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Accounting Policies of Saregama India Ltd. Company
Mar 31, 2025
1 MATERIAL ACCOUNTING POLICIES
The material accounting policies applied by the Company in the preparation of its standalone financial statements are listed
below. Such accounting policies have been applied consistently to all the periods presented in these standalone financial
statements.
(a) Basis of preparation
(i) Compliance with Ind AS
These standalone 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 (Accounting Standards) Rules, 2015 (as
amended)] and other relevant provisions of the Act.
(ii) Basis of measurement
(a) Historical cost convention
The standalone financial statements have been prepared on a historical cost basis, except for the following:
- Derivative financial instruments - Fair Value
- Non derivative financial instruments at FVTPL - Fair Value
- Net Defined benefit (assets)/liability - Fair value of plan assets less present value of defined benefit
obligations; and
- Equity share based payments - Fair Value
(b) Functional and presentation currency
Items included in the standalone financial statements of the Company are measured using the currency of
the primary economic environment in which the Company operates (''the functional currency''). The standalone
financial statements are presented in Indian Rupee (''), which is the Company''s functional and presentation
currency.
(iii) Current versus non-current classification
All assets and liabilities have been classified as current or non current as per the Company''s normal operating cycle
and other criteria set out in Schedule III to the Companies Act, 2013 and Ind AS 1 - Presentation of financial statement
based on the nature of products / service and the time between the acquisition of assets for processing / providing
the services and their realisation in cash and cash equivalents. The Company has ascertained its operating cycle as
12 months for the purpose of current, non current classification of assets and liabilities.
Assets
An asset is classified as current when it satisfies any of the following criteria:
(a) it is expected to be realised in, or is intended for sale or consumption in, the Company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the reporting date; or
(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least
12 months after the reporting date.
Current assets include the current portion of non-current financial assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
(a) it is expected to be settled in the Company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the reporting date; or
(d) the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after
the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the
issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
(b) Revenue recognition
(i) The Company has applied Ind AS 115, Revenue from Contracts with Customers, which establishes a comprehensive
framework for determining whether, how much and when revenue is to be recognised.
Revenue is recognised upon transfer of control of promised products or services to customers in an amount that
reflects the consideration which the Company expects to receive in exchange for those products or services.
- Revenue from the sale of products is recognised at the point in time when control is transferred to the customer.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts,
price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes
taxes collected from customers.
- Revenue from Music licensing where the customer obtains a "right to use" is recognised at the time the license
is made available to the customer. Revenue from licenses where the customer obtains a "right to access" is
recognised over the access period.
- Revenue from the sale of television serial episodes is recognised upfront at the point in time when the episode
is delivered to the customer.
- Revenue from sale of free commercial time (net of trade discount, as applicable) are recognised when the
related advertisement or commercials appears before the public, i.e. on telecast.
- Revenue from theatrical distribution is recognised on exhibition of films. In case of distribution through theatres,
revenue is recognised on the basis of box office reports received from various exhibitors. Contracted minimum
guarantees are recognised on theatrical release.
- Revenue from Sale of films rights are recognised on assignment of such rights as per terms of the sale/licencing
agreements.
- Revenue from events is recognised on exhibition of Events through ticket sales and sponsorship. Contracted
minimum guarantees are recognised on exhibition of event.
- Revenue from IPRS/PPL are recognised based on the details/information received from customers.
- Revenue from artist management are recognised on completion of work as per terms of the sale/licensing
agreements.
The billing schedules agreed with customers include periodic payments and / or milestone based progress payments.
Invoices are payable within contractually agreed credit period.
Unearned and deferred revenue ("contract liability") is recognised when there is billings in excess of revenues.
Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are
classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash,
and only passage of time is required, as per contractual terms.
Use of significant judgements in revenue recognition :
- The Company exercises judgement in determining whether the performance obligation is satisfied at a point in
time or over a period of time. The Company considers indicators such as how customer consumes benefits as
services are rendered, transfer of significant risks and rewards to the customer, acceptance of delivery by the
customer, etc. Judgement is also required to determine the transaction price for the contract. The transaction
price could be either a fixed amount of customer consideration or variable consideration with elements such as
volume discounts, price concessions and incentives.
(ii) Interest income
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the effective
interest rate applicable.
(iii) Dividend income
Dividend income from investments is recognised when the shareholder''s rights to receive payment have been
established.
(iv) Rental income
Rental income from investment properties and subletting of properties is recognised on a straight line basis over the
term of the relevant leases.
(c) Property, plant and equipment - (PPE)
All items of property, plant and equipment other than freehold land are stated at historical cost i.e. cost of acquisition/
construction or at deemed cost as on the date of transition to Ind AS less accumulated depreciation and accumulated
impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can
be measured reliably. All other repairs and maintenance are charged to statement of profit and loss during the reporting
period in which they are incurred.
Revaluation of Land is made with sufficient regularity to ensure that the carrying amount does not differ materially from
that which would be determined using fair value at the balance sheet date. When the fair value differs materially from its
carrying amount, the carrying amount is adjusted to the revalued amount. The fair value is determined based on appraisal
undertaken by a professionally qualified valuer.
Depreciation method, estimated useful lives and residual values
Depreciation is calculated on a pro-rata basis using the straight-line method to allocate their cost, net of their estimated
residual values, over the estimated useful lives of the asset as prescribed under Schedule II to the Companies Act, 2013.
The useful lives, residual values and the method of depreciation of property, plant and equipment 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 greater
than its estimated recoverable amounts.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in profit or
loss within ''Other Income''/''Other Expenses''.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is
classified as ''Capital Advances'' under other non - current assets.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and
equipment recognised as at 1st April, 2016 measured as per the previous GAAP and use that carrying value as the deemed
cost of the property, plant and equipment.
(d) Investment properties
Properties that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company,
is classified as investment property. Investment property is measured initially at its cost, including related transaction costs
and where applicable borrowing costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it
is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost of
item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
I nvestment properties are depreciated using the straight-line method over their estimated useful lives of the assets as
prescribed under Schedule II to the Companies Act, 2013.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment properties
recognised as at 1st April, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of
investment properties.
(e) Intangible assets
Intangible assets has a finite useful life and are stated at cost less accumulated amortisation and accumulated impairment
losses, if any.
(i) Music Copyrights
Outright acquisition of music copyrights wherein future economic benefits are established are capitalised. They have
finite useful lives and are subsequently carried at cost less accumulated amortisation and impairment losses.
(ii) Computer Software
Software for internal use, which is primarily acquired from third-party vendors is capitalised. Subsequent costs
associated with maintaining such software are recognised as expense as incurred. Cost of software includes license
fees and cost of implementation/system integration services, where applicable.
Amortisation method and year
The Company amortises intangible assets with a finite useful lives using the straight-line method over the following
periods:
Music Copyrights acquired through outright purchase are amortised over a period of one to ten years from the date
of release of Music. The Company reviews the expected future revenue potential at the end of each accounting period
and recognises impairment loss, where required.
Softwares are amortised on a straight line basis over a period of three to five years from the date of capitalisation.
