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Accounting Policies of Inox Leisure Ltd. Company
Mar 31, 2022
1. Company information
INOX Leisure Limited (âthe Company") is a public limited company incorporated and domiciled in India. The Company is engaged in operating & managing multiplexes and cinema theatres in India. The Company earns revenue from sale of movie tickets, advertisements, sale of food and beverages (including restaurant business), allied activities and generation of electricity through windmills. The shares of the Company are listed on the Bombay Stock Exchange and the National Stock Exchange of India. The Company''s holding company is GFL Limited. During the year, INOX Leasing and Finance Limited has ceased to be the ultimate holding company w.e.f. 22 September 2021.
The Company''s registered office is located at 5th Floor, Viraj Towers, next to Andheri Flyover, Western Express Highway, Andheri (East), Mumbai 400093, India, and the particulars of its other offices and multiplexes/cinema theatres are disclosed in the annual report.
The Board of Directors at its meeting held on 27 March 2022, approved a draft Scheme of Amalgamation (âScheme") of INOX Leisure Limited (Transferor Company) with PVR Limited (Transferee Company) and their respective shareholders and creditors, under Sections 230 to 232 of the Companies Act, 2013. The share exchange ratio shall be 3 equity shares of the face value of Rs. 10 of Transferee Company, credited as fully paid-up, for every 10 equity shares of the face value of Rs. 10 each fully paid-up held by such member in the Transferor Company. The Scheme is subject to the receipt of requisite approvals from statutory and regulatory authorities under applicable laws and the respective shareholders and creditors of the companies. As per the Scheme, the appointed date for the amalgamation is the effective date of the Scheme, or such other date as may be mutually agreed between the parties. The effective date as per the Scheme is the date on which last of the approvals or events specified under Clause 9.1 of Part IV of the Scheme are satisfied or obtained or have occurred or the requirement of which has been waived (in writing) in accordance with this Scheme. The Scheme has been filed with the Bombay Stock Exchange and the National Stock Exchange on 30 March 2022 for their approval.
2. Statement of compliance and basis of preparation and presentation2.1 Statement of Compliance
These financial statements are the separate financial statements of the Company (also called standalone financial statements) and comply in all material aspects with the Indian Accounting Standards (âInd AS") notified
under section 133 of the Companies Act, 2013 (âthe Act"), read together with the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time, relevant provisions of the Act and other accounting principles generally accepted in India. Accounting policies have been consistently applied except where a newly issued accounting standards initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use (see Note 2.4).
Ministry of Corporate Affairs (MCA), vide its Notification dated 24 March 2021, amended Schedule III to the Companies Act, 2013 with effect from 1 April 2021. Accordingly, previous year figures have been re-grouped/ re-classified wherever necessary, to conform to the classification for the current year in order to comply with the requirements of the amended Schedule III to the Act.
These financial statements for the year ended 31 March 2022 are approved for issue by the Board of Directors at its meeting held on 2 May 2022.
2.2 Assessment of COVID-19 pandemic impact
In view of the COVID-19 pandemic situation, the cinema exhibition sector was under lockdown, partial lockdown and operating restrictions, which adversely impacted the cinema exhibition industry and consequently the business activities of the Company during the preceding and the current financial year. However, due to the relaxation in restrictions and the release of main stream and regional contents, the Company has witnessed significant recovery and an improved performance by the end of financial year. In developing the assumptions relating to possible future uncertainties, the Company has considered all relevant internal and external information available upto the date of approval of these financial statements and the Company has used the principles of prudence in applying judgement, estimates and assumptions. Given the uncertainties due to the COVID-19 pandemic, its actual impact may be different from that estimated as on the date of approval of these financial statements, which will require the impact assessment on the Company''s operations to be continuously monitored.
Going concern assumption
On the basis of assessment carried out by the Company''s management, the COVID-19 pandemic does not affect the Company''s ability to continue as a going concern, in view of the various steps taken by the Company towards optimization of costs, the Company''s low leverage, additional line of credit available from the Company''s lenders, available liquidity, and the eventual lifting of the lockdown. Accordingly, these financial statements have been prepared on a going concern basis.
2.3 Basis of preparation, presentation and measurement
These financial statements are presented in Indian Rupees (INR), which is also the Company''s functional currency. All amounts have been rounded-off to the nearest lakhs, unless otherwise indicated.
These financial statements have been prepared on an accrual basis and under the historical cost convention except as under:
a) certain financial assets and liabilities are measured at fair value or amortised cost (refer accounting policy regarding financial instruments),
b) defined benefit liability is measured as per actuarial valuation, and
c) share-based payments (see Note 3.11)
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102 and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are not based on observable market data (unobservable inputs) for the asset or liability.
Any asset or liability is classified as current if it satisfies any of the following conditions:
⢠the asset/liability is expected to be realized/settled in the Company''s normal operating cycle;
⢠the asset is intended for sale or consumption;
⢠the asset/liability is held primarily for the purpose of trading;
⢠the asset/liability is expected to be realized/settled within twelve months after the reporting period
⢠the asset is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date;
⢠in the case of a liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
All other assets and liabilities are classified as noncurrent.
For the purpose of current/non-current classification of assets and liabilities, the Company has ascertained its normal operating cycle as twelve months. This is based on the nature of products and services and the time between the acquisition of assets or inventories for processing and their realisation in cash and cash equivalents.
2.4 Amendments of existing accounting standards and recent accounting pronouncements
a. Amendments to existing accounting standards:
Ministry of Corporate Affairs (âMCA") notifies new standards or amendments to the existing standards. As per Notification dated 18 June 2021, amendments to the existing standards have been notified and these amendments are effective from 1 April 2021. Following amendments have become applicable for the current reporting period:
⢠Amendments to Ind AS 116 Leases - COVID-19 related rent concessions: The amendments to Ind AS 116 extend the period of availing the practical expedient relating to Covid-19 related rent concessions to 30 June 2022 (from earlier 30 June 2021). The Company has continued to apply the practical expedient to all COVID-19 related rent concessions that meet the conditions in paragraph 46B of the Ind AS 116: Leases and elected not to assess whether such rent concession is a lease modification. see Note 21 for further details.
⢠Amendments to Ind AS 109, Ind AS 107, Ind AS 104 and Ind AS 116 - Interest Rate Benchmark Reform Phase 2: The amendments provide temporary reliefs which address the financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR). This amendment has no impact on the financial statements of the Company.
b. New accounting pronouncements
As per Notification dated 23 March 2022, amendments to the existing standards have been notified and these amendments are effective from 1 April 2022. The summary of these amendments is as under:
⢠Amendments to Ind AS 103 Business Combinations: The amendments specify that in a business combination, to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed, at the acquisition date, must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India.
⢠Amendments to Ind AS 16 Property Plant and Equipment: The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment.
⢠Amendments to Ind AS 37 Provision Contingent Liabilities & Contingent Asset: The amendments specify that the âcost of fulfilling'' a contract comprises the âcosts that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).
⢠Amendments to Ind AS 109 Financial Instruments: The amendment clarifies which fees an entity includes when it applies the â10 percent'' test of Ind AS 109 in assessing whether to derecognise a financial liability.
The Company does not expect the above amendments to have any significant impact on its financial statements.
3. Significant Accounting Policies3.1 Business combinations under Common Control
A business combination involving entities or businesses under common control is a business combination in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination and the control is not transitory. The transactions between entities under common control are specifically covered by Appendix C of Ind AS 103: Business Combinations. Such transactions are accounted for using the pooling-of-interest method. The assets and liabilities of the acquired entity are recognised at their respective carrying values. No adjustments are made to reflect fair values, or recognise any new assets or liabilities. The only adjustments that are made are to harmonise the accounting policies. Issue of fresh securities towards the consideration for the business combination is recorded at nominal value. The identity of the reserves transferred by the acquired entity is preserved and they are carried in the same form and manner. The difference, if any, between the amount recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve.
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Company''s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cashgenerating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in the statement of profit and loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Revenue from contract with customers is recognized when the Company satisfies the performance obligation by transfer of control of promised product or service to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services. Revenue excludes taxes collected from customers.
The following specific recognition criteria are met before revenue is recognised:
a) Revenue from services:
Revenue from services is recognized, at a point in time or over time, on satisfaction of performance obligation for the services rendered, as under:
Revenue from sale of movie tickets (box office revenue) is recognized as and when the movie is exhibited viz. at a point in time. Advertisement revenue is recognized on exhibition of the advertisement or over the period of contract, as applicable. Revenue from other services is recognized over the period of contract or at a point in time, as per the contractual terms.
b) Food and beverages revenue:
Food and beverages revenue is recognized when the control of goods have been transferred to the customers. The performance obligation is case of sale of products is satisfied at a point in time i.e., at the point of sale.
c) Loyalty programme:
The Company operates a loyalty programme where a customer earns points as and when the customer transacts with the Company, these points can be redeemed in the future for goods and services. Under Ind AS 115, the loyalty programme gives rise to a separate performance obligation as it provides a material right to the customer. The Company allocates a portion of transaction price to the loyalty programme based on relative standalone selling price, instead of allocating using the fair value of points issued. As at year-end, loyalty points which are not redeemed by the customers are lapsed and amount allocated to those points are transferred to other income.
d) Generally, no element of financing is deemed present as the payment of transaction price is either made in advance / due immediately at the point of sale or the sales are made with a credit term consistent with the market practice. There are no contracts
where the period between the transfer of promised goods or services to the customers and payment by the customers exceed one year. Consequently, no adjustment is required to the transaction price for the time value of money. Non-cash consideration (or promise of non-cash consideration) is measured at fair value. If the fair value of the non-cash consideration cannot be reasonably estimated, the same is measured indirectly by reference to the standalone selling price of the goods or services promised to the customer (or class of customer) in exchange for the consideration.
e) Contract balances:
The Company classifies the right to consideration in exchange for deliverables as either a receivable or as unbilled revenue. A receivable is a right to consideration that is unconditional upon passage of time. Contract asset, which is presented as unbilled revenue, is classified as non-financial asset as the contractual right to consideration is dependent on completion of contractual milestones.
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract. Contract liabilities include, and are presented as âRevenue received in advance'' and âAdvances from customers''.
Dividend income from investments is recognised when the right to receive payment is established. Interest income from a financial asset is recognized on time basis, by reference to the principal outstanding at the effective interest rate applicable, which is the rate which exactly discounts estimated future cash receipts through the expected life of the financial asset or a shorter period, where appropriate, to that asset''s net carrying amount on initial recognition. Insurance claims are recognised to the extent there is a reasonable certainty of the realizability of the claim amount.
Government grants are recognised when there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grants.
Government grants, whose primary condition is that the Company should establish and operate multiplexes in specified areas, are initially recognised as deferred revenue in the balance sheet and subsequently transferred to the statement of profit and loss as other operating revenue on a systematic and rational basis over the useful lives of the related assets of the respective multiplexes. Grants that compensate the Company for expenses incurred are recognized in the statement of profit and loss as other operating revenue on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised in the statement of profit and loss in the period in which they become receivable.
The Company assesses at contract inception whether a contract is, or contains, a lease viz. whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company recognises a right-of-use asset and a lease liability at the lease commencement date.
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, if any. Right-of-use assets are depreciated from the commencement date on a straightline basis over the shorter of the lease term and useful life of the underlying asset.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, company''s incremental borrowing rate.
The carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
âLease liabilities" and "Right of use assets" have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Company applies the short-term lease recognition exemption to its short-term leases (i.e. those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Variable lease payments that are not included in the measurement of lease liabilities is charged as expense in the statement of profit and loss under the head âRent''. Rent concessions that are not assessed as lease modification are recognised in the statement of profit and loss.
3.7 Foreign currency transactions and translation
The transactions in currencies other than the Company''s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, foreign currency monetary items are translated using the closing rates. Non-monetary items measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction and are not translated. Nonmonetary items measured at fair value that are denominated in foreign currency are translated using the exchange rates at the date when the fair value was measured. Exchange differences arising of settlement or translation of monetary items are recognised in the statement of profit and loss in the period in which they arise.
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 and loss in the period in which they are incurred.
3.9 Investment in subsidiaries
Investment in subsidiaries are carried at cost less accumulated impairment, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries the difference between net disposal proceeds and the carrying amounts are recognised in the Statement of Profit and Loss.
Short-term employee benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as shortterm employee benefits. All short-term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees and recognized as expenses in the Statement of profit and loss. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. These benefits include salary and wages, bonus, performance incentives, short-term compensated absences etc.
Long-term employee benefits:
The Company participates in various employee benefit plans. Post-employment benefits are classified as either defined contribution plans or defined benefit plans.
Defined contribution plans:
Retirement benefit in the form of provident and pension fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the fund. Payments to defined contribution plan are recognised as an expense when employees have rendered service entitling them to the contributions.
Defined benefit plans:
The Company''s gratuity scheme is a defined benefit plan and is unfunded. For defined benefit plan, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each reporting period. Remeasurement, comprising actuarial gains and losses reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to statement of profit and loss. Past service cost is recognised in the statement of profit and loss in the period of a plan amendment. Net interest is calculated by applying the discount rate to the net defined benefit plan at the start of the reporting period, taking account of any change in the net defined benefit plan during the year as a result of contributions and benefit payments. Defined benefit costs are categorized as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
⢠remeasurement
The Company presents the first two components of defined benefit costs in the statement of profit and loss in the line item âEmployee benefits expense''.
Other long-term employee benefits:
The employees of the Company are entitled to compensated absences. The employees can carryforward a portion of the unutilised accumulating compensated absences and utilise it in future service periods or receive cash compensation on termination of employment. Since the compensated absences do not fall due wholly within twelve months after the end of the period in which the employees render the related service and are also not expected to be utilized wholly within twelve months after the end of such period, the benefit is classified as a long-term employee benefit. The Company records an obligation for such compensated absences in the period in which the employee renders the services that increase this entitlement. The obligation is measured on the basis of independent actuarial valuation using the projected unit credit method.
