Accounting Policies of Padmalaya Telefilms Ltd. Company

Mar 31, 2024

Note 1: Significant Accounting Policies

A. Background

Padmalaya Telefilms Limited ("the Company") is a Company domiciled in India and limited by shares. The shares
of the Company are publicly traded on the BSE Limited. [The address of the Company''s registered office is Regd.
Office: 8-3-222/1/23, (Plot No: 138), Madhuranagar, Yusufguda, Hyderabad - 500 038, Telangana, India.

The Company is primarily involved in Film Production and Distribution.

B. Significant Accounting Policies

(a) Basis of preparation:

(i) The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified
under Section 133 of the Companies Act, 2013 (the Act) Companies (Indian Accounting Standards) Rules, 2015]
and other relevant provisions of the Act.

All assets and liabilities have been classified as current and non-current as per the Company''s normal operating
cycle and other criteria''s set out in the Schedule III to the Companies Act, 2013. Based on the nature of
products/services and the time between the acquisition of assets for processing and their realization in cash and
cash equivalents, the Company has ascertained it''s operating cycle as twelve months for the purpose of current/
non-current classification of assets and liabilities.

Based on the nature of products/services and the time between the acquisition of assets for processing and their
realization in cash and cash equivalents, the Company has ascertained it''s operating cycle as twelve months for
the purpose of current/non-current.

(ii) Historical cost convention

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

(b) Foreign Currency Translation

(i) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary
economic environment in which the entity operates (''the functional currency''). These financial statements are
presented in Indian rupee (^), which is Company''s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using exchange rates at the date of the
transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are
recognized in Statement of Profit and Loss. Non-monetary items carried at fair value that are denominated in
foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non¬
monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

(c) Revenue Recognition

Revenue is recognized, net of sales related taxes, when persuasive evidence of an arrangement exists, the fees are
fixed or determinable, the product is delivered or services have been rendered and collectability is reasonably
assured. The Company considers the terms of each arrangement to determine the appropriate accounting
treatment. The following additional criteria apply in respect of various revenue streams within filmed
entertainment: Theatrical - Contracted minimum guarantees are recognized on the theatrical release date. The
Company''s share of box office receipts in excess of the minimum guarantee is recognized at the point they are
notified to the Company. Television - License fees received in advance which do not meet the revenue recognition
criteria are included in deferred income until the above criteria is met. Other - DVD, CD and video distribution
revenue is recognized on the date the product is delivered or if licensed in line with the revenue recognition
criteria. Provision is made for physical returns where applicable. Digital and ancillary media revenues are
recognized at the earlier of when the content is accessed or declared. Visual effects, production and other fees for
services rendered by the Company and overhead recharges are recognized in the period in which they are earned
and in certain cases, the stage of production is used to determine the proportion recognized in the period.

(d) Interest and Dividend Income Recognition

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the
Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by
reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial asset to that asset''s carrying
amount on initial recognition.

Dividends are recognized in the Statement of Profit and Loss only when the right to receive payment is established,
it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of
the dividend can be measured reliably.

(e) Income Taxes

The income tax expense for the period is the tax payable on the current period''s taxable income based on the
applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses, if any.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the country where the Company generates taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid
to the tax authorities.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax
rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are
expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.

Deferred Tax assets are recognized for all deductible temporary differences, unused tax losses and carry forward
tax credits only if it is probable that future taxable amounts will be available to utilize those temporary differences,
tax losses and tax credits.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net
basis, or to realize the asset and settle the liability simultaneously.

Current and deferred tax is recognized in the Statement of Profit and Loss, except to the extent that it relates to
items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in
other comprehensive income or directly in equity, respectively.

(f) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with financial Institutions, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value. For the purpose of Cash Flow
Statement, Cash and cash equivalents are considered net of outstanding overdrafts, if any, as they are considered
an integral part of Company cash management.