Advances paid towards the cost of intangible assets outstanding at each balance sheet date is classified as ''Capital
advances'' under other non - current assets.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets
recognised as at 1st April, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost
of intangible assets.
(f) Impairment of non-financial assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised 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 group of assets (cash¬
generating units).
(g) Leases
The Company as a lessee
The Company''s lease asset classes primarily consist of leases for buildings and vehicles. The Company assesses whether
a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right
to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract
conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the
use of an identified asset (ii)the Company has substantially all of the economic benefits from use of the asset through the
period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a right-of-use asset ("ROU") and a corresponding
lease liability for all lease arrangements in which it is a lessee.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU
assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for
any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease
incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease
term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes
in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the
recoverable amount (i.e.the higher of the fair value less cost to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such
cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortised cost at the present value of the future lease payments. The lease
payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental
borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment
to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a
termination option.
The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have
a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated
with these leases are recognised as an expense on a straight-line basis over the lease term.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been
classified as financing cash flows.
The Company as a lessor
At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease.
Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is
classified as a finance lease. All other leases are classified as operating leases. The Company recognises lease payments
received under operating leases as income on a straight- line basis over the lease term. In case of a finance lease, finance
income is recognised over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor''s net
investment in the lease.
Transition to Ind AS 116
Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2019 and
Companies (Indian Accounting Standards) Second Amendment Rules, has notified Ind AS 116 Leases which replaces the
existing lease standard, Ind AS 17 leases, and other interpretations. Ind AS 116 sets out the principles for the recognition,
measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a single, on-balance sheet
lease accounting model for lessees.
Under the erstwhile standard Ind AS 17, operating lease payments as per terms of the agreement, were recognised as
an expense in the Statement of Profit and Loss on a straight line basis, except where another systematic basis was more
representative of the time pattern in which economic benefits from the leased asset were consumed.
Effective 1st April, 2019, the Company adopted Ind AS 116 ''Leases" and applied the standard to lease contracts existing on
1st April, 2019 using the modified retrospective method on the date of initial application. Consequently, the lease liabilities
is recognised at the present value of lease payment discounted at the weighted average incremental borrowing rate and
same amount is recognised for ROU assets.
The following is the summary of practical expedients elected on initial application:
⢠Applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar
end date.
⢠Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease
term and low value leases on the date of initial application.
⢠Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
⢠Applied the practical expedient to grandfather the assessment of which transactions are leases. Accordingly, Ind AS
116 is applied only to contracts that were previously identified as leases under Ind AS 17.
(h) Inventories
Physical inventory (caravan, music card and others): Inventories are valued at lower of cost and net realisable value. The
cost is determined on weighted average basis, and includes, where applicable, appropriate share of overheads, the same
is charged off on sale of goods. The costs of purchase of inventories comprise the purchase price, import duties and
other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling
and other costs directly attributable to the acquisition of finished goods. Provision is made for obsolete / slow moving /
defective stocks, where necessary.
Music rights are stated at lower of cost / unamortised cost or net realisable value. Cost comprises acquisition / direct
production cost. Music rights are amortised over a period of one to ten years from the date of release of Music.
Untelecasted television serials are valued at lower of cost or net realisable value. Cost comprises direct production cost.
Cost of a television serial is fully expensed on telecast/broadcasting.
Digital Films are stated at lower of cost / unamortised cost or net realisable value. Cost comprises acquisition / direct
production cost. Expenses of under production films incurred till the films are ready for release are inventorised. Cost of
digital films are recognised as expense in Statement of Profit and Loss as per the terms of licencing of multiple digital
rights.
Net realisable value is 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. The comparison of cost and net realisable value is made on an item-
by-item basis.
(i) Investments in subsidiaries
Investments in subsidiaries are carried at cost less provision for impairment, if any. Investments in subsidiaries are tested
for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the carrying amount of investments exceeds its recoverable
amount.
Transition to Ind AS
On transition to Ind AS, the Company has elected to measure its investments in all its subsidiaries at its previous GAAP
carrying value and use those values as the deemed cost of such investments.
(j) Investments (other than investments in subsidiaries) and other financial instruments
(i) 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 to be measured at amortised cost.
The classification depends on the Company''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 profit or loss or other comprehensive income.
For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at
the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
In accordance with Ind AS 101, the Company had irrevocably designated its investment in equity instruments as
FVOCI on the date of transition to Ind AS.
(ii) Measurement
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual
provisions of the instrument. Financial assets and liabilities are initially measured at fair value. However, trade
receivables that do not contain a significant financing component are measured at transaction price. 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
measured on initial recognition of financial asset or financial liability. The transaction costs directly attributable to the
acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately recognised
in the statement of profit and loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash
flows are solely payment of principal and interest.
Equity Instruments : The Company subsequently measures all equity investments at fair value. Where the Company''s
management has elected to present fair value gains and losses on equity investments in other comprehensive income,
there is no subsequent reclassification of fair value gains and losses to profit or loss. Changes in the fair value of
financial assets at fair value through profit or loss are recognised in ''Other Income'' in the Statement of Profit and Loss.
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of
principal and interest are measured at amortised cost. Interest income from these financial assets is included in
finance income using the effective interest rate method.
(iii) Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets which are
not fair valued through profit or loss. The impairment methodology applied depends on whether there has been
a significant increase in credit risk. Note 32(A) details how the Company determines whether there has been a
significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach as per Ind AS 109,''Financial Instruments'',
which requires expected lifetime losses to be recognised from initial recognition of the receivables.
(iv) Derecognition of financial assets
A financial asset is derecognised 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 entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks
and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity
has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not
derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership
of the financial asset, the financial asset is derecognised 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 recognised to the extent of
continuing involvement in the financial asset.
(v) Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL.
(vi) Financial liabilities through fair value through profit or loss (FVTPL)
A financial liability is classified as at FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as
such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including
any interest expense, are recognised in Statement of Profit and Loss. This category also includes derivative financial
instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as
defined by Ind AS 109.
(vii) Financial liabilities at amortised cost
Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest
expense and foreign exchange gains and losses are recognised in Statement of Profit and Loss.
Any gain or loss on derecognition is also recognised in Statement of Profit and Loss.
For trade and other payables maturing within one year from the balance sheet date, the carrying amounts
approximates fair value due to the short maturity of these instruments."
(viii) Fair value of financial instruments
In determining the fair value of financial instruments, the Company uses a variety of methods and assumptions that
are based on market conditions and risks existing at each reporting date. The methods used to determine fair value
include discounted cash flow analysis and available quoted market prices. All methods of assessing fair value result
in general approximation of value, and such value may never actually be realised.
(k) Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet where there is a
legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise 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.
(l) Trade receivables
Trade receivables are amounts due from customers for goods sold or services rendered in the ordinary course of business.
Trade receivables, shall be initially measured at their transaction price unless those contain a significant financing
component determined.
(m) Cash and cash equivalents
For the purpose of presentation in the Cash Flow Statement, cash and cash equivalents includes 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 and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(n) Trade payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year
which are unpaid. Trade payables are presented as current liabilities unless payment is not due within 12 months after the
reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the
effective interest method.