3.11 Share-based payment arrangements
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 40.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straightline basis over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in the statement of profit and loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share options outstanding account in other equity.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
Pursuant to the Scheme of Amalgamation of Fame India Limited (âFame'') and its subsidiaries with the Company (see Note 19), equity shares of the Company have been issued to INOX Benefit Trust (the Trust) against the equity shares of Fame held by the Company. These shares are recognised as Interest in INOX Benefit Trust at the amount of consideration paid by the Company to acquire the shares of erstwhile Fame. These shares of the Company held by INOX Benefit Trust were akin to treasury shares and were presented as a deduction in âTotal equity''. Difference between the cost and the amount received at the time of sale of such shares by the Trust, is recognized in other equity as âTreasury shares reserve'', being a transaction relating to the capital of the Company.
Income tax expense comprises of current tax and deferred tax. It is recognized in Statement of profit and loss except to the extent that it relates to an item recognized directly in equity or in other comprehensive income.
Current tax
Current tax comprises amount of tax payable in respect of the taxable income or loss for the year determined in accordance with Income Tax Act, 1961 and any adjustment to the tax payable or receivable in respect of previous years. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
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 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.
Minimum alternate tax (MAT) paid in a year is charged to the Statement of profit and loss as current tax. Deferred tax assets include Minimum Alternate Tax (MAT) paid on the book profits, which gives rise to future economic benefits in the form of tax credit against future income tax liability, is recognised as an deferred tax assets in the Balance Sheet if there is convincing evidence that the Company will pay normal tax within the period specified for utilization of such credit.
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.
Presentation of current and deferred tax:
Current and deferred tax are recognised in the statement of profit and 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. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. In case of deferred tax assets and deferred tax liabilities, the same are offset if the Company has a legally enforceable right to set off corresponding current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority on the Company.
3.14 Property, plant and equipment
An item of Property, Plant and Equipment (PPE) that qualifies as an asset is measured on initial recognition at cost. Following initial recognition, property, plant and equipment are carried at cost, as reduced by accumulated depreciation and impairment losses, if any.
The Company identifies and determines cost of each part of an item of property, plant and equipment separately, if the part has a cost which is significant to the total cost of that item of property, plant and equipment and has useful life that is materially different from that of the remaining item.
Cost comprises of purchase price / cost of construction, including non-refundable taxes or levies and any expenses attributable to bring the PPE to its working condition for its intended use. Project pre-operative expenses and expenditure incurred during construction period of multiplexes are capitalized to various eligible PPE in respective multiplexes. Borrowing costs directly attributable to acquisition or construction of qualifying PPE are capitalised.
Leasehold improvements represent expenses incurred towards civil works, interior furnishings, etc. on the leased premises at various cinema locations.
Spare parts, stand-by equipment and servicing equipment that meet the definition of property, plant and equipment are capitalized at cost and depreciated over their useful life. Costs in nature of repairs and maintenance are recognized in the Statement of Profit and Loss as and when incurred.
Subsequent expenditure on additions and betterment of operational properties are capitalised, only if, it is probable that the future economic benefits associated with the expenditure will flow to the Company.
Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work in progress. Advances given towards acquisition of PPE outstanding at each Balance Sheet date are disclosed as Other NonCurrent Assets.
Depreciation is recognised so as to write off the cost of PPE (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The useful lives prescribed in Schedule II to the Companies Act, 2013 are considered as the minimum lives. If the management''s estimate of the useful life of property, plant and equipment at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management''s estimate of the useful life/remaining useful life. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
PPE are depreciated over its estimated useful lives, determined as under:
⢠Freehold land is not depreciated.
⢠On leasehold improvements, electrical installations & air conditioners in leased premises, over the period of useful life on the basis of the respective
agreements, ranging from 10-29 years or the useful life as per Part C of Schedule II to the Companies Act, 2013, whichever is shorter.
⢠Laser projectors over the useful life estimated at 10 years.
⢠On other items of PPE, on the basis of useful life as per Part C of Schedule II to the Companies Act, 2013.
The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from its use or disposal. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the statement of profit and loss.
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as of 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.
Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization and impairment losses, on the same basis as intangible assets as above.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in the statement of profit and loss when the asset is derecognised.
Estimated useful lives of the intangible assets are as follows:
⢠Operating software 3 years
⢠Other software 6 years
⢠Website 5 years
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as of 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
3.16 Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets (other than goodwill) to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If it is not possible to measure fair value less cost of disposal because there is no basis for making a reliable estimate of the price at which an orderly transaction to sell the asset would take place between market participants at the measurement dates under market conditions, the asset''s value in use is used as recoverable amount.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of profit and loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the statement of profit and loss.
Inventories are valued at lower of the cost and net realisable value. Cost is determined using weighted average cost basis. Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
3.18 Provisions and contingencies
The Company recognizes provisions when a present obligation (legal or constructive) as a result of a past event exists and it is probable that an outflow of resources embodying economic benefits will be required to settle such obligation and the amount of such obligation can be reliably estimated. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. If the effect of 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 recognized as a finance cost.
Contingent liabilities are disclosed in respect of possible obligations that arise from past events, whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. Contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Contingent assets are not recognized in the financial statements. However, it is disclosed only when an inflow of economic benefits is probable.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the statement of profit and loss.
A] Financial assets
a) Initial recognition and measurement:
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument. On initial recognition, a financial asset is recognised at fair value, in case of financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction costs are recognised in the statement of profit and loss. In other cases, the transaction costs are attributed to the acquisition value of the financial asset.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
b) Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised
in the statement of profit and loss and is included in the âOther income" line item.
c) Subsequent measurement:
For subsequent measurement, the Company classifies a financial asset in accordance with the below criteria:
i. The Company''s business model for managing the financial asset and
ii. The contractual cash flow characteristics of the financial asset.
Based on the above criteria, the Company classifies its financial assets into the following categories:
i. Financial assets measured at amortized cost:
A financial asset is measured at the amortized cost if both the following conditions are met:
a) The Company''s business model objective for managing the financial asset is to hold financial assets in order to collect contractual cash flows, and
b) 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) This category applies to cash and bank balances, trade receivables, loans, other financial assets and certain investments of the Company. Such financial assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is adjusted for loss allowance and impairment losses, if any.
ii. Financial assets measured at FVTOCI:
A financial asset is measured at FVTOCI if both of the following conditions are met:
a) The Company''s business model objective for managing the financial asset is achieved both by collecting contractual cash flows and selling the financial assets, and
b) 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.
Investments in equity instruments, classified under financial assets, are initially measured at fair value. The Company may, on initial recognition, irrevocably elect to measure the same either at FVTOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument are recognised as other income in the Statement of Profit and Loss unless the Company has elected to measure such instrument at FVTOCI.
This category does not apply to any of the financial assets of the Company.
iii. Financial assets measured at FVTPL:
A financial asset is measured at FVTPL unless it is measured at amortized cost or at FVTOCI as explained above.
This is a residual category applied to all other investments of the Company excluding investments in subsidiaries, joint ventures and associate companies. Such financial assets are subsequently measured at fair value at each reporting date. Fair value changes are recognized in the Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised as âother income'' in the Statement of Profit and Loss.
d) Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in the statement of profit and loss except for those which are designated as hedging instruments in a hedging relationship.
e) Derecognition:
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized (i.e., removed from the Company''s Balance Sheet) when any of the following occurs:
i. The contractual rights to cash flows from the financial asset expires;
ii. The Company transfers its contractual rights to receive cash flows of the financial asset and has substantially transferred all the risks and rewards of ownership of the financial asset;
iii. The Company retains the contractual rights to receive cash flows but assumes a contractual obligation to pay the cash flows without material delay to one or more recipients under a âpassthrough'' arrangement (thereby substantially transferring all the risks and rewards of ownership of the financial asset);
iv. The Company neither transfers nor retains substantially all risk and rewards of ownership and does not retain control over the financial asset.
In cases where Company has neither transferred nor retained substantially all of the risks and rewards of the financial asset, but retains control of the financial asset, the Company continues to recognize such financial asset to the extent of its continuing involvement in the financial asset. In that case, the Company also recognizes an associated liability.
The financial asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
On derecognition of a financial asset, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in the statement of profit and loss if such gain or loss would have otherwise been recognised in the statement of profit and loss on disposal of that financial asset.
f) Impairment of financial assets:
The Company applies expected credit losses (ECL) model for measurement and recognition of loss allowance on the following:
i. Trade receivables
ii. Financial assets measured at amortized cost
iii. Financial assets measured at fair value through other comprehensive income (FVTOCI)
In case of trade receivables, the Company follows a simplified approach wherein an amount equal to lifetime ECL is measured and recognized as loss allowance.
In case of other assets (listed as ii and iii above), the Company determines if there has been a significant increase in credit risk of the financial asset since initial recognition. If the credit risk of such assets has not increased significantly, an amount equal to 12-month ECL is measured and recognized as loss allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and recognized as loss allowance.
Subsequently, if the credit quality of the financial asset improves such that there is no longer a significant increase in credit risk since initial recognition, the Company reverts to recognizing impairment loss allowance based on 12-month ECL.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original effective interest rate.
12-month ECL are a portion of the lifetime ECL which result from default events that are possible within 12 months from the reporting date. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial asset.
ECL are measured in a manner that they reflect unbiased and probability weighted amounts determined by a range of outcomes, taking into account the time value of money and other reasonable information available as a result of past events, current conditions and forecasts of future economic conditions.
As a practical expedient, the Company uses a provision matrix to measure lifetime ECL on its portfolio of trade receivables. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates. At each reporting date, the historically observed default rates and changes in the forward-looking estimates are updated.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as expense/income in the Statement of Profit and Loss under the head âOther expenses''/ ''Other income''.
B] Financial liabilities and equity instruments
Debt and equity instruments issued by a Company entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
i. Equity instruments:
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company entity are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in the statement of profit and loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
ii. Financial Liabilities:
a) Initial recognition and measurement:
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at fair value.
b) Subsequent measurement:
Financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities carried at fair value through profit or loss is measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.
The Company has not designated any financial liability as at FVTPL.
Mar 31, 2018
1.1 Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Company, liabilities incurred by the Company to the former owners of the acquiree and the equity interests issued by the Company in exchange of control of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:
- deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with Ind AS 12 Income Taxes and Ind AS 19 Employee Benefits respectively;
- liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Company entered into to replace share-based payment arrangements of the acquiree are measured in accordance with Ind AS 102 Share-based Payment at the acquisition date (see Note 3.9); and
- assets (or disposal Groups) that are classified as held for sale in accordance with Ind AS 105 Noncurrent Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree, and the fair value of the acquirerâs previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entityâs net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interestsâ proportionate share of the recognised amounts of the acquireeâs identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another Ind AS.
When the consideration transferred by the Company in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill or capital reserve, as the case may be. Measurement period adjustments are adjustments that arise from additional information obtained during the âmeasurement periodâ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at fair value at subsequent reporting dates with the corresponding gain or loss being recognized in profit or loss.
When a business combination is achieved in stages, the Companyâs previously held equity interest in the acquiree is remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognized in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed off.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (refer above), or additional assets or liabilities are recognized to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date.
1.2 Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see Note 3.1 above) less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Companyâs cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
1.3 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and is recognised when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of income can be measured reliably. Revenue is reduced for rebates, trade discounts, refunds and other similar allowances. Revenue is net of entertainment tax, goods & service tax, service tax, sales tax, value added tax and other similar taxes.
1.3.1 Rendering of services
Revenue from services rendered is recognized in profit or loss by reference to the stage of completion of transaction at the reporting date and when the costs incurred for the transactions and the costs to complete the transaction can be measured reliably, as under:
Revenue from box office is recognized as and when the movie is exhibited. Conducting fees are in respect of charges received from parties to conduct business from the Companyâs multiplexes and the revenue is recognized over the period of contract or other appropriate basis as per the contractual terms. Advertisement income is recognized on exhibition of the advertisement or over the period of contract, as applicable.
1.3.2 Sale of goods
Revenue is recognized, when the significant risks and rewards of the ownership have been transferred to the buyers and there is no continuing effective control over the goods or managerial involvement with the goods. Revenue from sale of food and beverages is recognized at the point of sale. Income from sale of power is recognized on the basis of actual units generated and transmitted to the purchaser.
1.3.3 Other income
Dividend income from investments is recognised when the right to receive payment is established. Interest income from a financial asset is recognized on time basis, by reference to the principal outstanding at the effective interest rate applicable, which is the rate which exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition. Insurance claims are recognised to the extent there is a reasonable certainty of the realizability of the claim amount.
1.4 Government Grants
Government grants are recognised when there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grants.
Government grants, whose primary condition is that the Company should establish and operate multiplexes in specified areas, are initially recognised as deferred revenue in the standalone balance sheet and subsequently transferred to profit or loss as other operating revenue on a systematic and rational basis over the useful lives of the related assets of the respective multiplexes. Grants that compensate the Company for expenses incurred are recognized in profit or loss as other operating revenue on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised in profit or loss in the period in which they become receivable.
1.5 Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The leasing transactions of the Company comprise of only operating leases.
The Company as lessee
Payments made under operating leases are generally recognised in profit or loss on a straight-line basis over the term of the lease unless such payments are structured to increase in line with the expected general inflation to compensate for the lessors expected inflationary cost increases. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
1.6 Foreign currency transactions and translation
The transactions in currencies other than the Companyâs functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, foreign currency monetary items are translated using the closing rates. Non-monetary items measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction and are not translated. Non-monetary items measured at fair value that are denominated in foreign currency are translated using the exchange rates at the date when the fair value was measured.
Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except as permitted by para D13AA of Ind AS 101, the Company has continued the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP. Accordingly, exchange differences on conversion and on settlement of long term foreign currency monetary items, where the long-term foreign currency monetary items relate to the acquisition of a depreciable capital asset (whether purchased within or outside India), is adjusted to the cost of the asset, and depreciated over the balance life of the assets.
1.7 Borrowing costs
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 profit or loss in the period in which they are incurred.
1.8 Employee benefits
1.8.1 Retirement benefit costs and termination benefits
Recognition and measurement of defined contribution plans:
Payments to defined contribution benefit plan viz. government administered provident funds and pension schemes are recognised as an expense when employees have rendered service entitling them to the contributions.