(g) Inventories

Inventories as disclosed in financial statements comprise are stated at the lower of cost and net realizable value.
Cost is determined on the basis of actual / amortized cost. Net realizable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and costs necessary to make the sale.

(h) Trade receivables

Trade receivable are recognized initially at fair value and subsequently measured at amortized cost using the
effective interest method, less provision for impairment.

(i) Financial Instruments
(i) Financial Assets
Classification

The Company classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income, or through profit
or loss), and

• those measured at amortized cost.

The classification depends on the entity''s business model for managing the financial assets and the contractual
terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in Statement of Profit and Loss or Other
Comprehensive Income.

Measurement

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in
Statement of Profit and Loss.

Impairment of Financial Assets

The Company assesses on a forward-looking basis the expected credit losses associated with its assets carried at
amortized cost. The impairment methodology applied depends on whether there has been a significant increase in
credit risk.

For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial
Instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables.

De-recognition of Financial Assets

A financial asset is de-recognized only when

- The Company has transferred the rights to receive cash flows from the financial asset or

- Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation
to pay the cash flows to one or more recipients

Where the Company has transferred an asset, it evaluates whether it has transferred substantially all risks and
rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. Where the Company
has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not
de-recognized.

Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards of
ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the
financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognized to
the extent of continuing involvement in the financial asset.

(ii) Financial Liabilities

Classification as debt or equity

Financial liabilities and equity instruments issued by the Company are classified according to the substance of the
contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

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 the fair value.

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.

Derecognition

A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.

(j) Offsetting Financial Instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a
legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or
realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on
future events and must be enforceable in the normal course of business and in the event of default, insolvency or
bankruptcy of the Company or the counterparty.

(k) Property, Plant and Equipment

All property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated
impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the
asset. Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for
as a separate asset is derecognized when replaced. All other repairs and maintenance expenses are charged to
Statement of Profit and Loss during the reporting period in which they are incurred.

Depreciation methods, estimated useful lives and residual value

Depreciation is calculated using the straight-line method to allocate the cost of the asset, net of their residual
values, if any, over their estimated useful lives which are in accordance with the useful lives prescribed under
Schedule II to the Companies Act, 2013.

The residual values are not more than 5% of the original cost of the asset. The assets'' residual values and useful
lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset''s carrying amount is
written down immediately to its recoverable amount if the asset''s carrying amount is higher than its estimated
recoverable amount.

Gains or losses arising from the retirement or disposal of a tangible asset are determined as the difference
between the net disposal proceeds and the carrying amount of the asset and recognized as income or expense in
the Statement of Profit and Loss.

(l) Borrowing costs

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortized cost with any difference between the Proceeds (net of transaction costs)
and the redemption value recognised in the Statement of profit and loss within finance costs over the
period of the borrowings using the effective interest method. Finance costs in respect of film productions
and other assets which take a substantial period of time to get ready for use or for exploitation are
capitalized as part of the assets. Borrowings are classified as current liabilities unless the Company has an
unconditional right to defer settlement of the liability for at least 12 months after the statement of
financial position date.

(m) Impairment of assets

Non-Financial assets are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset''s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less
costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows
from other assets or groups of assets (Cash-generating units). Non-financial assets other than goodwill that
suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so 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 the
Statement of profit or loss.

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Mar 31, 2015

Description of Business:

Padmalaya Telefilms Limited (PTL) is engaged in production of television software, feature films, animation serials, distribution of feature films and also facilities provider in pre-production, production, post-production including 2D & 3D Special effects for television software and feature films, Training in Multi Media Software and Animation. PTL was incorporated on 17th September, 1991 in Hyderabad, Andhra Pradesh, India.