(o) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised
in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of
loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility
will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it
is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services
and amortised over the period of the facility to which it relates.
Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or
expired.
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 reporting period.
(p) Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended
use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended
use or sale.
Other borrowing costs are expensed in the period in which they are incurred, unless they are capitalised.
(q) Foreign currency transactions and translation
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the
transactions. At the year-end, monetary assets and liabilities denominated in foreign currencies are restated at the year
- end exchange rates. The exchange differences arising from settlement of foreign currency transactions and from the
year-end restatement are recognised in profit and loss.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the
date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported
as part of the fair value gain or loss. Foreign currency non-monetary items carried in terms of historical cost are reported
using the exchange rate at the date of the transactions.
(r) Employee benefits expense
(i) Short-term employee benefits
Liabilities for short-term employee benefits that are expected to be settled wholly within 12 months after the end of
the period in which the employees render the related service are measured at the amounts expected to be paid when
the liabilities are settled. The liabilities are presented as ''Employee Benefits Payable'' within ''Other Current Liabilities''
in the Balance Sheet.
(ii) Other long-term employee benefits
The liabilities for leave are not expected to be settled wholly within 12 months after the end of the period in which
the employees render the related service. They are therefore measured annually by actuaries as the present value of
expected future benefits in respect of services provided by employees up to the end of the reporting period using the
projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period
that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience
adjustments and changes in actuarial assumptions are recognised in profit or loss.
(iii) Post-employment benefits
Defined benefit plans
The liability or asset recognised in the Balance Sheet in respect of defined benefit plans is the present value of the
defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit
obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows
by reference to market yields at the end of the reporting period on government bonds that have terms approximating
to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation
and the fair value of plan assets. This cost is included in ''Employee Benefits Expense'' in the Statement of Profit and
Loss. The rate is applied on the net balance determined at the start of the reporting period, taking into account any
changes in the net balance during the period as a result of contribution and benefit payments
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are
recognised in the period in which they occur, directly in Other Comprehensive Income. These are included in ''Retained
Earnings'' in the Statement of Changes in Equity in the balance sheet.
Defined contribution plans
The Company has certain defined contribution plans viz. provident fund and superannuation fund. Contributions
for provident fund are made at specified percentage of the covered employee''s qualifying salary to a government
administered fund. Contribution for superannuation fund are made yearly based on a specified percentage of each
covered employee''s salary to a Trust set up by the Company. Contributions under Defined Contribution Plans are
recognised as expenses for the period in which the employee has rendered the service.
(iv) Share-based payments
Share-based compensation benefits are provided to employees via Saregama Employee Stock Options Scheme
2013, Stock Appreciation Rights Scheme 2014 and Stock Appreciation Rights Scheme 2018.
Employee Options
The fair value of the options granted under the Saregama Employee Stock Option Scheme 2013 is recognised as an
employee benefits expense in the statement of profit and loss with a corresponding increase in equity. The fair value
at grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the
option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield
and risk free interest rate for the term of the option. The total amount to be expensed is determined by reference to
the fair value of the options granted:
- Including any market performance conditions (e.g., the entity''s share price);
- excluding the impact of any services and non-market performance vesting conditions (e.g. profitability, sales
growth targets and remaining an employee of the entity over a specified time period); and
- i ncluding the impact of any non-vesting conditions (e.g. the requirement for employees to save or holdings
shares for a specified period of time).
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that
are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision
to original estimates, if any, in the statement of profit or loss, with a corresponding adjustment to equity.
(s) Royalty
Royalty on sales, other than physical sales, is provided on the basis of management''s best estimate of the expenditure
required to settle the obligation. Other royalty payments are charged at agreed rates on related sales.
(t) Income tax
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, unused tax
credits and to unused tax losses, as applicable.
The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period. 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 standalone financial statements. However, deferred tax is not accounted
for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income 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 realised or the deferred tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused
tax losses, if any, only if it is probable that future taxable amounts will be available to utilise those temporary differences,
tax credits and losses.
Deferred tax assets are not recognised for temporary differences between the carrying amount and tax bases of
investments in subsidiaries where it is not probable that the differences will reverse in the foreseeable future and taxable
profit will not be available against which the temporary difference can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date 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 utilised.
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 liabilities are
offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
Current and deferred tax are recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity, if any. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
Mar 31, 2024
1 MATERIAL ACCOUNTING POLICIES
The material accounting policies applied by the Company in the preparation of its standalone financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these standalone financial statements.
(a) Basis of preparation
(i) Compliance with Ind AS
These standalone 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 (Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
(ii) Basis of measurement
(a) Historical cost convention
The standalone financial statements have been prepared on a historical cost basis, except for the following:
- Derivative financial instruments - Fair Value
- Non derivative financial instruments at FVTPL - Fair Value
- Net Defined benefit (assets)/Liability - Fair value of plan assets less present value of defined benefit obligations; and
- Share based payments - Fair Value
(b) Functional and presentation currency
Items included in the standalone financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The standalone financial statements are presented in Indian Rupee (Rs.), which is the Company''s functional and presentation currency.
(iii) Current versus non-current classification
All assets and liabilities have been classified as current or non current as per the Company''s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013 and Ind AS 1 - Presentation of financial statement based on the nature of products / service and the time between the acquisition of assets for processing / providing the services and their realisation in cash and cash equivalents. The Company has ascertained its operating cycle as 12 months for the purpose of current, non current classification of assets and liabilities.
Assets
An asset is classified as current when it satisfies any of the following criteria:
(a) it is expected to be realised in, or is intended for sale or consumption in, the Company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the reporting date; or
(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
(a) it is expected to be settled in the Company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the reporting date; or
(d) the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
(b) Revenue recognition
(i) The Company has applied Ind AS 115, Revenue from Contracts with Customers, which establishes a comprehensive
framework for determining whether, how much and when revenue is to be recognised.
Revenue is recognised upon transfer of control of promised products or services to customers in an amount that
reflects the consideration which the Company expects to receive in exchange for those products or services.
- Revenue from the sale of products is recognised at the point in time when control is transferred to the customer. Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.
- Revenue from Music licensing where the customer obtains a "right to use" is recognised at the time the license is made available to the customer. Revenue from licenses where the customer obtains a "right to access" is recognised over the access period.
- Revenue from the sale of television serial episodes is recognised upfront at the point in time when the episode is delivered to the customer.
- Revenue from sale of free commercial time (net of trade discount, as applicable) are recognised when the related advertisement or commercials appears before the public, i.e. on telecast.
- Revenue from theatrical distribution is recognised on exhibition of films. In case of distribution through theatres, revenue is recognised on the basis of box office reports received from various exhibitors. Contracted minimum guarantees are recognised on theatrical release.
- Revenue from Sale of films rights are recognised on assignment of such rights as per terms of the sale/licencing agreements.
- Revenue from events is recognised on exhibition of Events through ticket sales and sponsership. Contracted minimum guarantees are recognised on exhibition of event.
The billing schedules agreed with customers include periodic payments and / or milestone based progress payments. Invoices are payable within contractually agreed credit period.
Unearned and deferred revenue ("contract liability") is recognised when there is billings in excess of revenues. Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.