Recognition and measurement of defined benefit plans:
For defined benefit plan, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate to the net defined benefit plan at the start of the reporting period, taking account of any change in the net defined benefit plan during the year as a result of contributions and benefit payments. Defined benefit costs are categorised as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- net interest expense or income; and
- remeasurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item âEmployee benefits expenseâ. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the standalone balance sheet represents the actual deficit or surplus in the Companyâs defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
1.8.2 Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, bonus, annual leave and sick leave etc. in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
1.9 Share-based payment arrangements
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 41.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share options outstanding account in other equity.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
1.10 Treasury Shares
Pursuant to the Scheme of Amalgamation of Fame India Limited (âFameâ) and its subsidiaries with the Company (see Note 21), equity shares of the Company have been issued to INOX Benefit Trust (the Trust) against the equity shares of Fame held by the Company. These shares are recognised as Interest in INOX Benefit Trust at the amount of consideration paid by the Company to acquire the shares of erstwhile Fame. These shares of the Company held by INOX Benefit Trust are akin to treasury shares and are presented as a deduction in âTotal equityâ. Difference between the cost and the amount received at the time sale of shares by the Trust, is recognized directly under âOther Equityâ as âReserve on Sale of Treasury Sharesâ.
1.11 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
1.11.1 Current tax :
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before taxâ as reported in the standalone statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible and tax incentives. The Companyâs current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
1.11.2 Deferred tax :
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the standalone 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 assets include Minimum Alternate Tax (MAT) paid on the book profits, which gives rise to future economic benefits in the form of tax credit against future income tax liability, is recognised as an deferred tax assets in the Balance Sheet if there is convincing evidence that the Company will pay normal tax within the period specified for utilization of such credit.
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.
1.11.3 Presentation of current and deferred tax :
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. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. In case of deferred tax assets and deferred tax liabilities, the same are offset if the Company has a legally enforceable right to set off corresponding current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority on the Company.
1.12 Property, plant and equipment
An item of Property, Plant and Equipment (PPE) that qualifies as an asset is measured on initial recognition at cost. Following initial recognition, property, plant and equipment are carried at cost, as reduced by accumulated depreciation and impairment losses, if any.
The Company identifies and determines cost of each part of an item of property, plant and equipment separately, if the part has a cost which is significant to the total cost of that item of property, plant and equipment and has useful life that is materially different from that of the remaining item.
Cost comprises of purchase price / cost of construction, including non-refundable taxes or levies and any expenses attributable to bring the PPE to its working condition for its intended use. Project pre-operative expenses and expenditure incurred during construction period of multiplexes are capitalized to various eligible PPE in respective multiplexes. Borrowing costs directly attributable to acquisition or construction of qualifying PPE are capitalised. In respect of accounting period commencing on or after 1 April 2011, the cost of depreciable capital assets includes foreign exchange differences arising on translation of long term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP (see Note 3.6).
Spare parts, stand-by equipment and servicing equipment that meet the definition of property, plant and equipment are capitalized at cost and depreciated over their useful life. Costs in nature of repairs and maintenance are recognized in the Statement of Profit and Loss as and when incurred.
Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work in progress. Advances given towards acquisition of PPE outstanding at each Balance Sheet date are disclosed as Other Non-Current Assets.
Depreciation is recognised so as to write off the cost of PPE (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The useful lives prescribed in Schedule II to the Companies Act, 2013 are considered as the minimum lives. If the managementâs estimate of the useful life of property, plant and equipment at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the managementâs estimate of the useful life/remaining useful life. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
PPE are depreciated over its estimated useful lives, determined as under:
- Freehold land is not depreciated.
- On leasehold improvements, electrical installations & air conditioners in leased premises, over the period of useful life on the basis of the respective agreements ranging from 10-25 years or the useful life as per Part C of Schedule II to the Companies Act, 2013, whichever is shorter.
- On other items of PPE, on the basis of useful life as per Part C of Schedule II to the Companies Act, 2013.
The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from its use or disposal. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as of 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
1.13 Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization and impairment losses, on the same basis as intangible assets as above.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.
Estimated useful lives of the intangible assets are as follows:
- Operating software 3 years
- Other software 6 years
- Movie script 5 years
- Website 5 years
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as of 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
1.14 Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets (other than goodwill) to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If it is not possible to measure fair value less cost of disposal because there is no basis for making a reliable estimate of the price at which an orderly transaction to sell the asset would take place between market participants at the measurement dates under market conditions, the assetâs value in use is used as recoverable amount.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
1.15 Inventories
Inventories are valued at lower of the cost and net realisable value. Cost is determined using weighted average cost basis. Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
1.16 Provisions and contingencies
The Company recognizes provisions when a present obligation (legal or constructive) as a result of a past event exists and it is probable that an outflow of resources embodying economic benefits will be required to settle such obligation and the amount of such obligation can be reliably estimated.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. If the effect of 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 recognized as a finance cost.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.
Contingent liabilities acquired in a business combination are initially measured at fair value at the acquisition date. At the end of subsequent period, such contingent liabilities are measured at the higher of the amounts that would be recognised in accordance with Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation recognised in accordance with Ind AS 18 Revenue, if any.
1.17 Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
A] Financial assets
a) Initial recognition and measurement:
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument. On initial recognition, a financial asset is recognised at fair value, in case of financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction costs are recognised in the statement of profit and loss. In other cases, the transaction costs are attributed to the acquisition value of the financial asset.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
b) Effective interest method:
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the âOther incomeâ line item.
c) Subsequent measurement:
For subsequent measurement, the Company classifies a financial asset in accordance with the below criteria:
i. The Companyâs business model for managing the financial asset and
ii. The contractual cash flow characteristics of the financial asset.
Based on the above criteria, the Company classifies its financial assets into the following categories:
i. Financial assets measured at amortized cost:
A financial asset is measured at the amortized cost if both the following conditions are met:
a) The Companyâs business model objective for managing the financial asset is to hold financial assets in order to collect contractual cash flows, and
b) 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.
This category applies to cash and bank balances, trade receivables, loans, other financial assets and certain investments of the Company. Such financial assets are subsequently measured at amortized cost using the effective interest method.
The amortized cost of a financial asset is also adjusted for loss allowance, if any.
ii. Financial assets measured at FVTOCI:
A financial asset is measured at FVTOCI if both of the following conditions are met:
a) The Companyâs business model objective for managing the financial asset is achieved both by collecting contractual cash flows and selling the financial assets, and
b) 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.
Investments in equity instruments, classified under financial assets, are initially measured at fair value. The Company may, on initial recognition, irrevocably elect to measure the same either at FVTOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument are recognised as other income in the Statement of Profit and Loss unless the Company has elected to measure such instrument at FVTOCI.
This category does not apply to any of the financial assets of the Company.
iii. Financial assets measured at FVTPL:
A financial asset is measured at FVTPL unless it is measured at amortized cost or at FVTOCI as explained above.
This is a residual category applied to all other investments of the Company excluding investments in subsidiaries, joint ventures and associate companies. Such financial assets are subsequently measured at fair value at each reporting date. Fair value changes are recognized in the Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised as âother incomeâ in the Statement of Profit and Loss.
d) Foreign exchange gains and losses:
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
e) Derecognition:
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized (i.e. removed from the Companyâs Balance Sheet) when any of the following occurs:
i. The contractual rights to cash flows from the financial asset expires;
ii. The Company transfers its contractual rights to receive cash flows of the financial asset and has substantially transferred all the risks and rewards of ownership of the financial asset;
iii. The Company retains the contractual rights to receive cash flows but assumes a contractual obligation to pay the cash flows without material delay to one or more recipients under a âpassthroughâ arrangement (thereby substantially transferring all the risks and rewards of ownership of the financial asset);
iv. The Company neither transfers nor retains substantially all risk and rewards of ownership and does not retain control over the financial asset.
In cases where Company has neither transferred nor retained substantially all of the risks and rewards of the financial asset, but retains control of the financial asset, the Company continues to recognize such financial asset to the extent of its continuing involvement in the financial asset. In that case, the Company also recognizes an associated liability.
The financial asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
On derecognition of a financial asset, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
f) Impairment of financial assets:
The Company applies expected credit losses (ECL) model for measurement and recognition of loss allowance on the following:
i. Trade receivables
ii. Financial assets measured at amortized cost
iii. Financial assets measured at fair value through other comprehensive income (FVTOCI)
In case of trade receivables, the Company follows a simplified approach wherein an amount equal to lifetime ECL is measured and recognized as loss allowance.
In case of other assets (listed as ii and iii above), the Company determines if there has been a significant increase in credit risk of the financial asset since initial recognition. If the credit risk of such assets has not increased significantly, an amount equal to 12-month ECL is measured and recognized as loss allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and recognized as loss allowance.
Subsequently, if the credit quality of the financial asset improves such that there is no longer a significant increase in credit risk since initial recognition, the Company reverts to recognizing impairment loss allowance based on 12-month ECL.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original effective interest rate.
12-month ECL are a portion of the lifetime ECL which result from default events that are possible within 12 months from the reporting date. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial asset.
ECL are measured in a manner that they reflect unbiased and probability weighted amounts determined by a range of outcomes, taking into account the time value of money and other reasonable information available as a result of past events, current conditions and forecasts of future economic conditions.
As a practical expedient, the Company uses a provision matrix to measure lifetime ECL on its portfolio of trade receivables. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates. At each reporting date, the historically observed default rates and changes in the forward-looking estimates are updated.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as expense/income in the Statement of Profit and Loss under the head âOther expensesâ/âOther incomeâ.
B] Financial liabilities and equity instruments
Debt and equity instruments issued by a Company entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
i. Equity instruments:-
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company entity are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Companyâs own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments.
ii. Financial Liabilities:-
a) Initial recognition and measurement:
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at fair value.
b) Subsequent measurement:
Financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.
The Company has not designated any financial liability as at FVTPL.
c) Foreign exchange gains and losses:
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in profit or loss.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the closing rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
d) Derecognition of financial liabilities:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the Derecognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid is recognized in the Statement of Profit and Loss.
1.18 Earnings Per Share
Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
The shares of the Company held by INOX Benefit Trust, being Treasury Shares, are excluded while computing the weighted average number of shares.
1.19 Recent accounting pronouncements
a) On 28 March 2018, the Ministry of Corporate Affairs has notified Ind AS 115, âRevenue from contracts with customersâ which is applicable to the Company from 1 April 2018. The main principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The effect on the financial statements is being evaluated by the Company.
b) On 28 March 2018, the Ministry of Corporate Affairs has issued the Companies (Indian Accounting Standards) Amendments Rules, 2018 containing Appendix B to Ind AS 21, foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. This amendment has no impact on the financial statements of the Company.
Mar 31, 2017
1. Company information
Inox Leisure Limited ("the Company") is a public limited company incorporated in India. The Company is engaged in operating & managing multiplexes and cinema theatres in India. The Company''s parent company is Gujarat Fluorochemicals Limited and its ultimate holding company is Inox Leasing and Finance Limited. The shares of the Company are listed on the Bombay Stock Exchange and the National Stock Exchange of India.
The Company''s registered office is located at ABS Towers, Old Padra Road, Vadodara - 390 007, and the particulars of its other offices and multiplexes/cinema theatres are disclosed in the annual report.
2. Statement of compliance and basis of preparation and presentation
2.1 Statement of Compliance
These financial statements are the separate financial statements of the Company (also called standalone Ind AS financial statements) prepared in accordance with Indian Accounting Standards ("Ind AS") notified under section 133 of the Companies Act, 2013, read together with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015.
Upto the year ended 31 March 2016, the Company prepared its financial statements in accordance with the requirements of Accounting Standards notified under the Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (''Previous GAAP''). These are the Company''s first Ind AS financial statements. The date of transition to Ind AS is 1 April 2015. Refer Note
4 for the details of mandatory exceptions and optional exemptions on first-time adoption availed by the Company.
2.2 Basis of Measurement
These financial statements are presented in Indian Rupees (INR), which is also the Company''s functional currency. All amounts have been rounded-off to the nearest lakhs, unless otherwise indicated.
These financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the significant accounting policies.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2.3 Basis of Preparation and Presentation
The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements, including the preparation of the opening Ind AS Balance Sheet as at 1st April, 2015 being the ''date of transition to Ind AS''.
Any asset or liability is classified as current if it satisfies any of the following conditions:
- the asset/liability is expected to be realized/settled in the Company''s normal operating cycle;
- the asset is intended for sale or consumption;
- the asset/liability is held primarily for the purpose of trading;
- the asset/liability is expected to be realized/settled within twelve months after the reporting period
- the asset is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date;
- in the case of a liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
All other assets and liabilities are classified as non-current.
For the purpose of current/non-current classification of assets and liabilities, the Company has ascertained its normal operating cycle as twelve months. This is based on the nature of products and services and the time between the acquisition of assets or inventories for processing and their realization in cash and cash equivalents.
These financial statements were authorized for issue by the Company''s Board of Directors on 2 May 2017.
3. Significant Accounting Polices
3.1 Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Company, liabilities incurred by the Company to the former owners of the acquire and the equity interests issued by the Company in exchange of control of the acquire. Acquisition-related costs are generally recognized in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, except that:
- deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with Ind AS 12 Income Taxes and Ind AS 19 Employee Benefits respectively;
- liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Company entered into to replace share-based payment arrangements of the acquiree are measured in accordance with Ind AS 102 Share-based Payment at the acquisition date (refer Note 43); and
- assets (or disposal Groups) that are classified as held for sale in accordance with Ind AS 105 Noncurrent Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any no controlling interests in the acquiree, and the fair value of the acquirer''s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity''s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests'' proportionate share of the recognized amounts of the acquiree''s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another Ind AS.
When the consideration transferred by the Company in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill or capital reserve, as the case may be. Measurement period adjustments are adjustments that arise from additional information obtained during the ''measurement period'' (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not premeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is premeasured at fair value at subsequent reporting dates with the corresponding gain or loss being recognized in profit or loss.
When a business combination is achieved in stages, the Company''s previously held equity interest in the acquiree is premeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognized in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (refer above), or additional assets or liabilities are recognized to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date.
3.2 Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (refer Note 3.1 above) less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Company''s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
3.4. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and is recognized when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of income can be measured reliably. Revenue is reduced for rebates, trade discounts, refunds and other similar allowances. Revenue is net of entertainment tax, service tax, sales tax, value added tax and other similar taxes.