1. Preparation of financial statements

The financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost conversion on accrual basis, except certain tangible assets which are being carried at revalued amounts. Pursuant to section 133 of the Companies Act 2013 read with Rule 7 of Companies (Accounts) Rules 2014, till the standards of accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act 1956,shall continue to apply. Consequently these financial statements have been prepared to comply in all material respects with the accounting standards notified under Section 211 (3C) of the Companies Act,1956 (Companies Accounting Standards Rules, 2006 as amended) and the relevant provisions of the Companies Act, 2013 (the Act'). The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

2. Fixed assets and depreciation:

Fixed Assets are stated at their original cost of acquisition, net of accumulated depreciation and CENVAT credit, and include taxes, freight and other incidental expenses related to their acquisition/ construction/ installation. Pre-operative expenses relatable to a specific project are capitalized till all the activities necessary to prepare the qualifying asset for its intended use are completed. Expenses capitalized also include applicable borrowing costs. Fixed Assets are impaired when there is no possibility of using them further.

During the year the Company has provided Depreciation on Fixed Assets based on the Useful life in the manner prescribed in Schedule II Part C to the Companies Act, 2013.

3. Inventories:

Inventories are valued at cost or net realizable value whichever is lower after providing for cost of obsolescence and other anticipated losses, wherever considered necessary. Spares and Consumables are charged off to revenue in the year of purchase. Cost includes the aggregate of all expenditure incurred in bringing the inventories to the present condition and situation.

4. Deferred Tax:

Deferred Tax is accounted for by computing the tax effect of timing differences, which arise during the year and reverse in subsequent periods. Deferred Tax assets on accumulated losses and unabsorbed depreciation are recognized only to the extent that there is virtual certainty of realization of such assets in future.

5. Revenue recognition:

Sales of products are recognized when risk and rewards of ownership of the products are passed on to the customers, which are generally on handing over of goods / services (in our case). Export sales are recognized on the basis of bill of lading / Airway bill.

6. Foreign currency transactions:

Sales/Purchases and revenue income/expenses in foreign currency are booked at exchange rates prevailing on the date of transaction. Gain/loss arising out of fluctuations in exchange based on the rate of realization is accounted for in the profit and loss account as per AS-11.

7. Taxes on income:

Provisions for taxation comprises of current tax, deferred tax. Current tax provision has been made on the basis of reliefs and deductions available under the income tax act, 1961 .Deffered tax resulting from "timing Differences" between taxable income and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted on balance sheet date. No deferred tax assets were found and recognized. The fringe benefits tax has been calculated and accounted for in accordance with the provisions of the income tax act, 1961. (In line with AS-22)

8. Employee Benefits:

Staff benefits arising out of retirement/death, comprising of contributions to provident fund, superannuation and gratuity schemes, accrued leave encashable and other post separation benefits are accounted for on the basis of an independent actuarial valuation, in accordance with AS-15. The actuarial liability is determined with reference to employees at the end of each financial year.

9. Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized. Other borrowing costs are recognized to profit and loss account in the year in which they are incurred. (In line with AS-16).

10. Provisions, Contingent liabilities and contingent Assets:

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of the obligation can be made. Contingent liability is disclosed for present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized. (In line with AS-29)

11.Impairment of Assets:

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. However, no such indications were observed. Company has not even observed any such indication during previous accounting years and no impairment loss was provided during that year. So, no question of reversal of previously recognized impairment loss during current year. (in line with AS-28).

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Mar 31, 2014

Description of Business:

Padmalaya Telefilms Limited (PTL) is engaged in production of television software, feature films, animation serials, distribution of feature films and also facilities provider in pre-production, production, post-production including 2D & 3D Special effects for television software and feature films, Training in Multi Media Software and Animation. PTL was incorporated on 17th September, 1991 in Hyderabad, Andhra Pradesh, India.

1 . Basis of accounting:

These financial statements are prepared under historical cost convention as a going concern and on accrual basis in accordance with the generally accepted accounting principles in India and as per applicable accounting standards (AS) issued by Institute of Chartered Accountants of India as notified under Companies act (Accounting standards) rules, 2006.