Use of significant judgements in revenue recognition :
- The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits as services are rendered, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc. Judgement is also required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, price concessions and incentives.
(ii) Interest income
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the effective interest rate applicable.
(iii) Dividend income
Dividend income from investments is recognised when the shareholder''s rights to receive payment have been established.
(iv) Rental income
Rental income from investment properties and subletting of properties is recognised on a straight line basis over the term of the relevant leases.
(v) Government Grant
The Company may receive government grants that require compliance with certain conditions related to the Company''s operating activities or are provided to the Company by way of financial assistance on the basis of certain qualifying criteria. Accordingly, government grants by way of financial assistance on the basis of certain qualifying criteria are recognised as they become receivable.
(c) Property, plant and equipment - (PPE)
All items of property, plant and equipment other than freehold land are stated at historical cost i.e. cost of acquisition/ construction or at deemed cost as on the date of transition to Ind AS less accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to statement of profit and loss during the reporting period in which they are incurred.
Revaluation of Land is made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date. When the fair value differs materially from its carrying amount, the carrying amount is adjusted to the revalued amount. The fair value is determined based on appraisal undertaken by a professionally qualified valuer.
Depreciation method, estimated useful lives and residual values
Depreciation is calculated on a pro-rata basis using the straight-line method to allocate their cost, net of their estimated residual values, over the estimated useful lives of the asset as prescribed under Schedule II to the Companies Act, 2013. The useful lives, residual values and the method of depreciation of property, plant and equipment 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 greater than its estimated recoverable amounts.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in profit or loss within ''Other Income''/''Other Expenses''.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as ''Capital Advances'' under other non - current assets.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
(d) Investment properties
Properties that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost of item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
I nvestment properties are depreciated using the straight-line method over their estimated useful lives of the assets as prescribed under Schedule II to the Companies Act, 2013.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment properties recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of investment properties.
(e) Intangible assets
Intangible assets has a finite useful life and are stated at cost less accumulated amortisation and accumulated impairment losses, if any.
(i) Music Copyrights
Outright acquisition of music copyrights wherein future economic benefits are established are capitalised. They have finite useful lives and are subsequently carried at cost less accumulated amortisation and impairment losses.
(ii) Computer Software
Software for internal use, which is primarily acquired from third-party vendors is capitalised. Subsequent costs associated with maintaining such software are recognised as expense as incurred. Cost of software includes license fees and cost of implementation/system integration services, where applicable.
Amortisation method and year
The Company amortises intangible assets with a finite useful lives using the straight-line method over the following periods:
Music Copyrights acquired through outright purchase are amortised over a period of one to ten years from the date of release of Music. The Company reviews the expected future revenue potential at the end of each accounting period and recognises impairment loss, where required.
Softwares are amortised on a straight line basis over a period of three to five years from the date of capitalisation. Advances paid towards the cost of intangible assets outstanding at each balance sheet date is classified as ''Capital advances'' under other non - current assets.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.
(f) Impairment of non-financial assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised 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 group of assets (cashgenerating units).
(g) Leases
The Company as a lessee
The Company''s lease asset classes primarily consist of leases for buildings and vehicles. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii)the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e.the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortised cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Company as a lessor
At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. The Company recognises lease payments received under operating leases as income on a straight- line basis over the lease term. In case of a finance lease, finance income is recognised over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor''s net investment in the lease.
Transition to Ind AS 116
Ministry of Corporate Affairs ("MCA) through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, has notified Ind AS 116 Leases which replaces the existing lease standard, Ind AS 17 leases, and other interpretations. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a single, on-balance sheet lease accounting model for lessees.
Under the erstwhile standard Ind AS 17, operating lease payments as per terms of the agreement, were recognised as an expense in the Statement of Profit and Loss on a straight line basis, except where another systematic basis was more representative of the time pattern in which economic benefits from the leased asset were consumed.
Effective 1 April 2019, the Company adopted Ind AS 116 ''Leases" and applied the standard to lease contracts existing on 1 April 2019 using the modified retrospective method on the date of initial application. Consequently, the lease liabilities is recognised at the present value of lease payment discounted at the weighted average incremental borrowing rate and same amount is recognised for ROU assets.
The following is the summary of practical expedients elected on initial application:
⢠Applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date.
⢠Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term and low value leases on the date of initial application.
⢠Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
⢠Applied the practical expedient to grandfather the assessment of which transactions are leases. Accordingly, Ind AS 116 is applied only to contracts that were previously identified as leases under Ind AS 17.
(h) Inventories
Physical inventory (caravan, music card and others): Inventories are valued at lower of cost and net realisable value. The cost is determined on weighted average basis, and includes, where applicable, appropriate share of overheads, the same
is charged off on sale of goods. The costs of purchase of inventories comprise the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling and other costs directly attributable to the acquisition of finished goods. Provision is made for obsolete / slow moving / defective stocks, where necessary.
Music rights are stated at lower of cost / unamortised cost or net realisable value. Cost comprises acquisition / direct production cost. Music rights are amortised over a period of one to ten years from the date of release of Music. Untelecasted television serials are valued at lower of cost and net realisable value. Cost comprises direct production cost. Cost of a television serial is fully expensed on telecast/broadcasting.
Digital Films are stated at lower of cost / unamortised cost or net realisable value. Cost comprises acquisition / direct production cost. Expenses of under production films incurred till the films are ready for release are inventorised. Cost of digital films are recognised as expense in Statement of Profit and Loss as per the terms of licencing of multiple digital rights.
Net realisable value is 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.
(i) Investments in subsidiaries
Investments in subsidiaries are carried at cost less provision for impairment, if any. Investments in subsidiaries are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of investments exceeds its recoverable amount.
Transition to Ind AS
On transition to Ind AS, the Company has elected to measure its investments in all its subsidiaries at its previous GAAP carrying value and use those values as the deemed cost of such investments.
(j) Investments (other than investments in subsidiaries) and other financial instruments
(i) 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 to be measured at amortised cost.
The classification depends on the Company''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 profit or loss or other comprehensive income. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. In accordance with Ind AS 101, the Company had irrevocably designated its investment in equity instruments as FVOCI on the date of transition to Ind AS.
(ii) 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 profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Equity Instruments : The Company subsequently measures all equity investments at fair value. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Changes in the fair value of financial assets at fair value through profit or loss are recognised in ''Other Income'' in the Statement of Profit and Loss.
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method.
(iii) Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets which are not fair valued through profit or loss. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 32(A) details how the Company determines whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach as per Ind AS 109,''Financial Instruments'', which requires expected lifetime losses to be recognised from initial recognition of the receivables.
(iv) Derecognition of financial assets
A financial asset is derecognised 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 entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised 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 recognised to the extent of continuing involvement in the financial asset.
(v) Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL.
(vi) Financial liabilities through fair value through profit or loss (FVTPL)
A financial liability is classified as at FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in Statement of Profit and Loss. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109.
(vii) Financial liabilities at amortised cost
Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in Statement of Profit and Loss.
Any gain or loss on derecognition is also recognised in Statement of Profit and Loss.
For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximates fair value due to the short maturity of these instruments.