3.4.1 Rendering of services
Revenue from services rendered is recognized in profit or loss by reference to the stage of completion of transaction at the reporting date and when the costs incurred for the transactions and the costs to complete the transaction can be measured reliably, as under:
Revenue from box office is recognized as and when the movie is exhibited. Conducting fees are in respect of charges received from parties to conduct business from the Company''s multiplexes and the revenue is recognized over the period of contract or other appropriate basis as per the contractual terms. Advertisement income is recognized on exhibition of the advertisement or over the period of contract, as applicable.
3.4.2 Sale of goods
Revenue is recognized, when the significant risks and rewards of the ownership have been transferred to the buyers and there is no continuing effective control over the goods or managerial involvement with the goods. Revenue from sale of food and beverages is recognized at the point of sale. Income from sale of power is recognized on the basis of actual units generated and transmitted to the purchaser.
3.4.3 Other income
Dividend income from investments is recognized when the right to receive payment is established. Interest income from a financial asset is recognized on time basis, by reference to the principal outstanding at the effective interest rate applicable, which is the rate which exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition. Insurance claims are recognized to the extent there is a reasonable certainty of the reliability of the claim amount.
3.5 Government Grants
Government grants are recognized when there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grants.
Government grants, whose primary condition is that the Company should establish and operate multiplexes in specified areas, are initially recognized as deferred revenue in the standalone balance sheet and subsequently transferred to profit or loss as other operating revenue on a systematic and rational basis over the useful lives of the related assets of the respective multiplexes. Grants that compensate the Company for expenses incurred are recognized in profit or loss as other operating revenue on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to compensate. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognized in profit or loss in the period in which they become receivable.
3.6 Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The leasing transactions of the Company comprise of only operating leases.
3.6.1 The Company as lessee
Payments made under operating leases are generally recognized in profit or loss on a straight-line basis over the term of the lease unless such payments are structured to increase in line with the expected general inflation to compensate for the lessons expected inflationary cost increases. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.
3.7 Foreign currency transactions and translations
The transactions in currencies other than the Company''s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, foreign currency monetary items are translated using the closing rates. Non-monetary items measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction and are not translated. Non-monetary items measured at fair value that are denominated in foreign currency are translated using the exchange rates at the date when the fair value was measured.
Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except as permitted by para D13AA of Ind AS 101, the Company has continued the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognized in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP. Accordingly, exchange differences on conversion and on settlement of long term foreign currency monetary items, where the long-term foreign currency monetary items relate to the acquisition of a depreciable capital asset (whether purchased within or outside India), is adjusted to the cost of the asset, and depreciated over the balance life of the assets.
3.8 Borrowing costs
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 capitalization.
All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
3.9 Employee benefits
3.9.1 Retirement benefit costs and termination benefits
Recognition and measurement of defined contribution plans:
Payments to defined contribution retirement benefit plan viz. government administered provident funds and pension schemes are recognized as an expense when employees have rendered service entitling them to the contributions.
Recognition and measurement of defined benefit plans:
For defined benefit retirement benefit plan, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate to the net defined benefit plan at the start of the reporting period, taking account of any change in the net defined benefit plan during the year as a result of contributions and benefit payments. Defined benefit costs are categorized as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- net interest expense or income; and
- remeasurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item ''Employee benefits expense''. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognized in the standalone balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
3.9.2 Short-term and other long-term employee benefits
A liability is recognized for benefits accruing to employees in respect of wages and salaries, bonus, annual leave and sick leave etc in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognized in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
3.10 Share-based payment arrangements
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 43.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share options outstanding account in other equity.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
3.11 Treasury Shares
Pursuant to the Scheme of Amalgamation of Fame India Limited (''Fame'') and its subsidiaries with the Company (refer Note 22), equity shares of the Company have been issued to INOX Benefit Trust (the Trust) against the equity shares of Fame held by the Company. These shares are recognized as Interest in INOX Benefit Trust at the amount of consideration paid by the Company to acquire the shares of erstwhile Fame. These shares of the Company held by INOX Benefit Trust are akin to treasury shares and are presented as a deduction in ''Total equity''. Difference between the cost and the amount received at the time sale of shares by the Trust, is recognized directly under ''Other Equity'' as ''Reserve on Sale of Treasury Shares''.
3.12 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
3.12.1 Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the standalone statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible and tax incentives. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
3.12.2 Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the standalone financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized 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 utilized. Such deferred tax assets and liabilities are not recognized 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 recognized 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 realized, 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.
3.12.3 Presentation of current and deferred tax :
Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. In case of deferred tax assets and deferred tax liabilities, the same are offset if the Company has a legally enforceable right to set off corresponding current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority on the Company.
3.13 Property, plant and equipment
An item of property, plant and equipment that qualifies as an asset is measured on initial recognition at cost. Following initial recognition, Property, Plant and Equipment (PPE) are carried at cost, as reduced by accumulated depreciation and impairment losses, if any.
The Company identifies and determines cost of each part of an item of property, plant and equipment separately, if the part has a cost which is significant to the total cost of that item of property, plant and equipment and has useful life that is materially different from that of the remaining item.
Cost comprises of purchase price / cost of construction, including non-refundable taxes or levies and any expenses attributable to bring the PPE to its working condition for its intended use. Project pre-operative expenses and expenditure incurred during construction period of multiplexes are capitalized to various eligible PPE in respective multiplexes. Borrowing costs directly attributable to acquisition or construction of qualifying PPE are capitalized. In respect of accounting period commencing on or after 1st April 2011, the cost of depreciable capital assets includes foreign exchange differences arising on translation of long term foreign currency monetary items (refer Note 6).
Spare parts, stand-by equipment and servicing equipment that meet the definition of property, plant and equipment are capitalized at cost and depreciated over their useful life. Costs in nature of repairs and maintenance are recognized in the Statement of Profit and Loss as and when incurred.
Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work in progress. Advances given towards acquisition of fixed assets outstanding at each Balance Sheet date are disclosed as Other Non-Current Assets.
Depreciation is recognized so as to write off the cost of PPE (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
PPE are depreciated over its estimated useful lives, determined as under:
- Freehold land is not depreciated.
- On leasehold improvements, electrical installations & air conditioners in leased premises, over the period of useful life on the basis of the respective agreements or the useful life as per Part C of Schedule II to the Companies Act, 2013, whichever is shorter.
- On other items of PPE, on the basis of useful life as per Part C of Schedule II to the Companies Act, 2013.
The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as of 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
3.14 Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization and impairment losses, on the same basis as intangible assets as above.
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognized as of 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
3.15 Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets (other than goodwill) to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If it is not possible to measure fair value less cost of disposal because there is no basis for making a reliable estimate of the price at which an orderly transaction to sell the asset would take place between market participants at the measurement dates under market conditions, the asset''s value in use is used as recoverable amount.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
3.16 Inventories
Inventories are valued at lower of the cost and net realizable value. Cost is determined using weighted average cost basis. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
3.17 Provisions and contingencies
The Company recognizes provisions when a present obligation (legal or constructive) as a result of a past event exists and it is probable that an outflow of resources embodying economic benefits will be required to settle such obligation and the amount of such obligation can be reliably estimated.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. If the effect of 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 recognized as a finance cost.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.
Contingent liabilities acquired in a business combination are initially measured at fair value at the acquisition date. At the end of subsequent period, such contingent liabilities are measured at the higher of the amounts that would be recognized in accordance with Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognized less cumulative amortization recognized in accordance with Ind AS 18 Revenue, if any.
3.18 Financial instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
A] Financial assets
a) Initial recognition and measurement:
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument. On initial recognition, a financial asset is recognized at fair value, in case of financial assets which are recognized at fair value through profit and loss (FVTPL), its transaction costs are recognized in the statement of profit and loss. In other cases, the transaction costs are attributed to the acquisition value of the financial asset.
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
b) Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognized in profit or loss and is included in the "Other income" line item.
c) Subsequent measurement:
For subsequent measurement, the Company classifies a financial asset in accordance with the below criteria:
i. The Company''s business model for managing the financial asset and
ii. The contractual cash flow characteristics of the financial asset.
Based on the above criteria, the Company classifies its financial assets into the following categories:
i. Financial assets measured at amortized cost:
A financial asset is measured at the amortized cost if both the following conditions are met:
a) The Company''s business model objective for managing the financial asset is to hold financial assets in order to collect contractual cash flows, and
b) 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.
This category applies to cash and bank balances, trade receivables, loans and other financial assets of the Company. Such financial assets are subsequently measured at amortized cost using the effective interest method.
The amortized cost of a financial asset is also adjusted for loss allowance, if any.
ii. Financial assets measured at FVTOCI:
A financial asset is measured at FVTOCI if both of the following conditions are met:
a) The Company''s business model objective for managing the financial asset is achieved both by collecting contractual cash flows and selling the financial assets, and
b) 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.
All investments in equity instruments classified under financial assets are initially measured at fair value , the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument are recognized as other income in the Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI.
This category does not apply to any of the financial assets of the Company.
iii. Financial assets measured at FVTPL:
A financial asset is measured at FVTPL unless it is measured at amortized cost or at FVTOCI as explained above.
This is a residual category applied to all other investments of the Company excluding investments in subsidiaries, joint ventures and associate companies. Such financial assets are subsequently measured at fair value at each reporting date. Fair value changes are recognized in the Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognized as ''other income'' in the Statement of Profit and Loss.
d) Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortized cost and FVTPL, the exchange differences are recognized in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
e) Derecognition:
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized (i.e. removed from the Company''s Balance Sheet) when any of the following occurs:
i. The contractual rights to cash flows from the financial asset expires;
ii. The Company transfers its contractual rights to receive cash flows of the financial asset and has substantially transferred all the risks and rewards of ownership of the financial asset;
iii. The Company retains the contractual rights to receive cash flows but assumes a contractual obligation to pay the cash flows without material delay to one or more recipients under a ''pass-through'' arrangement (thereby substantially transferring all the risks and rewards of ownership of the financial asset);
iv. The Company neither transfers nor retains substantially all risk and rewards of ownership and does not retain control over the financial asset.
In cases where Company has neither transferred nor retained substantially all of the risks and rewards of the financial asset, but retains control of the financial asset, the Company continues to recognize such financial asset to the extent of its continuing involvement in the financial asset. In that case, the Company also recognizes an associated liability.
The financial asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
On derecognition of a financial asset, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.
f) Impairment of financial assets:
The Company applies expected credit losses (ECL) model for measurement and recognition of loss allowance on the following:
i. Trade receivables
ii. Financial assets measured at amortized cost (other than trade receivables)
iii. Financial assets measured at fair value through other comprehensive income (FVTOCI)
In case of trade receivables, the Company follows a simplified approach wherein an amount equal to lifetime ECL is measured and recognized as loss allowance.
In case of other assets (listed as ii and iii above), the Company determines if there has been a significant increase in credit risk of the financial asset since initial recognition. If the credit risk of such assets has not increased significantly, an amount equal to 12-month ECL is measured and recognized as loss allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and recognized as loss allowance.
Subsequently, if the credit quality of the financial asset improves such that there is no longer a significant increase in credit risk since initial recognition, the Company reverts to recognizing impairment loss allowance based on 12-monthECL.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original effective interest rate.
12-month ECL are a portion of the lifetime ECL which result from default events that are possible within 12 months from the reporting date. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial asset.
ECL are measured in a manner that they reflect unbiased and probability weighted amounts determined by a range of outcomes, taking into account the time value of money and other reasonable information available as a result of past events, current conditions and forecasts of future economic conditions.
As a practical expedient, the Company uses a provision matrix to measure lifetime ECL on its portfolio of trade receivables. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates. At each reporting date, the historically observed default rates and changes in the forward-looking estimates are updated.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the Statement of Profit and Loss under the head ''Other expenses''.
B] Financial liabilities and equity instruments
Debt and equity instruments issued by a Company entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
i. Equity instruments:-
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company entity are recognized at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
ii. Financial Liabilities:-
a) Initial recognition and measurement:
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at fair value.
b) Subsequent measurement:
Financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognized in the Statement of Profit and Loss.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
The Company has not designated any financial liability as at FVTPL. Further the Company does not have any commitments to provide a loan at a below market interest rate.
c) Foreign exchange gains and losses:
For financial liabilities that are denominated in a foreign currency and are measured at amortized cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortized cost of the instruments and are recognized in profit or loss.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the closing rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognized in profit or loss.
d) Derecognition of financial liabilities:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the Derecognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid is recognized in the Statement of Profit and Loss.
3.21 Earnings Per Share
Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
The shares of the Company held by INOX Benefit Trust, being Treasury Shares, are excluded while computing the weighted average number of shares.
3.22 Recent accounting pronouncements
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ''Statement of cash flows'' and Ind AS 102, ''Share- based payment''. The amendment is applicable to the Company from April 1, 2017.
Amendment to Ind AS 7:
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement. The effect on the financial statements is being evaluated by the Company.
Amendment to Ind AS 102:
The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes. It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity settled awards. Market-based performance conditions and non-vesting conditions are reflected in the ''fair values'' but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transactions are modified with the result that it becomes an equity settled share based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payments to the tax authority is treated as if it was part of an equity settlement. The effect on the financial statements is being evaluated by the Company.
4. First-time adoption - mandatory exceptions, optional exemptions Overall principle
The Company has prepared the opening standalone balance sheet as per Ind AS as at 1 April 2015 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing
items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities.