2. Fixed assets and depreciation:

Fixed assets are stated at historical cost (net of CENVAT & VAT credit in applicable cases) less accumulated depreciation thereon (in line with provisions of AS-10). Depreciation on tangible assets is provided on straight line method at the rates specified in the Schedule XIV to the companies act, 1956. Assets costing Rs.5000/- or less (as adopted as materiality threshold) are charged to expenses in the year of purchase.

3. Inventories:

Inventories are valued at cost or net realizable value whichever is lower after providing for cost of obsolescence and other anticipated losses, wherever considered necessary. Spares and Consumables are charged off to revenue in the year of purchase. Cost includes the aggregate of all expenditure incurred in bringing the inventories to the present condition and situation.

4. Deferred Tax:

Deferred Tax is accounted for by computing the tax effect of timing differences, which arise during the year and reverse in subsequent periods. Deferred Tax assets on accumulated losses and unabsorbed depreciation are recognized only to the extent that there is virtual certainty of realization of such assets in future.

5. Revenue recognition:

Sales of products are recognized when risk and rewards of ownership of the products are passed on to the customers, which are generally on handing over of goods / services (in our case). Export sales are recognized on the basis of bill of lading/Airway bill. (In line with provisions of Para 6.1 of AS-9).

6. Foreign currency transactions:

Sales/Purchases and revenue income/expenses in foreign currency are booked at exchange rates prevailing on the date of transaction. Gain/loss arising out of fluctuations in exchange based on the rate of realization is accounted for in the profit and loss account as per AS-11.

7. Taxes on income:

Provisions for taxation comprises of current tax, deferred tax. Current tax provision has been made on the basis of reliefs and deductions available under the income tax act, 1961.Deffered tax resulting from "timing Differences" between taxable income and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted on balance sheet date. No deferred tax assets were found and recognized. The fringe benefits tax has been calculated and accounted for in accordance with the provisions of the income tax act, 1961. (In line with AS-22)

8. Employee Benefits:

Staff benefits arising out of retirement/death, comprising of contributions to provident fund, superannuation and gratuity schemes, accrued leave en-cashable and other post separation benefits are accounted for on the basis of an independent actuarial valuation, in accordance with AS-15. The actuarial liability is determined with reference to employees at the end of each financial year.

9. Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized. Other borrowing costs are recognized to profit and loss account in the year in which they are incurred. (In line with AS-16).

10. Provisions, Contingent liabilities and contingent Assets:

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of the obligation can be made. Contingent liability is disclosed for present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized. (In line with AS- 29)

11.Impairment of Assets:

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. However, no such indications were observed. Company has not even observed any such indication during previous accounting years and no impairment loss was provided during that year. So, no question of reversal of previously recognized impairment loss during current year, (in line with AS-28).

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Mar 31, 2013

1. Basis of accounting:

These financial statements are prepared under historical cost convention as a going concern and on accrual basis in accordance with the generally accepted accounting principles in India and as per applicable accounting standards (AS) issued by institute of chartered accountants of India as notified under Companies act (Accounting standards) rules, 2006. ; , ''

2. Fixed assets and depreciation:

Fixed assets are stated at historical cost (net of CENVAT & VAT credit in applicable cases) less accumulated depreciation thereon (in line with provisions of AS-10). Depreciation on tangible assets is provided on straight line , method at the rates specified in the Schedule XIV to the companies act, 1956. Assets costing Rs.5000/- or less (as adopted as materiality threshold) are charged to expenses in the year of purchase.

3. Inventories:

Inventories are valued at cost or net realizable value whichever is lower after providing for cost of scarce and other anticipated losses, wherever considered necessary. Spares and Consumables ace charm, .r to revenue in the year of purchase. Cost includes the aggregate of ail expenditure incurred in bringing the if . entropies to the present condition and situation.

