1. SIGNIFICANT ACCOUNTING POLICIES A. BASIS OF brPARATION These financial statements have been brpared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, till the standards of accounting or any addendum thereto are brscribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been brpared to comply in all material aspects with the accounting standards notified under Section 211(3C) [Companies (Accounting Standards) Rules, 2006, as amended] and other relevant provisions of the Companies Act, 2013. All assets and liabilities have been classified as current or non-current as per the Company's operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of services provided, the Company has ascertained its operating cycle as 12 months for the purpose of current - non current classification of assets and liabilities. b. Tangible Assets Tangible assets are stated at their original cost and include all expenses relating to acquisition and installation. Losses arising from the retirement of, and gains and losses arising from disposal of fixed assets which are carried at cost are recognized in the Statement of Profit and Loss. c. Intangible Assets Acquired intangible assets expected to provide future enduring benefits are stated at their original cost and include all expenses relating to acquisition and installation. d. Debrciation / Amortisation • Debrciation on tangible assets (other than leasehold land, leasehold improvements, continuous process plant and machinery and vehicles) is provided on a pro-rata basis on the straight-line method over the estimated useful lives of the assets as brscribed under Schedule II to the Companies Act, 2013. Till last year, debrciation on these assets used to be provided for at the rates mentioned in Schedule XIV of the Companies Act, 1956. Had the earlier years' basis been followed, debrciation for the year would have been lower by Rs. 48,803,683. Further, based on the transitional provisions as per Note 7(b) of Schedule II of such Act, an amount of Rs. 5,079,444 (net of deferred tax of Rs. 2,615,514) has been adjusted against opening balance of retained earnings • Leasehold land is debrciated over the period of the lease. • Leasehold improvements are debrciated over the lease term or their useful life (based on a technical evaluation), whichever is shorter. • Continuous process plant and machinery are debrciated over the useful life of 9.67 years, based on a technical evaluation. • Vehicles are debrciated over the useful life of 5 years on straight-line method, based on a technical evaluation. • Assets costing less than Rs. 5,000 are debrciated over a period of 12 months. • Intangible assets are amortised on a straight-line basis over their estimated useful lives, as follows:- a. Computer software are debrciated over a period of three years. b. Production software are debrciated over a period of three years. c. CTI sites BECIL are debrciated over the license period of ten years. d. Digital rights of news channels are debrciated over a period of ten years. e. Revenue Recognition Advertisement and digital business income is recognized for the period for which services have been provided and for which there is certainty of ultimate collection. Subscription income is recognized on the basis of terms of contract with the distributors. Fee from training is recognized over the duration of the course offered by the media institute of the Company. f. Interest Income Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. g. Investments Long-term investments are stated at cost of acquisition. Provision is made for diminution, other than temporary, in the carrying value thereof, in valuation of investments. Current investments are stated at lower of cost and fair value. h. Employee Benefits (a) Short Term Employee benefits Short term employee benefits are recognised in the period during which the services have been rendered. (b) Long Term Employee benefits i) Defined contribution Plans Company's contributions to Provident Fund, Employees' State Insurance Scheme and Employee Pension Scheme, which are Defined Contribution Plans, are expensed to the Statement of Profit and Loss on accrual basis. The Company has no further obligations under these plans beyond its monthly contributions to the respective government funds. (ii) gratuity (Defined benefit Plan) and compensated Absences (Other Long-Term Employee benefits) The Company provides for the liability at year end as per actuarial valuation carried out by an independent actuary as per the Projected Unit Credit Method. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognized immediately in the Statement of Profit and Loss as income or expense. The Gratuity Plan of the Company provides a lump sum payment to vested employees at retirement or on termination of employment, based on the respective employee's salary and the tenure of employment. Gratuity Fund is recognized by the income tax authorities and is administered and managed by the Life Insurance Corporation of India ("LIC"). (iii) Termination benefits are recognized as an expense immediately. i. foreign currency Transactions Foreign exchange transactions during the year are recorded at the exchange rate brvailing on the date of transaction. Gains or losses arising out of fluctuations in exchange rate between transaction date and settlement date are recognized in the Statement of Profit and Loss. Monetary Assets and Liabilities are translated at the exchange rates brvailing at the year end and the resultant gain / loss is recognized in the Statement of Profit and