However, this principle is subject to the certain mandatory exceptions and optional exemptions allowed by Ind AS 101 First-time Adoption of Indian Accounting Standards and availed by the Company as detailed below:
I. Optional exemptions from retrospective application:
a) Deemed cost for property, plant and equipment and intangible assets
The Company has elected to continue with the carrying value of all of its property, plant and equipment and intangible assets recognized as at 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as at the transition date.
b) Past business combinations
The Company has elected not to apply Ind AS 103 Business Combinations retrospectively to past business combinations that occurred before the transition date of 1 April 2015. Consequently,
- The carrying amounts of assets and liabilities acquired pursuant to past business combination and recognized financial statements prepared under Previous GAAP, are considered to be the deemed cost under Ind AS, on the date of acquisition. After the date of acquisition, measurement of such assets and liabilities is in accordance with respective Ind AS. Also, there is no change in classification of such assets and liabilities;
- The Company has not recognized assets and liabilities that neither were recognized in the financial statements prepared under Previous GAAP nor qualify for recognition under Ind AS in the Balance Sheet of the acquiree;
- The Company has excluded from its opening Ind AS Balance Sheet (as at 1st April, 2015), those assets and liabilities which were recognized in accordance with Previous GAAP but do not qualify for recognition as an asset or liabilities under Ind AS; and
- Use of this exemption from retrospective appliction of Ind AS 103, Business Combination, requires that the carrying amount of goodwill as per financial statements prepared under Previous GAAP should be recognized in the opening Ind AS Balance Sheet after adjusting for impairment, if any. The company has therefore tested goodwill for impairment as at the date of transition to Ind AS and accordingly, no goodwill impairment was deemed necessary
The above exemption in respect of business combinations has also been applied to past acquisitions of interests in joint ventures.
c) Foreign currency translation of long-term monetary items
The Company has continued the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognized in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP. Accordingly, exchange differences on conversion and on settlement of long term foreign currency monetary items, where the long-term foreign currency monetary items relate to the acquisition of a depreciable capital asset (whether purchased within or outside India), is adjusted to the cost of the asset, and depreciated over the balance life of the assets.
d) Investment in subsidiary and joint venture
The Company has opted to measure the investments in its subsidiary and joint venture at deemed cost of such investment which is previous GAAP carrying amount on the date of transition.
e) Discounting of security deposits
As per the requirements of Ind AS 109, security deposits given by the Company are required to be carried at amortized cost at the time of initial recognition. However, as permitted by Ind AS
101, the assessment of modified time value of money element is made on the basis of facts and circumstances that exist at the date of transition to Ind AS.
II. Mandatory exceptions from retrospective application
a) Estimates:
On assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates. However, estimates that were required under Ind AS but not required under Previous GAAP are made by the Company for the relevant reporting dates reflecting conditions existing as at that date.
b) Derecognition of financial assets and financial liabilities
The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after 1 April 2015 (the transition date).
c) Impairment of financial assets
The Company has applied the impairment requirements of Ind AS 109 Financial Instruments retrospectively; however, as permitted by Ind AS 101 First-time Adoption of Indian Accounting Standards, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.
d) Classification and measurement of financial assets:
The classification of financial assets to be measured at amortized cost or fair value through other comprehensive income is made on the basis of the facts and circumstances that existed on the date of transition to Ind AS.
Mar 31, 2016
financial statements for the year ended 31st March 2016
1. CORPORATE INFORMATION
INOX Leisure Limited (the âCompanyâ) is engaged in the business of operating & managing multiplexes and cinema theatres in India. The Company is a public company and its shares are listed on the Bombay Stock Exchange and the National Stock Exchange of India. The Company is a subsidiary of Gujarat Fluor chemicals Limited.
2. BASIS OF PREPARATION
These financial statements have been prepared in accordance with the generally accepted accounting principles in India, under the historical cost convention and on accrual basis. These financial statements comply in all material respects with the applicable accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 20I4.
Figures for the previous year have been re-grouped / reclassified wherever necessary to confirm with the classification of the current year. In view of amalgamation of erstwhile Satyam Cineplex Limited (see note no. 30), figures for the current year are after giving effect to the amalgamation and hence not directly comparable with those of previous year.
3. SIGNIFICANT ACCOUNTING POLICIES
a) Revenue Recognition:
Revenue from Box Office is recognized as and when the movie is exhibited. Revenue from Sale of Food & Beverages is accounted at the point of sale. These revenues are net of refunds and complimentary. Conducting fees are in respect of charges received from parties to conduct business from the Companyâs Multiplexes and the revenue is recognized as per the contractual arrangements. Advertisement income is recognized on exhibition of the advertisement or over the period of contract, as applicable. Income from sale of power is recognized on the basis of actual units generated and transmitted to the purchaser. Dividend income is recognized when the unconditional right to receive payment is established. Income from interest on deposits, loans and interest-bearing securities is recognized on time proportion basis.
b) Fixed Assets:
Fixed assets are carried at cost, as reduced by accumulated depreciation/amortization, except freehold land, which is carried at cost. Cost comprises of purchase price / cost of construction, including non-refundable taxes or levies, and any expenses attributable to bring the assets to its working condition for its intended use. Project pre-operative expenses and expenditure incurred during construction period of multiplexes are capitalized to various eligible assets in respective multiplexes. Borrowing costs directly attributable to acquisition or construction of qualifying fixed assets are capitalized. In respect of accounting period commencing on or after I April 2011, consequent to the amendment of para 46A of AS II: The Effects of Changes in Foreign Exchange Rates, cost of depreciable capital assets include foreign exchange differences arising on translation of long term foreign currency monetary items. Fixed assets retired from active use and held for sale are stated at the lower of their net book value and net realizable value and are disclosed separately under current assets.
c) Depreciation and amortization:
On tangible assets - cost of leasehold land is amortized over the period of lease. On other fixed assets, excluding freehold land, depreciation is provided on straight-line basis as under:
I. On leasehold improvements, electrical installations & air conditioners in leased premises, over the period of useful life on the basis of the respective agreements or the useful life as per Schedule II part C of the Companies Act, 2013, whichever is shorter.
II. On other fixed assets, on the basis of useful life as per Schedule II part C of the Companies Act, 2013
On intangible assets - cost of software is amortized over a period of three years in case of operating software and six years in case of other software. Cost of goodwill and movie script acquired and cost of web-site developed is amortized over a period of five year.
d) Impairment of assets:
Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Companyâs asset. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.
e) Investments:
Long-term investments are carried at cost. Provision for diminution is made to recognize the decline, other than temporary, in the values of these investments. Current investments are carried at lower of the cost and fair value.
f) Inventories:
Inventories are valued at lower of the cost and net realizable value. Cost is determined using first-in-first-out (FIFO) method.
g) Employee Benefits:
Short-term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit and loss in the year in which related services are rendered. Company''s contribution towards Defined Contribution Plan viz. Government administered provident fund and pension schemes, paid / payable during the year are charged to the statement of profit and loss. Defined Benefit Plans in the form of Gratuity and Leave Encashment are recognized as an expense in the statement of profit and loss at the present value of the amounts payable, determined on the basis of actuarial valuation techniques, using the projected unit credit method. Actuarial gains and losses are recognized in the statement of profit and loss.
h) Taxes on Income:
Income tax expense comprises of current tax and deferred tax charge. Deferred tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of reversal in one or more subsequent periods. The deferred tax in respect of timing differences which reverse during the tax holiday period is not recognized to the extent the Company''s gross total income is subject to the deduction during the tax holiday period. Minimum Alternate Tax (MAT) paid on the book profits, which gives rise to future economic benefits in the form of tax credit against future income-tax liability, is recognized as an asset in the Balance Sheet if there is convincing evidence that the Company will pay normal tax within the period specified for utilization of such credit.
i) Borrowing Cost:
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to statement of profit and loss.
j) Leases:
Lease rentals in respect of assets acquired on operating lease are charged-off to the statement of profit and loss as per the terms of the respective lease agreements.
k) Foreign Currency Transactions:
(i) Transactions in foreign currency are recorded in rupees by applying the exchange rate at the date of the transaction. Gains or losses on settlement of the transactions are recognized in the statement of profit and loss. At the Balance Sheet date, monetary assets and liabilities in foreign currency are restated by applying the closing rate, and the difference arising out of such conversion is recognized in the statement of profit and loss, except as mentioned in para (ii) below.
(ii) The Central Government has vide its notification no. G.S.R. 914(E) dated 29th December, 2011, amended AS 11 âThe Effects of Changes in Foreign Exchange Rates'', notified under the Companies (Accounting Standards) Rules, 2006, to the extent it relates to the recognition of losses or gains arising on restatement of long-term foreign currency monetary items in respect of accounting periods commencing on or after 1st April 2011. As stipulated in the Notification, the Company has exercised the option to adopt the following policy irrevocably.
Long term foreign currency monetary items are translated at the exchange rate prevailing on the balance sheet date and the net exchange gain / loss on such conversion and on settlement of the liability, is adjusted to the cost of the asset, where the long-term foreign currency monetary items relate to the acquisition of a depreciable capital asset (whether purchased within or outside India), and depreciated over the balance life of the assets.
l) Treasury Shares:
Pursuant to the Scheme of Amalgamation of Fame India Limited (âFame'') and its subsidiaries with the Company (refer note no. 31), equity shares of the Company have been issued to INOX Benefit Trust (the Trust) against the equity shares of Fame held by the Company. These shares are recognized as Interest in INOX Benefit Trust at the amount of consideration paid by the Company to acquire the shares of erstwhile Fame. These shares of the Company held by INOX Benefit Trust are classified and are presented as a deduction from Shareholders'' Funds. Difference between the cost and the amount received at the time sale of shares by the Trust, is recorded separately as âReserve on Sale of Treasury Shares'' under Reserve and Surplus.
m) Provisions and Contingent Liabilities:
A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is possible obligation or a present obligation in respect of which the likelihood of outflow of resource is remote, no provision or disclosure is made.
n) Use of Estimates:
The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported balances of assets and liabilities and disclosure of contingent liabilities, at the end of the accounting year and reported amounts of revenue and expenses during the year. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.
Mar 31, 2015
A) Revenue Recognition:
Income from Box Office is recognized as and when the movie is
exhibited. Income from Sale of Food & Beverages is accounted at the
point of sale. Income is net of refunds and complimentary. Conducting
fees are in respect of charges received from parties to conduct
business from the Company's Multiplexes and the revenue is recognized
as per the contractual arrangements. Advertisement income is
recognized on exhibition of the advertisement or over the period of
contract, as applicable. Income from sale of power is recognized on the
basis of actual units generated and transmitted to the purchaser.
Dividend income is recognised when the unconditional right to receive
payment is established. Income from interest on deposits, loans and
interest-bearing securities is recognised on time proportion basis.
b) Fixed Assets:
Fixed assets are carried at cost, as reduced by accumulated
depreciation/amortization, except freehold land, which is carried at
cost. Cost comprises of purchase price / cost of construction,
including non-refundable taxes or levies, and any expenses attributable
to bring the assets to its working condition for its intended use.
Project pre-operative expenses and expenditure incurred during
construction period of multiplexes are capitalized to various eligible
assets in respective multiplexes. Borrowing costs directly attributable
to acquisition or construction of qualifying fixed assets are
capitalised. In respect of accounting period commencing on or after 1st
April 2011, consequent to the amendment of para 46A of AS 11: The
Effects of Changes in Foreign Exchange Rates, cost of depreciable
capital assets include foreign exchange differences arising on
translation of long term foreign currency monetary items.
c) Depreciation and amortization:
Consequent to Schedule II of the Companies Act, 2013 becoming effective
from 1st April 2014, the depreciation/amortization is provided as
under:
On tangible assets - cost of leasehold land is amortized over the
period of lease. On other fixed assets, excluding freehold land,
depreciation is provided on straight-line basis as under:
I. On leasehold improvements, electrical installations & air
conditioners in leased premises, over the period of useful life on the
basis of the respective agreements or the useful life as per Schedule
II part C of the Companies Act, 2013, whichever is shorter.
II. On other fixed assets, on the basis of useful life as per Schedule
II part C of the Companies Act, 2013
On intangible assets - cost of software is amortized over a period of
three years in case of operating software and six years in case of
other software. Cost of movie script acquired and cost of web-site
developed is amortized over a period of five year.
Upto 31st March 2014, depreciation/amortization was provided as under:
On tangible assets - cost of leasehold land was amortized over the
period of lease. On other fixed assets, excluding freehold land,
depreciation was provided on straight-line basis as under:
I. On leasehold improvements, electrical installations & air
conditioners in leased premises, over the period of useful life on the
basis of the respective agreements or the useful life as per Schedule
XIV of the Companies Act, 1956, whichever is shorter.
II. On other fixed assets, at the rates and in the manner specified in
Schedule XIV to the Companies Act, 1956.
III. Individual items of fixed assets, costing upto Rs. 5,000, were
fully depreciated in the first year. Based on technical opinion,
windmill was considered as a continuous process plant and depreciation
was provided at the rate applicable thereto.
On intangible assets - cost of film distribution rights and negative
rights was amortized in proportion to the management's estimate of
gross revenue expected to be realized over a period. Cost of movie
script acquired was amortized over a period of five year from the date
of agreement. Cost of software was amortized on straight line basis @
16.21% p.a.
d) Impairment of assets :
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
Company's asset. An impairment loss is recognized wherever the carrying
amount of an asset exceeds its recoverable amount.
e) Investments :
Long-term investments are carried at cost. Provision for diminution is
made to recognize the decline, other than temporary, in the values of
these investments. Current Investments are carried at lower of the cost
and fair value.
f) Inventories :
Inventories are valued at lower of the cost and net realisable value.
Cost is determined using FIFO method.
g) Employee Benefits :
Short-term employee benefits are recognized as an expense at the
undiscounted amount in the statement of profit and loss in the year in
which related services are rendered. Company's contribution towards
provident fund paid / payable during the year are charged to the
statement of profit and loss. Post employment benefits in the form of
Gratuity and Leave Encashment are recognized as an expense in the
statement of profit and loss at the present value of the amounts
payable, determined on the basis of actuarial valuation techniques,
using the projected unit credit method. Actuarial gains and losses are
recognized in the statement of profit and loss.
h) Taxes on Income :
Income tax expense comprises of current tax and deferred tax charge.
Deferred tax is recognised, subject to consideration of prudence, on
timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. The deferred tax in respect
of timing differences which reverse during the tax holiday period is
not recognised to the extent the Company's gross total income is
subject to the deduction during the tax holiday period. Minimum
Alternate Tax (MAT) paid on the book profits, which gives rise to
future economic benefits in the form of tax credit against future
income-tax liability, is recognized as an asset in the Balance Sheet if
there is convincing evidence that the Company will pay normal tax
within the period specified for utilization of such credit.
i) Borrowing Cost :
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
j) Leases :
Lease rentals in respect of assets acquired on operating lease are
charged-of to the statement of profit and loss as per the terms of the
respective lease agreements.
k) Foreign Currency Transactions:
(i) Transactions in foreign currency are recorded in rupees by applying
the exchange rate at the date of the transaction. Gains or losses on
settlement of the transactions are recognized in the statement of
profit and loss. At the Balance Sheet date, monetary assets and
liabilities in foreign currency are restated by applying the closing
rate, and the difference arising out of such conversion is recognized
in the statement of profit and loss, except as mentioned in para (ii)
below.