(viii) Fair value of financial instruments
In determining the fair value of financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis and available quoted market prices. All methods of assessing fair value result in general approximation of value, and such value may never actually be realised.
(k) Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise 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.
(l) Trade receivables
Trade receivables are amounts due from customers for goods sold or services rendered in the ordinary course of business. trade receivables, shall be initially measured at their transaction price unless those contain a significant financing component determined.
(m) Cash and cash equivalents
For the purpose of presentation in the Cash Flow Statement, cash and cash equivalents includes 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 and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(n) Trade payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
(o) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.
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 reporting period.
(p) Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred, unless they are capitalised.
(q) Foreign currency transactions and translation
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. At the year-end, monetary assets and liabilities denominated in foreign currencies are restated at the year - end exchange rates. The exchange differences arising from settlement of foreign currency transactions and from the year-end restatement are recognised in profit and loss.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Foreign currency non-monetary items carried in terms of historical cost are reported using the exchange rate at the date of the transactions.
(r) Employee benefits expense
(i) Short-term employee benefits
Liabilities for short-term employee benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as ''Employee Benefits Payable'' within ''Other Current Liabilities'' in the Balance Sheet.
(ii) Other long-term employee benefits
The liabilities for leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured annually by actuaries as the present value of expected future benefits in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
(iii) Post-employment benefits Defined benefit plans
The liability or asset recognised in the Balance Sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in ''Employee Benefits Expense'' in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income. These are included in ''Retained Earnings'' in the Statement of Changes in Equity in the balance sheet.
Defined contribution plans
The Company has certain defined contribution plans viz. provident fund and superannuation fund. Contributions for provident fund are made at specified percentage of the covered employee''s qualifying salary to a government administered fund. Contribution for superannuation fund are made yearly based on a specified percentage of each covered employee''s salary to a Trust set up by the Company. Contributions under Defined Contribution Plans are recognised as expenses for the period in which the employee has rendered the service.
(iv) Share-based payments
Share-based compensation benefits are provided to employees via Saregama Employee Stock Options Scheme 2013, Stock Appreciation Rights Scheme 2014.and Stock Appreciation Rights Scheme 2018.
Employee Options
The fair value of the options granted under the Saregama Employee Stock Option Scheme 2013 is recognised as an employee benefits expense in the statement of profit and loss with a corresponding increase in equity. The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and risk free interest rate for the term of the option.The total amount to be expensed is determined by reference to the fair value of the options granted:
- Including any market performance conditions (e.g., the entity''s share price);
- excluding the impact of any services and non-market performance vesting conditions (e.g. profitability, sales growth targets and remaining an employee of the entity over a specified time period); and
- i ncluding the impact of any non-vesting conditions (e.g. the requirement for employees to save or holdings shares for a specified period of time).
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in the statement of profit or loss, with a corresponding adjustment to equity.
(s) Royalty
Royalty on sales, other than physical sales, is provided on the basis of management''s best estimate of the expenditure required to settle the obligation. Other royalty payments are charged at agreed rates on related sales.
(t) Income tax
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, unused tax credits and to unused tax losses, as applicable.
The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. 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 standalone financial statements. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income 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 realised or the deferred tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, if any, only if it is probable that future taxable amounts will be available to utilise those temporary differences, tax credits and losses.
Deferred tax assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries where it is not probable that the differences will reverse in the foreseeable future and taxable profit will not be available against which the temporary difference can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date 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 utilised.
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 liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax are recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, if any. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Mar 31, 2023
BACKGROUND
Saregama India Limited ("the Company") is a Company limited by shares, incorporated and domiciled in India. The Company is engaged in the business of manufacturing and sale of Music storage device viz. Carvaan, Music Card, Audio Compact Discs, Digital Versatile Discs and dealing with related music rights. The Company is also engaged in production and sale/telecast/broadcast of films/Tv Serials, prerecorded programmes and dealing in film rights. Equity shares of the Company are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The registered office of the Company is located in Kolkata, West Bengal, India.
1 SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied by the Company in the preparation of its standalone financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these standalone financial statements.
(a) Basis of preparation
The standalone financial statements of the Company for the year ended 31 March 2023 were first approved by the Board of Directors on 19 May 2023 ("Original financial statements") without giving effect to the Scheme of Arrangement since the application seeking approval of the said Scheme was pending before the National Company Law Tribunal, Kolkata Bench as of that date. These revised standalone financial statements were approved and authorised for issue by the Board of Directors of the Company at their meeting held on 27 July 2023. The Original standalone financial statements of the Company are being revised pursuant to an approved Scheme of Arrangement, the details of which are stated in Note 34.
(i) Compliance with Ind AS
These standalone 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 (Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
(ii) Basis of measurement
(a) Historical cost convention
The standalone financial statements have been prepared on a historical cost basis, except for the following:
⢠Certain financial assets and liabilities (including derivative instruments) that is measured at fair value;
⢠Net Defined benefit (assets)/Liability - Fair value of plan assets less present value of defined benefit obligations; and
⢠Share based payments.
(b) Functional and presentation currency
Items included in the standalone financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The standalone financial statements are presented in Indian Rupee (Rs.), which is the Company''s functional and presentation currency.
(iii) Current versus non-current classification
All assets and liabilities have been classified as current or non current as per the Company''s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013 and Ind AS 1 - Presentation of financial statement based on the nature of products / service and the time between the acquisition of assets for processing / providing the services and their realisation in cash and cash equivalents. The Company has ascertained its operating cycle as 12 months for the purpose of current, non current classification of assets and liabilities.
Assets
An asset is classified as current when it satisfies any of the following criteria:
(a) it is expected to be realised in, or is intended for sale or consumption in, the Company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the reporting date; or
(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
(a) it is expected to be settled in the Company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the reporting date; or
(d) the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
(b) Revenue recognition
The Company has applied Ind AS 115, Revenue from Contracts with Customers, which establishes a comprehensive framework for determining whether, how much and when revenue is to be recognised.
Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services.
⢠Revenue from the sale of products is recognised at the point in time when control is transferred to the customer. Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.
⢠Revenue from Music licensing where the customer obtains a "right to use" is recognized at the time the license is made available to the customer. Revenue from licenses where the customer obtains a "right to access" is recognized over the access period.
⢠Revenue from the sale of television serial episodes is recognised upfront at the point in time when the episode is delivered to the customer.
⢠Revenue from sale of free commercial time (net of trade discount, as applicable) are recognised when the related advertisement or commercials appears before the public, i.e. on telecast.
⢠Revenue from theatrical distribution is recognised on exhibition of films. In case of distribution through theatres, revenue is recognised on the basis of box office reports received from various exhibitors. Contracted minimum guarantees are recognised on theatrical release.
⢠Revenue from Sale of films rights are recognised on assignment of such rights as per terms of the sale/licencing agreements.
The billing schedules agreed with customers include periodic payments and / or milestone based progress payments. Invoices are payable within contractually agreed credit period.
Unearned and deferred revenue ("contract liability") is recognised when there is billings in excess of revenues.
Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.
Use of significant judgements in revenue recognition :
⢠The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits as services are rendered, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc. Judgement is also required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, price concessions and incentives.