4. Deferred Tax:

Deferred Tax is accounted for by computing the tax effect of timing differences, which arise during the year and reverse in subsequent periods. Deferred Tax assets on accumulated losses and unabsorbed depreciation are recognized only to the extent that there is virtual certainty of realization of such assets in future.

5. Revenue recognition:

Sales of products are recognized when risk and rewards of ownership of the products are passed on to the customers, which are generally on handing over of goods / services (in our case). Export sales are recognized on the basis of bill of lading / Airway bill. (In line with provisions of Para 6.1 of AS-9). -

6. Foreign currency transactions:

Sales/Purchases and revenue income/expenses in foreign currency are booked at exchange rates prevailing on the date of transaction. Gain/loss arising out of fluctuations in exchange based on the rate of realization is accounted for in the profit and loss account as per AS-11. ''

7. Taxes on income:

Provisions for taxation comprises of current tax, deferred tax. Current tax provision has been made on the basis of reliefs and deductions available under the income tax act, 1961 .Deffered tax resulting from "timing Differences" between taxable income and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted on balance sheet date. No deferred tax assets were found and recognized. The fringe benefits tax has been calculated and accounted for in accordance with the provisions of the income tax act, 1961. (In line with AS-22)

8. Employee Benefits:

Staff benefits arising out of retirement/death, comprising of contributions to provident fund, superannuation and gratuity schemes, accrued leave encashable and other post separation benefits are accounted for on the basis of an independent actuarial valuation, in accordance with AS-15. The actuarial liability is determined with reference to employees at the end of each financial year.

9. Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized. Other borrowing costs are recognized to profit and loss account in the year in which they are incurred. (In line with AS-16).

10.Provisions, Contingent liabilities and contingent Assets:

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of the obligation can be made. Contingent liability is disclosed for present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation oral reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized. (In line with AS-29) 1 1 .Impairment of Assets:

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. However, no such indications were observed. Company has not even observed any such indication during previous accounting years and no impairment loss was provided during that year. So, no question of reversal of previously recognized impairment loss during current year, (in line with AS-28).

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Mar 31, 2012

1. Basis of accounting:

These financial statements are prepared under historical cost convention as a going Concern and on accrual basis in accordance with the generally accepted accounting principles in India and as per applicable accounting , standards (AS) issued by Institute of Chartered Accountants of India as notified under Companies act (Accounting standards] rules, 2006.

2. Fixed assets and depreciation:

Fixed assets are stated at historical cost (net of CENVAT & VAT credit in applicable cases) less accumulated depreciation thereon (in line with provisions of AS-10). Depreciation on tangible assets is provided on-straight line method at the rates specified in the Schedule XIV to the companies act, 1956. Assets costing Rs.5600/- or less (as adopted as materiality threshold) are charged to expenses in the year of purchase.

3. Inventories:

Inventories are valued at cost or net realizable value whichever is lower after providing for cost of obsolescence and other anticipated losses, wherever considered necessary. Spares and Consumables are charged off to revenue in the year of purchase. Cost includes the aggregate of all expenditure incurred in bringing the inventories to the present condition and situation.

4. Deferred Tax:

Deferred Tax is accounted for by computing the tax effect of timing differences, which arise during the year and reverse in subsequent periods. Deferred Tax assets on accumulated losses and unabsorbed depreciation are recognized only to the extent that there is virtual certainty of realization of such assets in future.

5. Revenue recognition:

Sales of products are recognized when risk and rewards of ownership of the produces are passed onto the customers, which are generally on handing over of goods/services (in our case). Export sales are recgnized on the basis of bill of lading/Airway bill. (In line with provisions of Para 6.1 of AS-9).

6. Foreign currency transactions: Sales/Purchases and revenue income/expenses in foreign currency are booked at exchange rotes prevailing on the date of transaction. Gain/loss arising out of fluctuations in exchange based on the rate of realiization is accounted for in the profit and loss account as per AS-11.