(ii) The Central Government has vide its notification no. G.S.R. 914(E)
dated 29th December, 2011, amended AS 11-'The Effects of Changes in
Foreign Exchange Rates', notified under the Companies (Accounting
Standards) Rules, 2006, to the extent it relates to the recognition of
losses or gains arising on restatement of long-term foreign currency
monetary items in respect of accounting periods commencing on or after
1st April 2011. As stipulated in the Notification, the Company has
exercised the option to adopt the following policy irrevocably:
Long term foreign currency monetary items are translated at the
exchange rate prevailing on the balance sheet date and the net exchange
gain / loss on such conversion and on settlement of the liability, is
adjusted to the cost of the asset, where the long-term foreign currency
monetary items relate to the acquisition of a depreciable capital asset
(whether purchased within or outside India), and depreciated over the
balance life of the assets.
l) Treasury shares:
Pursuant to the Scheme of Amalgamation of Fame India Limited ('Fame')
and its subsidiaries with the Company (refer note 30), equity shares of
the Company have been issued to Inox Benefit Trust (the Trust) against
the equity shares of Fame held by the Company. These shares are
recognised as Interest in Inox Benefit Trust at the amount of
consideration paid by the Company to acquire the shares of erstwhile
Fame. These shares of the Company held by Inox Benefit Trust are
classified and are presented as a deduction from Shareholders' Funds.
Difference between the cost and the amount received at the time sale of
shares by the Trust, is recorded separately as 'Reserve on Sale of
Treasury Shares' under Reserve and Surplus.
m) Provisions and contingent Liabilities :
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation and in respect of which a
reliable estimate can be made. A disclosure for a contingent liability
is made when there is a possible obligation or a present obligation
that may, but probably will not, require an outflow of resources. When
there is possible obligation or a present obligation in respect of
which the likelihood of outflow of resource is remote, no provision or
disclosure is made.
n) Use of estimates:
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgements, estimates and assumptions
that affect the reported balances of assets and liabilities and
disclosure of contingent liabilities, at the end of the accounting year
and reported amounts of revenue and expenses during the year. Although
these estimates are based on the management's best knowledge of current
events and actions, uncertainty about these assumptions and estimates
could result in outcomes requiring a material adjustment to the
carrying amounts of assets or liabilities in future periods.
Mar 31, 2014
A) Revenue Recognition:
Income from Box Office is recognized as and when the movie is
exhibited. Income from Sale of Food & Beverages is accounted at the
point of sale. Income is net of refunds and complimentary. Conducting
fees are in respect of charges received from parties to conduct
business from the Company''s Multiplexes and the revenue is recognized
as per the contractual arrangements. Advertisement income is
recognized on exhibition of the advertisement or over the period of
contract, as applicable. Income from sale of power is recognized on the
basis of actual units generated and transmitted to the purchaser.
Dividend income is recognised when the unconditional right to receive
payment is established. Income from interest on deposits, loans and
interest-bearing securities is recognised on time proportion basis.
b) Fixed Assets:
Fixed assets are carried at cost of acquisition or cost of
construction, as reduced by accumulated depreciation/amortization,
except freehold land, which is carried at cost. Project pre-operative
expenses and expenditure incurred during construction period of
multiplexes are capitalized to various eligible assets in respective
multiplexes. Borrowing costs directly attributable to acquisition or
construction of qualifying fixed assets are capitalised. In respect of
accounting period commencing on or after 1 April, 2011, consequent to
the amendment of para 46A of AS 11: The Effects of Changes in Foreign
Exchange Rates, cost of depreciable capital assets include foreign
exchange differences arising on translation of long term foreign
currency monetary items.
c) Depreciation on Tangible Fixed Assets:
Cost of leasehold land is amortized over the period of lease. On other
fixed assets, excluding freehold land, depreciation is provided on
straight-line basis as under:
I. On Leasehold Improvements, electrical installations & air
conditione in leased premises, over the period of useful life on the
basis of the respective agreements or the useful life as per Schedule
XIV of the Companies Act, 1956, whichever is shorter.
II. On other fixed assets, at the rates and in the manner specified in
Schedule XIV to the Companies Act, 1956.
Individual items of Fixed Assets added during the year, costing 5,000
or less, are fully depreciated in the fit year. Based on technical
opinion Windmill is considered as a continuous process plant and
depreciation is provided at the rate applicable thereto.
d) Amortization of Intangible assets:
Cost of film distribution rights and negative rights is amortized in
proportion to the management''s estimate of gross revenue expected to be
realized over a period. Cost of movie script acquired is amortized over
a period of five year from the date of agreement. Cost of software is
amortized on straight line basis @ 16.21% p.a.
e) Impairment of assets :
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
Company''s asset. An impairment loss is recognized wherever the carrying
amount of an asset exceeds its recoverable amount.
f) Investments :
Long-term investments are carried at cost. Provision for diminution is
made to recognize the decline, other than temporary, in the values of
these investments. Current Investments are carried at lower of the cost
and fair value.
g) Inventories :
Inventories are valued at lower of the cost and net realisable value.
Cost is determined using FIFO method.
h) Employee Benefits :
Short-term employee benefits are recognized as an expense at the
undiscounted amount in the statement of profit and loss in the year in
which related services are rendered. Company''s contribution towards
provident fund paid / payable during the year
3. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
are charged to the statement of profit and loss. Post employment
benefits in the form of Gratuity and Leave Encashment are recognized as
an expense in the statement of profit and loss at the present value of
the amounts payable, determined on the basis of actuarial valuation
techniques, using the projected unit credit method. Actuarial gains and
losses are recognized in the statement of profit and loss.
i) Borrowing Cost :
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
j) Taxes on Income :
Income tax expense comprises of current tax and deferred tax charge.
Deferred tax is recognised, subject to consideration of prudence, on
timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reveal in one or more subsequent periods. The deferred tax in respect
of timing differences which revee during the tax holiday period is not
recognised to the extent the Company''s gross total income is subject to
the deduction during the tax holiday period. Minimum Alternate Tax
(MAT) paid on the book profits, which gives rise to future economic
benefits in the form of tax credit against future income-tax liability,
is recognized as an asset in the Balance Sheet if there is convincing
evidence that the Company will pay normal tax within the period
specified for utilization of such credit.
k) Foreign Currency Transactions:
(i) Transactions in foreign currency are recorded in rupees by applying
the exchange rate at the date of the transaction. Gains or losses on
settlement of the transactions are recognized in the statement of
profit and loss. At the Balance Sheet date, monetary assets and
liabilities in foreign currency are restated by applying the closing
rate, and the difference arising out of such conveion is recognized in
the statement of profit and loss, except as mentioned in para (ii)
below.
(ii) The Central Government has vide its notification no. G.S.R. 914(E)
dated 29th December, 2011, amended AS 11-''The Effects of Changes in
Foreign Exchange Rates'', notified under the Companies (Accounting
Standards) Rules, 2006, to the extent it relates to the recognition of
losses or gains arising on restatement of long-term foreign currency
monetary items in respect of accounting periods commencing on or after
1st April 2011. As stipulated in the Notification, the Company has
exercised the option to adopt the following policy irrevocably:
Long term foreign currency monetary items are translated at the
exchange rate prevailing on the balance sheet date and the net exchange
gain / loss on such conveion and on settlement of the liability, is
adjusted to the cost of the asset, where the long-term foreign currency
monetary items relate to the acquisition of a depreciable capital asset
(whether purchased within or outside India), and depreciated over the
balance life of the assets.
l) Leases :
Lease rentals in respect of assets acquired on operating lease are
charged-off to the statement of profit and loss as per the terms of the
respective lease agreements.
m) Treasury shares:
Puuant to the Scheme of Amalgamation of Fame India Ltd (''Fame'') and its
subsidiaries with the Company, (refer note 30), equity shares of the
Company have been issued to Inox Benefit Trust (the Trust) against the
equity shares of Fame held by the Company. These shares are recognised
as Interest in Inox Benefit Trust at the amount of consideration paid
by the Company to acquire the shares of etwhile Fame. These shares of
the Company held by Inox Benefit Trust are classified and are presented
as a deduction from Shareholde'' Funds. Difference between the cost and
the amount received at the time sale of shares by the Trust, is
recorded separately as ''Reserve on Sale of Treasury Shares'' under
Reserve and Surplus.
n) Provisions and contingent Liabilities :
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation and in respect of which a
reliable estimate can be made. A disclosure for a contingent liability
is made when there is a possible obligation or a present obligation
that may, but probably will not, require an outflow of resources. When
there is possible obligation or a present obligation in respect of
which the likelihood of outflow of resource is remote, no provision or
disclosure is made.
o) Use of estimates:
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgements, estimates and assumptions
that affect the reported balances of assets and liabilities and
disclosure of contingent liabilities, at the end of the accounting year
and reported amounts of revenue and expenses during the year. Although
these estimates are based on the management''s best knowledge of current
events and actions, uncertainty about these assumptions and estimates
could result in outcomes requiring a material adjustment to the
carrying amounts of assets or liabilities in future periods.
b) Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of
Rs.10 per share. Each shareholder is eligible for one vote per share
held. The dividend proposed by the Board of Directo is subject to
approval of the shareholde in the Annual General Meeting. In the event
of liquidation of the Company, the holde of equity shares will be
entitled to receive the remaining assets of the Company, in proportion
to their shareholding.
4: Share Capital Continued.
d) Shares issued for consideration other than cash during the period of
five yea immediately preceding the reporting date:
3,45,62,206 shares of Rs. 10 each, fully paid-up, issued to the
shareholde of etwhile Fame India Limited, puuant to the Scheme of
Amalgamation, during the year ended 31st March, 2014.
e) Details of shareholde holding more than 5% equity shares in the
Company
Nature of Security and terms of repayment for secured borrowings:
a) Term loans from Axis Bank amounting to Rs. 5,980.67 lacs (previous
year Rs. 4,322.25 lacs) carries interest @ bank base rate 1.25 % p.a
which presently is 11.50%. The loans are secured by mortgage of
immovable property situated at Vadodara and Anand and fit exclusive
charge on all movable fixed assets and current assets of the new
multiplexes/ property financed by the said term loans and escrow of
entire cash flows relating to such multiplexes. The repayment schedules
are as under:
Particula Outstanding Repayment terms
Amount (in lacs)
Term Loan 1 4,495.67 Repayable in 16 equal quarterly instalments
beginning from 30th June, 2013
Term Loan 2 300.00 Repayable in 10 equal quarterly instalments
beginning from 1st April, 2013
Term Loan 3 1,185.00 Repayable in 16 equal quarterly instalments
beginning from 1st October, 2014
b) Term loan from Citi Bank amounting to Rs. Nil (previous year Rs. 499.99
lacs) carried interest @ 8.75% p.a and was secured by mortgage of
immovable property situated at Pune and charge on all movable assets
situated at Pune, Thane, Rajapark (Jaipur) and Madurai multiplexes and
four future properties.
c) Term loan from ING Vysya Bank amounting to Rs. Nil (previous year Rs.
777.79 lacs) carried interest @ 9.5% p.a and was secured by charge on
immovable property situated at Nariman Point and exclusive charge on
all the current and fixed assets situated at Vizag Beach Road, Vizag
CMR Mall, Kanpur, Belgaum, J.P.Nagar (Bangalore), Kharghar multiplexes
and one future multiplex.
Terms of repayment for unsecured borrowings:
The inter-corporate deposits are repayable in 3 to 8 yea from the date
of the respective deposits and carry interest in the range of 10% to
11%.
10: Short terms borrowings - Continued.
a) Short Term loan from Axis Bank amounting to Rs. Nil (previous year Rs.
800 lacs) carried interest @ bank base rate 1.25 % p.a which was
11.50%. The loan was secured by mortgage of immovable property situated
at Vadodara and charge on all stocks, debts and movable properties
situated at Amanora-Pune, Hyderabad-2, Udaipur, Bhubaneshwar, Bhopal,
Vijayanagaram, Element Mall-Jaipur, RPG Mall-Kolkata, Surat, and
Vizag-3 properties.
b) Bank overdraft is secured against fit charge on the entire current
assets of the Company, both present and future; and extension of fit
charge by way of mortgage of property at Vadodara and Anand, Gujarat
c) Short term inter-corporate deposit was repayable on demand and
carried interest @ 10%.
30 The Composite Scheme of Amalgamation (the "Scheme") of the Company''s
subsidiary, Fame India Limited (Fame), and subsidiaries of Fame viz.
Fame Motion Pictures Limited (FMPL), Big Pictures Hospitality Services
Private Limited (BPHSPL) and Headstrong Films Private Limited (HFPL)
(hereinafter collectively referred as Transferor Companies) with the
Company was approved by the Hon''ble High Courts of Judicature at
Gujarat and Bombay vide their orde dated 12th March 2013 (read with
order dated 20th March 2013) and 10th May, 2013, respectively (the
"Orde"). The Scheme became effective on 25th May 2013 and was operative
from 1st April 2012, the Appointed Date, as defined in the Scheme.
Puuant to the Scheme, the entire undertaking and business of the
Transferor Companies stood transferred and became vested with the
Company. The Scheme was accordingly given effect to in the financial
statements for the year ended 31st March, 2013. On 10th July, 2013 the
Company has allotted 3,45,62,206 equity shares to the shareholde of
Transferor Companies in the ratio specified in the Scheme, including
2,44,31,570 equity shares to Inox Benefit Trust (the "Trust"), towards
shares held by Inox Leisure Limited in Fame India Limited. These shares
(Treasury Shares) are held by the Trust exclusively for the benefit of
the Company.
In terms of Accounting Standard (AS 31) ''Financial Instruments'' (which
is not yet mandatory), internationally generally accepted accounting
practices and for more appropriate presentation of the financial
statements, the Company''s interest in Inox Benefit Trust (at cost),
being akin to Treasury Shares, is reclassified as deduction from
Shareholde'' Fund, instead of presentation under the head ''Investments''
in last year, in accordance with their substance and economic reality.