Interest income
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the effective interest rate applicable.
Dividend income
Dividend income from investments is recognised when the shareholder''s rights to receive payment have been established. Rental income
Rental income from investment properties and subletting of properties is recognised on a straight line basis over the term of the relevant leases.
Government Grant
The Company may receive government grants that require compliance with certain conditions related to the Company''s operating activities or are provided to the Company by way of financial assistance on the basis of certain qualifying criteria
Accordingly, government grants by way of financial assistance on the basis of certain qualifying criteria are recognised as they become receivable.
(c) Property, plant and equipment - (PPE)
All items of property, plant and equipment other than freehold land are stated at historical cost i.e. cost of acquisition/ construction or at deemed cost as on the date of transition to Ind AS less accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to statement of profit and loss during the reporting period in which they are incurred.
Revaluation of Land is made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date. When the fair value differs materially from its carrying amount, the carrying amount is adjusted to the revalued amount. The fair value is determined based on appraisal undertaken by a professionally qualified valuer.
Depreciation method, estimated useful lives and residual values
Depreciation is calculated on a pro-rata basis using the straight-line method to allocate their cost, net of their estimated residual values, over the estimated useful lives of the asset as prescribed under Schedule II to the Companies Act, 2013.
The useful lives, residual values and the method of depreciation of property, plant and equipment 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 greater than its estimated recoverable amounts.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in profit or loss within ''Other Income''/''Other Expenses''.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as ''Capital Advances'' under other non - current assets.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
(d) Investment properties
Properties that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost of item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
Investment properties are depreciated using the straight-line method over their estimated useful lives of the assets as prescribed under Schedule II to the Companies Act, 2013.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment properties recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of investment properties.
(e) Intangible assets
Intangible assets has a finite useful life and are stated at cost less accumulated amortisation and accumulated impairment losses, if any.
(i) Music Copyrights
Outright acquisition of music copyrights wherein future economic benefits are established are capitalised. They have finite useful lives and are subsequently carried at cost less accumulated amortisation and impairment losses.
(ii) Computer Software
Software for internal use, which is primarily acquired from third-party vendors is capitalised. Subsequent costs associated with maintaining such software are recognised as expense as incurred. Cost of software includes license fees and cost of implementation/system integration services, where applicable.
Amortisation method and year
The Company amortises intangible assets with a finite useful lives using the straight-line method over the following periods:
Music Copyrights acquired through outright purchase are amortised over a period of one to ten years from the date of release of Music. The Company reviews the expected future revenue potential at the end of each accounting period and recognises impairment loss, where required.
Softwares are amortised on a straight line basis over a period of three to five years from the date of capitalisation.
Advances paid towards the cost of intangible assets outstanding at each balance sheet date is classified as ''Capital advances'' under other non - current assets.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.
(f) Impairment of non-financial assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised 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 group of assets (cash-generating units).
(g) Leases
The Company as a lessee
The Company''s lease asset classes primarily consist of leases for buildings and vehicles. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii)the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease term.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Company as a lessor
At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. The Company recognises lease payments received under operating leases as income on a straight- line basis over the lease term. In case of a finance lease, finance income is recognised over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor''s net investment in the lease.
Transition to Ind AS 116
Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, has notified Ind AS 116 Leases which replaces the existing lease standard, Ind AS 17 leases, and other interpretations. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a single, on-balance sheet lease accounting model for lessees.
Under the erstwhile standard Ind AS 17, operating lease payments as per terms of the agreement, were recognised as an expense in the Statement of Profit and Loss on a straight line basis, except where another systematic basis was more representative of the time pattern in which economic benefits from the leased asset were consumed.
Effective 01 April 2019, the Company adopted Ind AS116 ''Leases" and applied the standard to lease contracts existing on 01 April 2019 using the modified retrospective method on the date of initial application. Consequently, the lease liabilities is recognized at the present value of lease payment discounted at the weighted average incremental borrowing rate and same amount is recognized for ROU assets.
The following is the summary of practical expedients elected on initial application:
⢠Applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date.
⢠Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term and low value leases on the date of initial application.
⢠Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
⢠Applied the practical expedient to grandfather the assessment of which transactions are leases. Accordingly, Ind AS 116 is applied only to contracts that were previously identified as leases under Ind AS 17.
(h) Inventories
Physical inventory (caravan, music card and others): Inventories are valued at lower of cost and net realisable value. The cost is determined on weighted average basis, and includes, where applicable, appropriate share of overheads, the same is charged off on sale of goods. The costs of purchase of inventories comprise the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling and other costs directly attributable to the acquisition of finished goods. Provision is made for obsolete / slow moving / defective stocks, where necessary.
Music rights are stated at lower of cost / unamortised cost or net realisable value. Cost comprises acquisition / direct production cost. Music rights are amortised over a period of one to ten years from the date of release of Music.
Untelecasted television serials are valued at lower of cost and net realisable value. Cost comprises direct production cost. Cost of a television serial is fully expensed on telecast/broadcasting.
Digital Films are stated at lower of cost / unamortised cost or net realisable value. Cost comprises acquisition / direct production cost. Expenses of under production films incurred till the films are ready for release are inventorised. Cost of digital films are recognised as expense in Statement of Profit and Loss as per the terms of Licencing of multiple digital rights.
Net realisable value is 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.
(i) Investments in subsidiaries
Investments in subsidiaries are carried at cost less provision for impairment, if any. Investments in subsidiaries are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of investments exceeds its recoverable amount.
Transition to Ind AS
On transition to Ind AS, the Company has elected to measure its investments in all its subsidiaries at its previous GAAP carrying value and use those values as the deemed cost of such investments.
(j) Investments (other than investments in subsidiaries) and other financial instruments
(i) 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 to be measured at amortised cost.
The classification depends on the Company''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 profit or loss or other comprehensive income. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
In accordance with Ind AS 101, the Company had irrevocably designated its investment in equity instruments as FVOCI on the date of transition to Ind AS.
(ii) 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 profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Equity Instruments : The Company subsequently measures all equity investments at fair value. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Changes in the fair value of financial assets at fair value through profit or loss are recognised in ''Other Income'' in the Statement of Profit and Loss.
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method.
(iii) Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets which are not fair valued through profit or loss. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 32(A) details how the Company determines whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach as per Ind AS 109,''Financial Instruments'', which requires expected lifetime losses to be recognised from initial recognition of the receivables.
(iv) Derecognition of financial assets
A financial asset is derecognised 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 entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised. Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised 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 recognised to the extent of continuing involvement in the financial asset.
(v) Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL.
(vi) Financial liabilities through fair value through profit or loss (FVTPL)
A financial liability is classified as at FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in Statement of Profit and Loss. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109.
(vii) Financial liabilities at amortised cost
Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in Statement of Profit and Loss.
Any gain or loss on derecognition is also recognised in Statement of Profit and Loss.
For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximates fair value due to the short maturity of these instruments.
(viii) Fair value of financial instruments
In determining the fair value of financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis and available quoted market prices. All methods of assessing fair value result in general approximation of value, and such value may never actually be realised.
(k) Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise 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.
