Accounting Policies of Crest Animation Studios Ltd. Company

Mar 31, 2012

A) Basis of accounting:

The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956.The financial statements have been prepared under the historical cost convention on an accrual basis except in the case of revaluation of assets. The accounting policies applied by the Company are consistent with those used in the previous year.

During the year ended 31st March 2012, the revised schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. The adoption of revised schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosure made in financial statements. The company has also reclassified the previous year figures in accordance with the requirement applicable in current year.

b) Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the year. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

c) Fixed Assets:

Owned assets are stated at cost of acquisition including incidental expenses related to acquisition and installation or at revalued amounts, wherever applicable, less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any other cost of bringing the assets to its working condition for its intended use.

d) Leased Assets:

Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalized.

If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

e) Intangible assets:

Intangible assets are stated at cost of acquisition including incidental expenses related to acquisition less accumulated amortisation / depreciation and impairment if any. Cost comprises the purchase price and any other attributable cost of bringing the assets to its working condition for its intended use.

f) Depreciation:

(i) Depreciation on tangible assets is provided on the Straight Line Method at the rates prescribed in schedule XIV of the Companies Act, 1956, except in respect of leasehold improvement and certain furniture, fixtures and office equipments, where depreciation is provided over a period of five years.

(ii) Depreciation on intangible assets is provided on the straight-line method. Copyrights are amortised over the expected period of exploitation ranging from 24 months to 120 months. Software is being amortised over a period of 60 months being the estimated useful life.

(iii) The excess of depreciation provided on re-valued fixed assets over the amount computed with reference to the original costs thereof is withdrawn from revaluation reserve and transferred to the statement of profit and loss.

g) Impairment:

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

h) Foreign currency transactions :

(i) Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non- monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

(iii) Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting monetary items of company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise.

(iv) Forward Exchange Contracts not intended for trading or speculation purposes

The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year.

(v) Translation of Integral foreign operation

The financial statements of an integral foreign operation are translated as if the transactions of the foreign operation have been those of the company itself.

i) Investments:

(i) Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments.

(ii) Long term investments are stated at cost less provision for diminution in the value to recognise a decline, other than temporary, wherever applicable. Cost includes expenditure attributable to the acquisition of investments.

(iii) Current Investments are stated at lower of cost and market value determined on an individual investment basis.

j) Inventories:

Work-in-process is valued at cost or at net realisable value whichever is lower. Work-in- process in respect of television serials includes pro-rata cost attributable to modelling and preparatory costs of projects, amortised appropriately as per the progressive execution of contracts/ projects. Work-in-process in respect of feature film includes pro-rata cost attributable to start ups, modelling and preparatory costs of projects, amortised appropriately.

k) Revenue recognition:

Revenue is primarily in the nature of animation services for television serials, features and other media. Contracts in respect of television serials are divisible into individual episodes, unlike features and other media where there is generally only one deliverable.

Revenue is recognised on the following basis:

Television serials : When the relevant episode is transmitted on completion.

Features : Revenue is recognised in the proportion of contract costs incurred for work performed to the estimated total contract costs. Provisions for estimated losses on uncompleted contracts are made in the year on which such losses are determined.

Other media : When delivered on completion except in respect of contracts of long-term nature where revenue is recognised on the basis similar to features.

Unbilled Revenue represents excess of revenue recognized based on percentage of completion over the progress billing as per the contract.

Interest:- Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

Dividends:- Revenue is recognized when the shareholders' right to receive payment is established by the balance sheet date.

l) Employee benefits:

(i) Short term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.

(ii) Post employment benefits:

(A) Defined Contribution Plan:

Provident and Family Pension Fund

The eligible employees of the Company are entitled to receive post employment benefits in respect of provident and family pension fund, in which both employees and the Company make monthly contributions at a specified percentage of the employees' eligible salary (currently 12% of employees' eligible salary). Provident Fund and Family Pension Fund are classified as Defined Contribution Plan as the Company has no further obligations beyond making the contribution. The Company's contribution to Defined Contribution Plan are charged to Statement of profit and loss as incurred.

(B) Defined Benefit Plan:

Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company accounts for gratuity benefits payable in future based on an independent actuarial valuation made at the year-end on projected unit credit method. Actuarial gains and losses are recognised in the statement of profit and loss.

(C) Other long term employee benefits - compensated absences:

The Company provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment/ availment. The Company makes provision for compensated absences based on an independent actuarial valuation made at the year-end on projected unit credit method. Actuarial gains and losses are recognised in the statement of profit and loss.

m) Borrowing 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 capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

n) Taxation:

Tax expense comprises current, and deferred. Current tax, are measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Deferred tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

Minimum Alternate Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of profit and loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

o) Provisions:

A provision is recognised when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present values and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

p) Cash and Cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand

q) Earnings per share:

Basic earnings per share have been calculated by dividing the net profit or loss after tax attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The Company has not issued any potential equity shares and accordingly, the basic earnings per share and diluted earnings per share are the same.

r) Provisions, Contingent Liabilities and Contingent Assets :