Any profit or loss arising from sale of shares by the Trust is being
recorded separately as ''Reserve on sale of Treasury Shares'' under
Reserves and Surplus, being transactions relating to the capital of the
Company. Accordingly, the loss of Rs. 458.34 lacs incurred during the
year on sale of 45,00,000 such shares is directly recognised in
''Reserve on sale of Treasury Shares'' under Reserves and Surplus.
On allotment of above 3,45,62,206 equity shares of the Company, Gujarat
Fluorochemicals Limited ("GFL") ceased to be the holding company on
10th July 2013. Subsequently, the shareholde of the Company have passed
a resolution at the Annual General Meeting held on 23rd August, 2013
amending the Articles of Association of the Company entitling GFL to
appoint majority of directo on the Board of the Company if GFL holds
not less than 40% of the paid-up equity capital of the Company.
Accordingly, the Company has again become a subsidiary of GFL with
effect from this date.
31 Exceptional items:
During the previous year, Swanston Multiplex Cinemas Private Limited, a
joint venture of etwhile Fame India Limited (amalgamated with the
Company w.e.f. 1st April 2012) which was running Fame Big Cinemas
Multiplex at Andheri (West), Mumbai, had stopped operations w.e.f. 13th
July 2012 as the lease agreement of the property was terminated.
Estimated provision of Rs. 39 lacs (Previous year Rs. 250 lacs) for
diminution in the value of investment in the joint venture has been
made and is shown as an exceptional item.
32 Employees'' Stock Option Plan
During the year ended 31st March, 2006, the Company had issued 500,000
equity shares of Rs. 10 each at a premium of Rs. 5 per share to Inox
Leisure Limited  Employees'' Welfare Trust ("Trust") to be transferred
to the employees of the Company under the scheme of ESOP framed by the
Company in this regard. The Company has provided finance of Rs. 75 lacs
to the Trust for subscription of these shares at the beginning of the
plan.
As per the Guidance Note on Accounting for Employee Share-based
Payments issued by the Institute of Chartered Accountants of India,
shares allotted to the Trust but not transferred to employees is
required to be reduced from Share Capital and Reserves. Out of the
500,000 equity shares allotted to the Trust, 188,420 shares have been
transferred to employees up to 31st March, 2014. Accordingly, for the
balance number of shares, the Company has reduced the Share Capital by
the amount of face value of equity shares and Share Premium Account by
the amount of share premium on such shares. The Company has also given
effect to the above in the calculation of its Basic and Diluted
earnings per share.
Following equity settled stock options have been granted to the
employees:
On 29th January 2007 (Fit Grant) 244,120 shares
On 27th October 2009 (Second Grant) 33,332 shares
On 12th August 2013 (Third Grant) 33,156 shares
The vesting period for options granted under 1st & 2nd lot was between
one to four yea from the date of the grant. The options were
exercisable within one year from the date of vesting. Option granted
under 3rd lot is as per the terms of the Scheme of Amalgamation
(referred to in Note no. 30). As per the Scheme, the stock options
granted by etwhile Fame India Limited ("Fame") to its employees
automatically stood cancelled. The Company has issued stock options to
the eligible employees of Fame under the existing ESOP Scheme of the
Company. These stock options were granted in the ratio of 5 options
(each option being equal to one share) of Company for every 8 options
(each option being equal to one share) held under ESOP of Fame. These
options are now exercisable within one year from the date of vesting.
The compensation costs of stock options granted to employees are
accounted by the Company using the intrinsic value method.
In respect of the options granted under the Employees'' Stock Option
Plan, in accordance with the Guidance Note on Accounting for Employee
Share-based Payments issued by the Institute of Chartered Accountants
of India, the accounting value of options is amortized over the vesting
period. Consequently, ''Employee benefits expense'' in note no 27
includes Rs. 14.33 lacs (previous year Rs. 1.06 lacs) being the
amortization of employee compensation.
Had the Company adopted fair value method in respect of options
granted, the employee compensation cost would have been higher by Rs.
9.99 lacs, profit before tax lower by Rs. 9.99 lacs and the basic and
diluted earnings per share would have been lower by Rs. 0.01 each.
33 In respect of taxation matte
a) In the proceedings before the appellate authorities and High Court
of Judicature at Gujarat, the Company''s contention that the amount of
entertainment tax exemption availed for some of its multiplexes is a
capital receipt has been accepted. The matter is presently pending
before the Hon''ble Supreme Court. Provision for current tax is made on
this basis to the extent the entertainment tax exemption is held as
capital receipt for such multiplexes.
b) Provision for current taxation is for Minimum Alternate Tax (MAT)
payable on book profit. MAT paid by the Company is entitled to be
carried forward and utilized in subsequent yea. In the opinion of
management, on the basis of projections, estimates of future taxable
income and the period available for utilization of MAT credit, the
Company would have normal tax liability within the specified period to
avail such MAT credit. Consequently, the Company has recognized Rs.
113.00 lacs (Previous year Rs. 310.00 lacs), including Rs. 38 lacs for
earlier yea, towards MAT credit entitlement and the cumulative amount
as on 31st March, 2014 is Rs. 2689.81 lacs (previous year Rs. 2576.81
lacs).
Mar 31, 2013
A) Change in accounting policy
The Company has opted for accounting of exchange differences arising on
reporting of long term monetary items under Clause 46A of AS 11 "The
Effects of Changes in Foreign Exchange Rates" as per notification no.
G.S.R. 914(E) dated 29th December, 2011 issued by the Ministry of
Corporate Affairs, Government of India. Accordingly, such exchange
difference, being gain of Rs. 28.79 lacs on the reporting of long term
foreign currency monetary items at the rates different from those at
which they were initially recorded, in so far they relate to
acquisition of depreciable capital assets, have been adjusted in the
cost of fixed assets and shall be depreciated over the balance useful
life of the assets. Due to adoption of this accounting policy, the
profit before tax for the current year ended 31st March 2013 is lower
by Rs. 27.56 lacs (net of depreciation charge of Rs. 1.23 lacs), and the
carrying amount of fixed assets are lower by Rs. 27.56 lacs.
b) Revenue Recognition:
Income from Box Office is recognized as and when the movie is
exhibited. Income from Sale of Food & Beverages is accounted at the
point of sale. Income is net of refunds and complimentary. Conducting
fees are in respect of charges received from parties to conduct
business from the Company''s Multiplexes and the revenue is recognized
as per the contractual arrangements. Advertisement income is
recognized on exhibition of the advertisement or over the period of
contract, as applicable. Income from sale of power is recognized on the
basis of actual units generated and transmitted to the purchaser.
Dividend income is recognised when the unconditional right to receive
payment is established. Income from interest on deposits, loans and
interest-bearing securities is recognised on time proportion basis.
c) Fixed Assets:
Fixed assets are carried at cost of acquisition or cost of
construction, as reduced by accumulated depreciation/amortization,
except freehold land, which is carried at cost. Project pre-operative
expenses and expenditure incurred during construction period of
multiplexes are capitalized to various eligible assets in respective
multiplexes. Borrowing costs directly attributable to acquisition or
construction of qualifying fixed assets are capitalised. Foreign
exchange differences arising on translation of long term foreign
currency monetary items are adjusted in cost of respective fixed
assets.
d) Depreciation on Tangible Fixed Assets:
Cost of leasehold land is amortized over the period of lease. On other
fixed assets, excluding freehold land, depreciation is provided on
straight-line basis as under:
I. On Leasehold Improvements, electrical installations & air
conditioners in leased premises, over the period of useful life on the
basis of the respective agreements or the useful life as per Schedule
XIV of the Companies Act, 1956, whichever is shorter.
II. On other fixed assets, at the rates and in the manner specified in
Schedule XIV to the Companies Act, 1956.
Individual items of Fixed Assets added during the period, costing Rs
5,000 or less, are fully depreciated in the first year. Based on
technical opinion Windmill is considered as a continuous process plant
and depreciation is provided at the rate applicablethereto.
e) Amortization of Intangible assets:
Cost of film distribution rights and negative rights is amortized in
proportion to the management''s estimate of gross revenue expected to be
realized over a period. Cost of movie script acquired is amortized over
a period of five year from the date of agreement. Cost of software is
amortized on straight line basis @ 16.21% p.a.
f) Impairment of assets :
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
Company''s asset. An impairment loss is recognized wherever the carrying
amount of an asset exceeds its recoverable amount.
g) Investments :
Long-term investments are carried at cost. Provision for diminution is
made to recognize the decline, other than temporary, in the values of
these investments. Current Investments are carried at lower of the cost
and fair value.
h) Inventories :
Inventories are valued at lower of the cost and net realisable value.
Cost is determined using FIFO method.
i) Employee Benefits :
Short-term employee benefits are recognized as an expense at the
undiscounted amount in the statement of profit and loss in the year in
which related services are rendered. Company''s contribution towards
provident fund paid / payable during the year are charged to the
statement of profit and loss. Post employment benefits in the form of
Gratuity and Leave Encashment are recognized as an expense in the
statement of profit and loss at the present value of the amounts
payable, determined on the basis of actuarial valuation techniques,
using the projected unit credit method. Actuarial gains and losses are
recognized in the statement of profit and loss.
j) Leases :
The lease term is the non-cancellable period for which the lessee has
agreed to take on lease the asset together with any further periods for
which the lessee has the option to continue the lease of the asset,
which option at the inception of the lease it is reasonably certain
that the lessee will exercise. Lease rentals in respect of assets
acquired on operating lease are charged-off to the statement of profit
and loss as per the terms of the respective lease agreements.
k) Borrowing Cost :
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
l) Taxes on Income :
Income tax expense comprises of current tax and deferred tax charge.
Deferred tax is recognised, subject to consideration of prudence, on
timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. The deferred tax in respect
of timing differences which reverse during the tax holiday period is
not recognised to the extent the Company''s gross total income is
subject to the deduction during the tax holiday period. Minimum
Alternate Tax (MAT) paid on the book profits, which gives rise to
future economic benefits in the form of tax credit against future
income-tax liability, is recognized as an asset in the Balance Sheet if
there is convincing evidence that the Company will pay normal tax
within the period specified for utilization of such credit.
m) Foreign Currency Transactions:
(i) Transactions in foreign currency are recorded in rupees by applying
the exchange rate at the date of the transaction. Gains or losses on
settlement of the transactions are recognized in the statement of
profit and loss. At the Balance Sheet date, monetary assets and
liabilities in foreign currency are restated by applying the closing
rate, and the difference arising out of such conversion is recognized
in the statement of profit and loss, except as mentioned in para (ii)
below.
(ii) The Central Government has vide its notification no. G.S.R. 914(E)
dated 29th December, 2011, amended AS 11-The Effects of Changes in
Foreign Exchange Rates'', notified under the Companies (Accounting
Standards) Rules, 2006, to the extent it relates to the recognition of
losses or gains arising on restatement of long-term foreign currency
monetary items in respect of accounting periods commencing on or after
1st April 2011. As stipulated in the Notification, the Company has
exercised the option to adopt the following policy irrevocably:
Long term foreign currency monetary items are translated at the
exchange rate prevailing on the balance sheet date and the net exchange
gain / loss on such conversion and on settlement of the liability, is
adjusted to the cost of the asset, where the long-term foreign currency
monetary items relate to the acquisition of a depreciable capital asset
(whether purchased within or outside India), and depreciated over the
balance life of the assets.
n) Earnings Per Share:
Basic EPS is computed by dividing the net profit for the year
attributable to equity shareholders by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed
using the weighted average number of equity and dilutive equity
equivalent shares outstanding during the year except where the results
would be anti-dilutive.
o) Provisions and contingent Liabilities :
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation and in respect of which a
reliable estimate can be made. A disclosure for a contingent liability
is made when there is a possible obligation or a present obligation
that may, but probably will not, require an outflow of resources. When
there is possible obligation or a present obligation in respect of
which the likelihood of outflow of resource is remote, no provision or
disclosure is made.
p) Use of estimates:
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgements, estimates and assumptions
that affect the reported balances of assets and liabilities and
disclosure of contingent liabilities, at the end of the accounting year
and reported amounts of revenue and expenses during the year. Although
these estimates are based on the management''s best knowledge of current
events and actions, uncertainty about these assumptions and estimates
could result in outcomes requiring a material adjustment to the
carrying amounts of assets or liabilities in future periods.
Mar 31, 2012
A) Revenue Recognition:
Income from Box Office and Film Distribution is recognized as and when
the movie is exhibited. Income from Sale of Food & Beverages is
accounted at the point of sale. Income is net of refunds and
complimentary. Conducting fees are in respect of charges received from
parties to conduct business from the Company's Multiplexes and
recognized on accrual basis as per the contractual arrangements. Income
from sale of power is recognized on the basis of actual units generated
and transmitted to the purchaser. Dividend income is recognised when
the unconditional right to receive payment is established. Income from
interest on deposits, loans and interest-bearing securities is
recognised on time proportion basis.
b) Fixed Assets:
Fixed assets are carried at cost of acquisition or cost of
construction, as reduced by accumulated depreciation/ amortization,
except freehold land, which is carried at cost. Project pre-operative
expenses and expenditure incurred during construction period of
Multiplexes are capitalized to various eligible assets in respective
Multiplexes. Such expenses in respect of the Multiplexes under
construction are carried forward for being capitalised at the time of
completion.
c) Amortization and Depreciation of Fixed Assets:
Cost of leasehold land is amortized over the period of lease. On other
fixed assets, excluding freehold land, depreciation is provided on
straight-line basis as under:
I. On Leasehold Improvements, electrical installations & air
conditioners in leased premises, over the period of useful life on the
basis of the respective agreements or the useful life as per Schedule
XIV of the Companies Act, 1956, whichever is shorter.
II. On other fixed assets, at the rates and in the manner specified in
Schedule XIV to the Companies Act, 1956. Individual items of Fixed
Assets added during the period, costing Rs 5,000 or less, are fully
depreciated in the first year. Based on technical opinion Windmill is
considered as a continuous process plant and depreciation is provided
at the rate applicable thereto.
d) Amortization of Film Distribution Rights and Prints Cost (intangible
assets):
Cost of film distribution rights acquired and prints cost is amortized
over a period of one year from the date of release of the movie as
under:
50%, 30%, 10% and 10% of the costs in the first, second, third and
fourth quarter respectively and in a quarter, pro- rata for the
completed weeks.
e) Amortization of Movie script (intangible assets):
Cost of movie script acquired is amortized over a period of five year
from the date of agreement.
f) Impairment of assets :
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
Company's asset. An impairment loss is recognized wherever the
carrying amount of an asset exceeds its recoverable amount.
g) Investments :
Long-term investments are carried at cost. Provision for diminution is
made to recognize the decline, other than temporary, in the values of
these investments. Current Investments are carried at lower of the cost
and fair value.
h) Inventories :
Inventories are valued at lower of the cost and net realisable value.
