.

7. Tax Expense:

Income tax expense comprises current tax, deferred tax, Minimum alternative Tax.

Current tax

The current change for income tax is calculated in accordance with the relevant tax regulations applicable to the company.

Deferred tax

Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the year. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have enacted or substantially enacted by the balance sheet date. Deferred tax asset is recognized only to the extent there is reasonable certainty that the assets can be realized in future.

Minimum Alternative Tax (MAT) credit

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of adjustments of future income tax liability, is considered as an asset if there is convincing evidence that the company will pay normal tax after the tax holiday period. Accordingly, it is recognized as an asset in the balance sheet when it is probable that the future economic benefit associated with it will flow to the company and asset can be measured reliably

8. Earnings Per Share:

The earnings considered in ascertaining the companies earning per share comprise net profit after tax and includes the post-tax effect of any extra-ordinary/exceptional item is considered. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the year.

The no. of shares used in computing diluted earnings per share comprises the weighted average no. of shares considered for deriving basic earnings per share and also the weighted average no. of equity shares that could have been issued on the conversion of all dilutive potential equity shares.