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

---

Mar 31, 2011

A) Basis of accounting:

The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956.The financial statements have been prepared under the historical cost convention on an accrual basis except in the case of revaluation of assets. The accounting policies applied by the Company are consistent with those used in the previous year.

b) Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the year. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

c) Fixed Assets:

Owned assets are stated at cost of acquisition including incidental expenses related to acquisition and installation or at revalued amounts, wherever applicable, less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any other attributable cost of bringing the assets to its working condition for its intended use.

d) Impairment:

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre- tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

e) Depreciation:

(i) Depreciation on tangible assets is provided on the Straight Line Method at the rates prescribed in schedule XIV of the Companies Act, 1956, except in respect of leasehold improvement and certain furniture, fixtures and office equipments, where depreciation is provided over a period of five years.

(ii) Depreciation on intangible assets is provided on the straight-line method. Copyrights are amortised over the expected period of exploitation ranging from 24 months to 120 months. Software is being amortised over a period of 60 months being the estimated useful life.

(iii) The excess of depreciation provided on re-valued fixed assets over the amount computed with reference to the original costs thereof is withdrawn from revaluation reserve and transferred to the profit and loss account.

f) Investments:

(i) Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments.

(ii) Long term investments are stated at cost less provision for diminution in the value to recognise a decline, other than temporary, wherever applicable. Cost includes expenditure attributable to the acquisition of investments.

(iii) Current Investments are stated at lower of cost and market value determined on an individual investment basis.

g) Inventories:

Work-in-process is valued at cost or at net realisable value whichever is lower. Work-in-process in respect of television serials includes pro-rata cost attributable to modelling and preparatory costs of projects, amortised appropriately as per the progressive execution of contracts/ projects. Work-in-process in respect of feature film includes pro-rata cost attributable to start ups, modelling and preparatory costs of projects, amortised appropriately.

h) Revenue recognition:

Revenue is primarily in the nature of animation services for television serials, features and other media. Contracts in respect of television serials are divisible into individual episodes, unlike features and other media where there is generally only one deliverable.

Revenue is recognised on the following basis:

Television serials : When the relevant episode is transmitted on completion.

Features : Revenue is recognised in the

proportion of contract costs incurred for work performed to the estimated total contract costs. Provisions for estimated losses on uncompleted contracts are made in the year on which such losses are determined.

Other media : When delivered on completion except in respect of contracts of long-term nature where revenue is recognised on the basis similar to features.

Unbilled Revenue represents excess of revenue recognized based on percentage of completion over the progress billing as per the contract.

Interest:- Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

Dividends:- Revenue is recognized when the shareholders' right to receive payment is established by the balance sheet date.

i) Borrowing 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 capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

j) Foreign currency transactions

(i) Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

(iii) Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting monetary items of company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise.

(iv) Forward Exchange Contracts not intended for trading or speculation purposes

The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year.

(v) Translation of Integral and Non-integral foreign operation.

The financial statements of an integral foreign operation are translated as if the transactions of the foreign operation have been those of the company itself.

k) Accounting For Derivatives

As per the ICAI Announcement, accounting for derivative contracts, other than those covered under AS- 11, are marked to market on a portfolio basis, and the net loss after considering the offsetting effect on the underlying hedge item is charged to the profit and loss account. Net gains are ignored.

l) Taxation:

Tax expense comprises current and deferred. Current tax, are measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Deferred tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Minimum Alternate Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

m) Provisions:

A provision is recognised when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present values and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

n) Leases:

Finance lease, which effectively transfer to the Company substantially all the risks and benefit incidental to ownership

of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payment at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income, Lease Management fees, legal charges and other initial costs are capitalized.

If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss Account on a straight-line basis over the lease term.

o) Employee benefits:

(i) Short term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

(ii) Post employment benefits:

(A) Defined Contribution Plan: Provident and Family Pension Fund

The eligible employees of the Company are entitled to receive post employment benefits in respect of provident and family pension fund, in which both employees and the Company make monthly contributions at a specified percentage of the employees' eligible salary (currently 12% of employees' eligible salary). Provident Fund and Family Pension Fund are classified as Defined Contribution Plan as the Company has no further obligations beyond making the contribution. The Company's contribution to Defined Contribution Plan are charged to profit and loss account as incurred.

(B) Defined Benefit Plan: Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company accounts for gratuity benefits payable in future based on an independent actuarial valuation made at the year-end on projected unit credit method. Actuarial gains and losses are recognised in the profit and loss account.

(C) Other long term employee benefits - compensated absences:

The Company provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment/availment. The Company makes

provision for compensated absences based on an independent actuarial valuation made at the year-end on projected unit credit method. Actuarial gains and losses are recognised in the profit and loss account.

p) Cash and Cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand.

q) Earnings per share:

Basic earnings per share have been calculated by dividing the net profit or loss after tax attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The Company has not issued any potential equity shares and accordingly, the basic earnings per share and diluted earnings per share are the same.