Cost is determined using FIFO method.
i) Employee Benefits :
Short-term employee benefits are recognized as an expense at the
undiscounted amount in the statement of profit and loss in the year in
which related services are rendered. Company's contribution towards
provident fund paid / payable during the year are charged to the
statement of profit and loss. Post employment benefits in the form of
Gratuity and Leave Encashment are recognized as an expense in the
statement of profit and loss at the present value of the amounts
payable, determined on the basis of actuarial valuation techniques,
using the projected unit credit method. Actuarial gains and losses are
recognized in the statement of profit and loss.
j) Leases :
The lease term is the non-cancellable period for which the lessee has
agreed to take on lease the asset together with any further periods for
which the lessee has the option to continue the lease of the asset,
which option at the inception of the lease it is reasonably certain
that the lessee will exercise.
Assets taken on operating lease
Lease rentals in respect of assets acquired on operating lease are
charged-off to the statement of profit and loss as per the terms of the
respective lease agreements.
k) Borrowing Cost :
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
l) Taxes on Income :
Income tax expense comprises of current tax and deferred tax charge.
Deferred tax is recognised, subject to consideration of prudence, on
timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. The deferred tax in respect
of timing differences which reverse during the tax holiday period is
not recognised to the extent the Company's gross total income is
subject to the deduction during the tax holiday period. Minimum
Alternate Tax (MAT) paid on the book profits, which gives rise to
future economic benefits in the form of tax credit against future
income-tax liability, is recognized as an asset in the Balance Sheet if
there is convincing evidence that the Company will pay normal tax
within the period specified for utilization of such credit.
m) Foreign Currency Transactions:
Transactions in foreign currency are recorded in rupees by applying the
exchange rate at the date of the transaction. Gains or losses on
settlement of the transactions are recognized in the statement of
profit and loss. At the Balance Sheet date, monetary assets and
liabilities in foreign currency are restated by applying the closing
rate, and the difference arising out of such conversion is recognized
in the statement of profit and loss.
n) Earnings Per Share:
Basic EPS is computed by dividing the net profit for the year
attributable to equity shareholders by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed
using the weighted average number of equity and dilutive equity
equivalent shares outstanding during the year except where the results
would be anti-dilutive.
o) Provisions and contingent Liabilities :
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation and in respect of which a
reliable estimate can be made. A disclosure for a contingent liability
is made when there is a possible obligation or a present obligation
that may, but probably will not, require an outflow of resources. When
there is possible obligation or a present obligation in respect of
which the likelihood of outflow of resource is remote, no provision or
disclosure is made.
p) Use of estimates:
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgements, estimates and assumptions
that affect the reported balances of assets and liabilities and
disclosure of contingent liabilities, at the end of the accounting year
and reported amounts of revenue and expenses during the year. Although
these estimates are based on the management's best knowledge of
current events and actions, uncertainty about these assumptions and
estimates could result in outcomes requiring a material adjustment to
the carrying amounts of assets or liabilities in future periods.
Mar 31, 2011
A) Basis of Accounting :
The financial statements are prepared under the historical cost
convention and are in accordance with applicable mandatory Accounting
Standards notified by the Companies (Accounting Standard) Rules, 2006
and the relevant provisions of the Companies Act, 1956.
b) Revenue Recognition :
Income from Box Office and Film Distribution is recognized as and when
the movie is exhibited. Income from Sale of Food & Beverages is
accounted at the point of sale. Income is net of refunds and
complimentary. Conducting fees are in respect of charges received from
parties to conduct business from the Company's Multiplexes and
recognized on accrual basis as per the contractual arrangements. Income
from sale of power is recognized on the basis of actual units generated
and transmitted to the purchaser.
c) Fixed Assets :
Fixed assets are carried at cost of acquisition or cost of
construction, as reduced by accumulated depreciation/ amortization,
except freehold land, which is carried at cost. Project pre-operative
expenses and expenditure incurred during construction period of
Multiplexes are capitalized to various eligible assets in respective
Multiplexes. Such expenses in respect of the Multiplexes under
construction are carried forward for being capitalised at the time of
completion.
d) Amortization and Depreciation of Fixed Assets :
Cost of leasehold land is amortized over the period of lease. On other
fixed assets, excluding freehold land, depreciation is provided on
straight-line basis as under:
On Leasehold Improvements, electrical installations & air
conditioners in leased premises, over the period of useful life on the
basis of the respective agreements or the useful life as per Schedule
XIV of the Companies Act, 1956, whichever is shorter.
II On other fixed assets, at the rates and in the manner specified in
Schedule XIV to the Companies Act, 1956.
Individual items of Fixed Assets added during the period, costing Rs
5,000 or less, are fully depreciated in the first year. Based on
technical opinion Windmill is considered as a continuous process plant
and depreciation is provided at the rate applicable thereto.
e) Amortization of Film Distribution Rights and Prints Cost (intangible
assets) :
Cost of film distribution rights acquired and prints cost is amortized
over a period of one year from the date of release of the movie as
under:
50%, 30%, 10% and 10% of the costs in the first, second, third and
fourth quarter respectively and in a quarter, pro- rata for the
completed weeks.
f) Impairment of assets :
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
Company's asset. An impairment loss is recognized wherever the carrying
amount of an asset exceeds its recoverable amount.
g) Investments :
Long-term investments are carried at cost. Provision for diminution is
made to recognize the decline, other than temporary, in the values of
these investments. Current Investments are carried at lower of the cost
and fair value. Income from investments is accounted for on accrual
basis.
h) Inventories :
Inventories are valued at lower of the cost and net realisable value.
Cost is determined using FIFO method.
i) Employee Benefits :
Short-term employee benefits are recognized as an expense at the
undiscounted amount in the Profit and Loss Account in the year in which
related services are rendered. Company's contribution towards provident
fund paid / payable during the year are charged to the Profit and Loss
Account. Post employment benefits in the form of Gratuity and Leave
Encashment are recognized as an expense in the Profit and Loss Account
at the present value of the amounts payable, determined on the basis of
actuarial valuation techniques, using the projected unit credit method.
Actuarial gains and losses are recognized in the Profit and Loss
Account.
j) Borrowing Cost :
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
k) Taxes on Income :
Income tax expense comprises of current tax and deferred tax charge.
Deferred tax is recognised, subject to consideration of prudence, on
timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. The deferred tax in respect
of timing differences which reverse during the tax holiday period is
not recognised to the extent the Company's gross total income is
subject to the deduction during the tax holiday period. Minimum
Alternate Tax (MAT) paid on the book profits, which gives rise to
future economic benefits in the form of tax credit against future
income-tax liability, is recognized as an asset in the Balance Sheet if
there is convincing evidence that the Company will pay normal tax
within the period specified for utilization of such credit.
l) Foreign Currency Transactions :
Transactions in foreign currency are recorded in rupees by applying the
exchange rate at the date of the transaction. Gains or losses on
settlement of the transactions are recognized in the Profit and Loss
Account. At the Balance Sheet date, monetary assets and liabilities in
foreign currency are restated by applying the closing rate, and the
difference arising out of such conversion is recognized in the Profit
and Loss Account.
m) Provisions :
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation and in respect of which a
reliable estimate can be made.
Mar 31, 2010
A) Basis of Accounting:
The financial statements are prepared under the historical cost
convention and are in accordance with applicable mandatory Accounting
Standards notified by the Companies (Accounting Standard) Rules, 2006
and the relevant provisions of the Companies Act, 1956.
b) Revenue Recognition:
Income from Box Office and Film Distribution is recognized as and when
the movie is exhibited. Income from Sale of Food & Beverages is
accounted at the point of sale. Income is net of refunds and
complimentary. Conducting fees are in respect of charges received from
parties to conduct business from the Companys Multiplexes. Income from
sale of power is recognized on the basis of actual units generated and
transmitted to the purchaser.
c) Fixed Assets:
Fixed assets are carried at cost of acquisition or cost of
construction, as reduced by accumulated depreciation/ amortization,
except freehold land, which is carried at cost. Project pre-operative
expenses and expenditure incurred during construction period of
Multiplexes are capitalized to various eligible assets in respective
Multiplexes. Such expenses in respect of the Multiplexes under
construction are carried forward for being capitalised at the time of
completion.
d) Amortization and Depreciation of Fixed Assets:
Cost of leasehold land is amortized over the period of lease. On other
fixed assets, excluding freehold land, depreciation is provided on
straight-line basis as under:
I. On Leasehold Improvements, over the period of useful life on the
basis of the respective agreements or the useful life as per Schedule
XIV of the Companies Act, 1956, whichever is shorter.
II. On other fixed assets, at the rates and in the manner specified in
Schedule XIV to the Companies Act, 1956.
Individual items of Fixed Assets added during the period, costing Rs
5,000 or less, are fully depreciated in the first year. Based on
technical opinion Windmill is considered as a continuous process plant
and depreciation is provided at the rate applicable thereto.
e) Amortization and Depreciation of Film Distribution Rights and Prints
Cost (intangible assets):
Cost of film distribution rights acquired and prints cost is amortized
over a period of one year from the date of release of the movie as
under:
50%, 30%, 10% and 10% of the costs in the first, second, third and
fourth quarter respectively and in a quarter, pro- rata for the
completed weeks.
f) Impairment of assets :
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
Companys asset. An impairment loss is recognized wherever the carrying
amount of an asset exceeds its recoverable amount.
g) Investments:
Long-term investments are carried at cost. Current Investments are
carried at lower of the cost and fair value. Income from investments is
accounted for on accrual basis.
h) Inventories .
Inventories are valued at lower of the cost and net realisable value.
Cost is determined using FIFO method.
i) Employee Benefits :
Short-term employee benefits are recognized as an expense at the
undiscounted amount in the Profit and Loss Account in the year in which
related services are rendered. Companys contribution towards provident
fund paid / payable during the year are charged to the Profit and Loss
Account. Post employment benefits in the form of Gratuity and Leave
Encashment are recognized as an expense in the Profit and Loss Account
at the present value of the amounts payable, determined on die basis of
actuarial valuation techniques, using the projected unit credit method.
Actuarial gains and losses are recognized in the Profit and Loss
Account.
j) Borrowing Cost;
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. Ail other
borrowing costs are charged to revenue.
k) Taxes on Income :
Income tax expense comprises of current tax and deferred tax charge.
Deferred tax is recognised, subject to consideration of prudence, on
timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. The deferred tax in respect
of timing differences which reverse during the tax holiday period is
not recognised to the extent the Companys gross total income is
subject to the deduction during the tax holiday period. Minimum
Alternate Tax (MAT) paid on the book profits, which gives rise to
future economic benefits in the form of tax credit against future
income-tax liability, is recognized as an asset in the Balance Sheet if
there is convincing evidence that the Company will pay norma tax within
the period specified for utilization of such credit.
I) Provisions:
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation and in respect of which a
reliable estimate can be made.
2. During the year ended 31st March 2006, the Company had issued
500,000 equity shares of Rs. 10 each at a premium of Rs. 5 per share to
inox Leisure Limited - Employees Welfare Trust ("Trust") to be
transferred to the employees of the Company under the scheme of ESOP
framed by the Company in this regard. The Company has provided finance
of Rs. 75 lacs to the Trust for subscription of these shares at the
beginning of the plan.
As per the Guidance Note on Accounting for Employee Share-based
Payments issued by the Institute of Chartered Accountants of India,
shares allotted to the Trust but not transferred to employees is
required to be reduced from Share Capital and Reserves. Out of the
500,000 equity shares allotted to the Trust, 98.540 shares have been
transferred to employees up to 3 1st March 2010. Accordingly, for the
balance number of shares, die Company has reduced the Share Capital by
the amount of face value of equity shares and Share Premium Account by
die amount of share premium on such shares. The Company has also given
effect to the above in die calculation of its Basic and Diluted
earnings per share.
The vesting period for these equity settled options is between one to
four years from the date of the grant. The options are exercisable
within one year from the date of vesting.
The compensation costs of stock options granted to employees are
accounted by the Company using the intrinsic value method.
3. During the year, the Company has acquired 1,50,57,751 equity shares
in Fame (India) Limited, being the Promoters shareholding, comprising
of 43 28% stake in Fame (India) Limited, through a block deal carried
out on the Bombay Stock Exchange. The Company has further acquired
another 25,07,537 equity shares in Fame (India) Limited, comprising of
7.21 % stake in Fame (India) Limited, from the market, through two
separate block deals carried out on the Bombay Stock Exchange.
A Share Purchase Agreement between the Company and Promoters of Fame
(India) Limited recording the terms and conditions of the
abovementioned first acquisition has been executed.
Consequent to the first acquisition above, the Company, through its
merchant banker, Enam Securities Limited, has made a Public
Announcement, under the Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeover) Regulations, 1997
Takeover Code"), for an Open Offer of 8,231,759 equity shares
constituting 20% of the fully-diluted capital of Fame (India) Limited,
at a price of Rs. 51 per equity share. Further, as required under the
Takeover Code, the
Company has placed Rs 42 crores, being 100% of the funds required under
the Open Offer, in escrow with HDFC Bank, and the 1,50,57,751 equity
shares acquired from the Promoters of Fame (India) Limited under the
terms of the Share Purchase Agreement mentioned above have been placed
in escrow with Standard Chartered Bank, till conclusion of the Open
Offer formalities. The Company has, through Enam Securities Limited,
filed a Draft Letter of Offer with the Securities and Exchange Board of
India, and is awaiting its approval on the same.
As a result of the above acquisitions, the Company holds 1,75,65,288
equity shares, comprising of 50.48% stake in Fame (India) Limited.
Based on legal advice received by the Company, Fame (India) Limited
shall become a subsidiary of the Company on completion of the Open
Offer formalities.
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