(l) Trade receivables
Trade receivables are amounts due from customers for goods sold or services rendered in the ordinary course of business. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
(m) Cash and cash equivalents
For the purpose of presentation in the Cash Flow Statement, cash and cash equivalents includes 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 and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(n) Trade payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
(o) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.
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 reporting period.
(p) Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred, unless they are capitalised.
(q) Foreign currency transactions and translation
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. At the year-end, monetary assets and liabilities denominated in foreign currencies are restated at the year - end exchange rates. The exchange differences arising from settlement of foreign currency transactions and from the year-end restatement are recognised in profit and loss.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Foreign currency non-monetary items carried in terms of historical cost are reported using the exchange rate at the date of the transactions.
(r) Employee benefits expense
(i) Short-term employee benefits
Liabilities for short-term employee benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as ''Employee Benefits Payable'' within ''Other Current Liabilities'' in the Balance Sheet.
(ii) Other long-term employee benefits
The liabilities for leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured annually by actuaries as the present value of expected future benefits in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
(iii) Post-employment benefits Defined benefit plans
The liability or asset recognised in the Balance Sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in ''Employee Benefits Expense'' in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income. These are included in ''Retained Earnings'' in the Statement of Changes in Equity in the balance sheet.
Defined contribution plans
The Company has certain defined contribution plans viz. provident fund and superannuation fund. Contributions for provident fund are made at specified percentage of the covered employee''s qualifying salary to a government administered fund. Contribution for superannuation fund are made yearly based on a specified percentage of each covered employee''s salary to a Trust set up by the Company. Contributions under Defined Contribution Plans are recognised as expenses for the period in which the employee has rendered the service.
(iv) Share-based payments
Share-based compensation benefits are provided to employees via Saregama Employee Stock Options Scheme 2013, Stock Appreciation Rights Scheme 2014.and Stock Appreciation Rights Scheme 2018.
Employee Options
The fair value of the options granted under the Saregama Employee Stock Option Scheme 2013 is recognised as an employee benefits expense in the statement of profit and loss with a corresponding increase in equity. The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and risk free interest rate for the term of the option.The total amount to be expensed is determined by reference to the fair value of the options granted:
⢠Including any market performance conditions (e.g., the entity''s share price);
⢠excluding the impact of any services and non-market performance vesting conditions (e.g. profitability, sales growth targets and remaining an employee of the entity over a specified time period); and
⢠including the impact of any non-vesting conditions (e.g. the requirement for employees to save or holdings shares for a specified period of time).
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in the statement of profit or loss, with a corresponding adjustment to equity.
Share appreciation rights
Liabilities for the Company''s Share Appreciation Rights (SAR), granted pursuant to Company''s share appreciation rights schemes, is measured initially and at the end of each reporting period until settled, at fair value of the SAR, by applying option pricing model, and is recognised as employee benefit expense over the relevant service period. The liabilities are presented as employee benefits obligations in the balance sheet.
(s) Royalty
Minimum Guarantee Royalty is recognised as expense within the license period or ten years, whichever is earlier. Royalty on sales, other than physical sales, is provided on the basis of management''s best estimate of the expenditure required to settle the obligation. Other royalty payments are charged at agreed rates on related sales.
(t) Income tax
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, unused tax credits and to unused tax losses, as applicable.
The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. 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 standalone financial statements. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income 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 realised or the deferred tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, if any, only if it is probable that future taxable amounts will be available to utilise those temporary differences, tax credits and losses.
Deferred tax assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries where it is not probable that the differences will reverse in the foreseeable future and taxable profit will not be available against which the temporary difference can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date 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 utilised.
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 liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax are recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, if any. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
(u) Provisions and contingencies
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period.
A disclosure for contingent liabilities is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources embodying economic benefits will be required to settle or a reliable estimate of the amount cannot be made.
(v) Dividend Distribution
Dividends paid are recognised in the period in which the interim dividends are approved by the Board of Directors, or in respect of the final dividend when approved by shareholders.
(w) Earnings per share
(i) Basic earnings per Share
Basic earnings per share is calculated by dividing:
⢠the profit attributable to owners of the Company
⢠by the weighted average number of equity shares outstanding during the financial year excluding treasury shares
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
⢠the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
(x) Rounding of amounts
All amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest lakhs (with two places of decimal) as per the requirement of Schedule III, unless otherwise stated.
(y) Recent pronouncements
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1, 2023, as below:
Ind AS 1 - Presentation of Financial Statements
The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements.
Ind AS 12 - Income Taxes
The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company is evaluating the impact, if any, in its financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company does not expect this amendment to have any significant impact in its financial statements.
2 CRITICAL ESTIMATES AND JUDGEMENTS
The preparation of standalone financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the date of these standalone financial statements and the reported amounts of revenues and expenses for the years presented. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed at each Balance Sheet date. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.
This Note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the standalone financial statements.
The areas involving critical estimates or judgements are:
Employee benefits (estimation of defined benefit obligations) - Notes 1(r) and 29
Post-employment benefits represent obligations that will be settled in future and require assumptions to estimate benefit obligations. Post-employment benefit accounting is intended to reflect the recognition of benefit costs over the employees'' approximate service period, based on the terms of the plans and the investment and funding decisions made. The accounting requires the Company to make assumptions regarding variables such as discount rate and salary growth rate. Changes in these key assumptions can have a significant impact on the defined benefit obligations.
Impairment of trade receivables - Notes 1 (j)(iii) and 32
For impairment of trade receivable, Company applies the simplified approach permitted by Ind AS 109,''Financial Instruments'', which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Estimation of expected useful lives of property, plant and equipment - Notes 1(c) and 3
Management reviews its estimate of useful lives of property, plant and equipment at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of property, plant and equipment.
Contingencies - Notes 1(u) and 37
Legal proceedings covering a range of matters are pending against the Company. Due to the uncertainty inherent in such matters, it is often difficult to predict the final outcome. The cases and claims against the Company often raise factual and legal issues that are subject to uncertainties and complexities, including the facts and circumstances of each particular case/claim, the jurisdiction and the differences in applicable law. The Company consults with legal counsel and other experts on matters related to specific litigations where considered necessary. The Company accrues a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated. In the event an adverse outcome is possible or an estimate is not determinable, the matter is disclosed.
Valuation of deferred tax assets - Notes 1(t) and 16
Deferred income tax expense is calculated based on the differences between the carrying value of assets and liabilities for financial reporting purposes and their respective tax bases that are considered temporary in nature. Valuation of deferred tax assets is dependent on management''s assessment of future recoverability of the deferred tax benefit. Expected recoverability may result from expected taxable income in the future, planned transactions or planned optimising measures. Economic conditions may change and lead to a different conclusion regarding recoverability.
Fair value measurements - Notes 1(j)(viii) and 31
When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair values are measured using valuation techniques, including the discounted cash flow model, which involve various judgements and assumptions.
Mar 31, 2022
Background
Saregama India Limited (âthe Companyâ) is a Company limited by shares, incorporated and domiciled in India. The Company is engaged in the business of manufacturing and sale of Music storage device viz. Carvaan, Music Card, Audio Compact Discs, Digital Versatile Discs and dealing with related music rights. The Company is also engaged in production and sale/telecast/broadcast of films/Tv Serials, pre-recorded programmes and dealing in film rights. Equity shares of the Company are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The registered office of the Company is located in Kolkata, West Bengal, India.