---

Mar 31, 2010

A) Basis of accounting:

The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956.The financial statements have been prepared under the historical cost convention on an accrual basis except in the case of revaluation of assets. The accounting policies applied by the Company are consistent with those used in the previous year.

b) Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the year. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates.

c) Fixed Assets:

Owned assets are stated at cost of acquisition including incidental expenses related to acquisition and installation or at revalued amounts, wherever applicable, less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any other attributable cost of bringing the assets to its working condition for its intended use.

d) Impairment:

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

e) Depreciation:

(i) Depreciation on tangible assets is provided on the Straight Line Method at the rates prescribed in schedule XIV of the Companies Act, 1956, except in respect of leasehold improvement and certain furniture, fixtures and office equipments, where depreciation is provided over a period of five years.

(ii) Depreciation on intangible assets is provided on the straight-line method. Copyrights are amortised over the expected period of exploitation ranging from 24 months to 120 months. Software is being amortised over a period of 60 months being the estimated useful life.

(iii) The excess of depreciation provided on re-valued fixed assets over the amount computed with reference to the original costs thereof is withdrawn from revaluation reserve and transferred to the profit and loss account.

f) Investments:

(i) Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long- term investments.

(ii) Long term investments are stated at cost less provision for diminution in the value to recognise a decline, other than temporary, wherever applicable. Cost includes expenditure attributable to the acquisition of investments.

(iii) Current Investments are stated at lower of cost and market value determined on an individual investment basis.

g) Inventories:

Work-in-process is valued at cost by applying absorption costing method or at net realisable value whichever is lower. Work-in-process in respect of television serials includes pro- rata cost attributable to modelling and preparatory costs of projects, amortised appropriately as per the progressive execution of contracts/ projects. Work-in-process in respect of feature film includes pro-rata cost attributable to start ups, modelling and preparatory costs of projects, amortised appropriately.

h) Revenue recognition:

Revenue is primarily in the nature of animation services for television serials, features and other media. Contracts in respect of television serials are divisible into individual episodes, unlike features and other media where there is generally only one deliverable.

Revenue is recognised on the following basis:

Television serials : When the relevant episode is transmitted on completion.

Features : Revenue is recognised in the

proportion of contract costs incurred for work performed to the estimated total contract costs. Provisions for estimated losses on uncompleted contracts are made in the year on which such losses are determined.

Other media : When delivered on completion

except in respect of contracts of long-term nature where revenue is recognised on the basis similar to features.

Sale of rights to : As per the terms of the agreement.

share revenue in

television serials,

featuresand other

media

Unbilled Revenue represents excess of revenue recognised based on percentage of completion over the progress billing as per the contract.

Interest:- Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

Dividends:- Revenue is recognised when the shareholders’ right to receive payment is established by the balance sheet date.

i) Borrowing 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 capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

j) Foreign currency transactions

(i) Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

(iii) Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting monetary items of company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise.

(iv) Forward Exchange Contracts not intended for trading or speculation purposes

The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.

(v) Accounting For Derivatives

As per the ICAI Announcement, accounting for derivative contracts, other than those covered under AS-11, are marked to market on a portfolio basis, and the net loss after considering the offsetting effect on the underlying hedge item is charged to the profit and loss account. Net gains are ignored.

j) Taxation:

Tax expense comprises current, deferred and fringe benefit tax. Current tax and fringe benefit tax are measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Deferred tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

Minimum Alternate Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

k) Provisions:

A provision is recognised when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present values and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

l) Leases:

Leases where the lessor transfers substantially all the risks and rewards incidental to ownership of the leased assets are classified as finance leases. Leases other than finance leases are classified as operating leases.

At the inception of a finance lease, the lessee recognises the lease as an asset and a liability at lower of the fair value and the present value of minimum lease payments. Finance lease payments are apportioned between the finance charge at a constant periodic rate of interest and the reduction of the outstanding liability.

Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.

m) Employee benefits:

(i) Short term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

(ii) Post employment benefits:

(A) Defined Contribution Plan:

Provident and Family Pension Fund

The eligible employees of the Company are entitled to receive post employment benefits in respect of provident and family pension fund, in which both employees and the Company make monthly contributions at a specified percentage of the employees’ eligible salary (currently 12% of employees’ eligible salary). Provident Fund and Family Pension Fund are classified as Defined Contribution Plan as the Company has no further obligations beyond making the contribution. The Company’s contribution to Defined Contribution Plan are charged to profit and loss account as incurred.

(B) Defined Benefit Plan:

Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company accounts for gratuity benefits payable in future based on an independent actuarial valuation made at the year- end on projected unit credit method. Actuarial gains and losses are recognised in the profit and loss account.

(C) Other long term employee benefits - compensated absences:

The Company provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment/ availment. The Company makes provision for compensated absences based on an independent actuarial valuation made at the year-end on projected unit credit method. Actuarial gains and losses are recognised in the profit and loss account.

n) Cash and Cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short- term investments with an original maturity of three months or less.

o) Earnings per share:

Basic earnings per share has been calculated by dividing the net profit or loss after tax attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The Company has not issued any potential equity shares and accordingly, the basic earnings per share and diluted earnings per share are the same.