Loss. j. Taxes on Income Tax expense for the year, comprising current tax and deferred tax, is included in determining the net profit for the year. Current tax is determined based on liability computed in accordance with relevant tax rates and tax laws. Deferred tax is recognized for all timing differences arising between accounting income and taxable income and is measured at the tax rates and tax laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets are carried forward to the extent there is reasonable certainty that sufficient future taxable profits will be available against which such deferred tax assets can be realized. Deferred tax assets in respect of unabsorbed debrciation or brought forward losses are recognized to the extent of virtual certainty that sufficient future taxable profits will be available against which such deferred tax assets can be realized. k. Leases As a lessee: Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight- line basis over the period of the lease. As a lessor: The Company has leased a tangible asset and such leases where the Company has substantially retained all the risks and rewards of ownership are classified as operating leases. Lease income on such operating leases are recognized in the Statement of Profit and Loss on a straight line basis over the lease term which is rebrsentative of the time pattern in which benefit derived from the use of the leased asset is diminished. Initial direct costs are recognized as an expense in the Statement of Profit and Loss in the period in which they are incurred. l. Earnings Per Share Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. m. Borrowing costs Borrowing costs attributable to the acquisition or construction of a qualifying asset is capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred. n. Employee Stock based compensation The Company calculates the employee stock compensation expense based on the intrinsic value method wherein the excess of market price of underlying equity shares as on the date of the grant of options over the exercise price of the options given to employees under the Employee Stock Option Scheme of the Company, is recognized as deferred stock compensation expense and is amortized over the vesting period on the basis of generally accepted accounting principles in accordance with the guidelines of Securities and Exchange Board of India and guidance note issued by the Institute of Chartered Accountants of India. o. Provisions and contingencies Provision is recognized when the Company has a brsent obligation as a result of past event and it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. A disclosure for contingent liabilities is made when there is a possible obligation or a brsent obligation that probably will not require an outflow of resource or where a reliable estimate of obligation cannot be made. p. Impairment of Assets Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. Impairment occurs where the carrying value exceeds the brsent value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. The impairment loss to be expensed is determined as the excess of the carrying amount over the higher of the asset's net sales price or brsent value, as determined above. q. cash and cash Equivalents In the cash flow statement, cash and cash equivalents include cash in hand, cheques on hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less. 39. Dues to Micro and Small Enterprises Based on information available with the Company, there are no outstanding dues to micro and small enterprises as at March 31, 2015. No interest has been paid / is payable by the Company in terms of Section 16 of the Micro, Small and Medium Enterprises Development Act, 2006. 4. The Company as a strategic decision considered entering into the print media and, accordingly, acquired in earlier years some stake in Mail Today Newspapers Private Limited (Mail Today), a differentiated newspaper with respect to content as well as value to its advertisers. Based on the valuation of the equity shares of Mail Today, carried out by an independent valuer, the Company acquired the shares through direct subscription and also through purchase from existing shareholders at a cost of Rs. 455,212,482. Though, Mail Today is brsently incurring losses, the Company is confident of its long-term strategic value and it has also received a guarantee from its holding company, Living Media India Limited, for indemnifying any loss to the Company arising from the sale of the said investment, based on which the carrying value of the said investment is considered appropriate. 5. The Company has decided to enter into digital news space to tap significant growth potential and business opportunity in digital news industry. Consequently, the Company has acquired digital rights of its news channels from its holding company, Living Media India Limited, for a consideration of Rs. 387,500,000. Such consideration has been recognized as an intangible asset (refer note 11), to be amortized over a period of 10 years. 6. Previous Year Figures Previous year figures have been reclassified to conform to this year's classification. For Price Waterhouse Firm Registration No. 301112E Chartered Accountants For and on behalf of the Board sd/- Sougata Mukherjee Partner Membership No. 57084 sd/- Dr. Puneet Jain Head - Legal and Compliances, Company Secretary and Vice President - Internal Audit sd/- Ashok Kapur Director sd/- Aroon Purie Chairman and Managing Director Dinesh Bhatia Chief Financial Officer Place : Gurgaon Date : May 12, 2015 |