7. Taxes on income:

Provisions for taxation comprises of current tax, deferred tax. Current tax provision has been made on the basis of reliefs and deductions available under the income tax act, 1961. Deffered tax resulting from, "timing Differences" between taxable income arid accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted on balance sheet date. No. deferred tax assets were found and recognized. The fringe benefits tax has been calculated and accounted for in accordance with the provisions of the income tax act, 1961. (In line with AS-22)

8. Employee Benefits:

Staff benefits arising cot of retirement/death comprising, of contributions to provident, fund, superannuation and gratuity schemes, accrued leave en-cashable and other post separation benefits are accounted for on the basis of an independent actuarial valuation, in accordance with AS-15 the actuarial liability is determined with reference to employees at the end of each financial, year.

9. Borrowing Costs:;

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized. Other borrowing costs are recbgnized to profit and loss account in the year in which they are incurred. (In line with AS-16).

10. Provisions, Contingent liabilities and contingent Assets:

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable ' estimate of the amount of the obligation can be made. Contingent liability is disclosed for present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized. (In line, with AS-29)

11. Impairment of Assets:

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. However, no such indications were observed. Company has not even observed any such indication during previous accounting years and no impairment loss was provided during that year. So, no question of reversal of previously recognized impairment loss during current year, (inline with AS-28).

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Mar 31, 2010

Description of Business:

Padmalaya Telefilms Limited (PTL) is engaged in production of television software, feature films, animation serials, distribution of feature films and also facilities provider in pre-production, production, post-production including 2D & 3D Special effects for television software and feature films, Training in Multi Media Software and Animation. PTL was incorporated on 1 7th September; 1991 in Hyderabad, Andhra Pradesh, India.

1) Basis for preparation of financial statements:

The financial statements have been prepared under the historical cost convention in accordance with the Generally Accepted Principles (GAAP) in India and the mandatory Accounting Standards & Statements issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 as adopted consistently by the Company.

2) Revenue Recognition:

The Sales accounted for on the basis of billing. Revenue from sale of software products are recognized when the sale has been completed with the passing of telecast rights as the case may be. Revenues relating to Feature Films under production will be considered during the financial year of release.

3) Expenditure:

Expenditures are accounted for on accrual basis and provision is made for all known losses and liabilities. In case of Movies produced by the Company, Expenditure / revenues will be charged to Profit and Loss Account in the financial year of release.

4) Fixed Assets:

Fixed Assets are stated at cost of acquisition inclusive of freight, duties, insurance, installation charges, taxes and other expenditure incurred till the asset is put in commercial operation, allocated to and utilized for Fixed Assets.

5) Depreciation:

Depreciation on fixed Assets is provided on Straight Line Method at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956. Depreciation is charged on a pro-rata basis for assets purchased during the year.

6) Inventories:

All inventories are valued at lower of cost or net realizable value after providing for cost of obsolescence and other anticipated losses, wherever considered necessary. Spares and Consumables are charged off to revenue in the year of purchase. Cost includes the aggregate of all expenditure incurred in bringing the inventories to the present condition and situation.

7) Retirement Benefits:

Provident Fund: Company is contributing to Employees Provident Fund and the same is charged to Profit & Loss Account every year.

Gratuity: In the Current Year, Gratuity has been provided up to 31 st March, 2010 (On accrual basis) and the same is charged to Profit and Loss Account.

Earn Leaves: Provision for encashment of Earned leaves are provided for the unutilized leaves at the end of the year.

8) Foreign Currency Transactions:

Transactions in Foreign Currency are recorded in the books of account at conversion rates as applicable on the date of transaction.

9) Miscellaneous Expenses:

The Preliminary Expenses / Share Issue Expenses are being written of over a period of 10 years from the year and Miscellaneous (Differed) Expenditure is written off in 5 years from the year in which expenditure is incurred.

10)Deferred Tax:

Deferred Tax has been provided as per the provisions of Accounting Standard 22 of ICAI.