The standalone financials statements were approved and authorised for issue with the resolution of the Board of Directors on 02 May 2022.
1 Significant accounting policies
The significant accounting policies applied by the Company in the preparation of its standalone financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these standalone financial statements.
(a) Basis of preparation
(i) Compliance with Ind AS
These standalone 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 (Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
(ii) Basis of measurement
(a) Historical cost convention
The standalone financial statements have been prepared on a historical cost basis, except for the following:
- Certain financial assets and liabilities (including derivative instruments) that is measured at fair value;
- Net Defined benefit (assets)/Liability - Fair value of plan assets less present value of defined benefit obligations; and
- Share based payments.
(b) Functional and presentation currency
Items included in the standalone financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The standalone financial statements are presented in Indian Rupee (Rs.), which is the Company''s functional and presentation currency.
(iii) Current versus non-current classification
All assets and liabilities have been classified as current or non current as per the Company''s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013 and Ind AS 1 - Presentation of financial statement based on the nature of products / service and the time between the acquisition of assets for processing / providing the services and their realisation in cash and cash equivalents. The Company has ascertained its operating cycle as 12 months for the purpose of current, non current classification of assets and liabilities.
Assets
An asset is classified as current when it satisfies any of the following criteria:
(a) it is expected to be realised in, or is intended for sale or consumption in, the Company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the reporting date; or
(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
(a) it is expected to be settled in the Company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the reporting date; or
(d) the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
(b) Revenue recognition
The Company has applied Ind AS 115, Revenue from Contracts with Customers, which establishes a comprehensive framework for determining whether, how much and when revenue is to be recognised.
Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services.
- Revenue from the sale of products is recognised at the point in time when control is transferred to the customer. Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.
- Revenue from Music licensing where the customer obtains a âright to useâ is recognized at the time the license is made available to the customer. Revenue from licenses where the customer obtains a âright to accessâ is recognized over the access period.
- Revenue from the sale of television serial episodes is recognised upfront at the point in time when the episode is delivered to the customer.
- Revenue from sale of free commercial time (net of trade discount, as applicable) are recognised when the related advertisement or commercials appears before the public, i.e. on telecast.
- Revenue from theatrical distribution is recognised on exhibition of films. In case of distribution through theatres, revenue is recognised on the basis of box office reports received from various exhibitors. Contracted minimum guarantees are recognised on theatrical release.
- Revenue from Sale of films rights are recognised on assignment of such rights as per terms of the sale/licencing agreements.
The billing schedules agreed with customers include periodic payments and / or milestone based progress payments. Invoices are payable within contractually agreed credit period.
Unearned and deferred revenue (âcontract liabilityâ) is recognised when there is billings in excess of revenues.
Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.
Use of significant judgements in revenue recognition :
- The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits as services are rendered, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc. Judgement is also required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, price concessions and incentives.
Interest income
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the effective interest rate applicable.
Dividend income
Dividend income from investments is recognised when the shareholder''s rights to receive payment have been established. Rental income
Rental income from investment properties and subletting of properties is recognised on a straight line basis over the term of the relevant leases.
Government Grant
The Company may receive government grants that require compliance with certain conditions related to the Company''s operating activities or are provided to the Company by way of financial assistance on the basis of certain qualifying criteria.
Accordingly, government grants by way of financial assistance on the basis of certain qualifying criteria are recognised as they become receivable.
(c) Property, plant and equipment - (PPE)
All items of property, plant and equipment other than freehold land are stated at historical cost i.e. cost of acquisition/ construction or at deemed cost as on the date of transition to Ind AS less accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to statement of profit and loss during the reporting period in which they are incurred.
Revaluation of Land is made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date. When the fair value differs materially from its carrying amount, the carrying amount is adjusted to the revalued amount. The fair value is determined based on appraisal undertaken by a professionally qualified valuer.
Depreciation method, estimated useful lives and residual values
Depreciation is calculated on a pro-rata basis using the straight-line method to allocate their cost, net of their estimated residual values, over the estimated useful lives of the asset as prescribed under Schedule II to the Companies Act, 2013.
The useful lives, residual values and the method of depreciation of property, plant and equipment 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 greater than its estimated recoverable amounts.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in profit or loss within ''Other Income''/''Other Expenses''.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as ''Capital Advances'' under other non- current assets.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
(d) Investment properties
Properties that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost of item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
Investment properties are depreciated using the straight-line method over their estimated useful lives of the assets as prescribed under Schedule II to the Companies Act, 2013.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment properties recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of investment properties.
(e) Intangible assets
Intangible assets has a finite useful life and are stated at cost less accumulated amortisation and accumulated impairment losses, if any.
(i) Music Copyrights
Outright acquisition of music copyrights wherein future economic benefits are established are capitalised. They have finite useful lives and are subsequently carried at cost less accumulated amortisation and impairment losses.
(ii) Computer Software
Software for internal use, which is primarily acquired from third-party vendors is capitalised. Subsequent costs associated with maintaining such software are recognised as expense as incurred. Cost of software includes license fees and cost of implementation/system integration services, where applicable.
Amortisation method and year
The Company amortises intangible assets with a finite useful lives using the straight-line method over the following periods:
Music Copyrights acquired through outright purchase are amortised over a period of one to ten years from the date of release of Music. The Company reviews the expected future revenue potential at the end of each accounting period and recognises impairment loss, where required.
Softwares are amortised on a straight line basis over a period of three to five years from the date of capitalisation.
Advances paid towards the cost of intangible assets outstanding at each balance sheet date is classified as ''Capital advances'' under other non- current assets.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.
(f) Impairment of non-financial assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised 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 group of assets (cashgenerating units).
(g) Leases
The Company as a lessee
The Company''s lease asset classes primarily consist of leases for buildings and vehicles. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii)the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset (âROUâ) and a corresponding lease liability for all lease arrangements in which it is a lessee.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e.the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease term.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Company as a lessor
At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. The Company recognises lease payments received under operating leases as income on a straight- line basis over the lease term. In case of a finance lease, finance income is recognised over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor''s net investment in the lease.
Transition to Ind AS 116
Ministry of Corporate Affairs (âMCAâ) through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, has notified Ind AS 116 Leases which replaces the existing lease standard, Ind AS 17 leases, and other interpretations. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a single, on-balance sheet lease accounting model for lessees.
Under the erstwhile standard Ind AS 17, operating lease payments as per terms of the agreement, were recognised as an expense in the Statement of Profit and Loss on a straight line basis, except where another systematic basis was more representative of the time pattern in which economic benefits from the leased asset were consumed.
Effective 01 April 2019, the Company adopted Ind AS116 âLeasesâ and applied the standard to lease contracts existing on 01 April 2019 using the modified retrospective method on the date of initial application. Consequently, the lease liabilities is recognized at the present value of lease payment discounted at the weighted average incremental borrowing rate and same amount is recognized for ROU assets.
The following is the summary of practical expedients elected on initial application:
⢠Applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date.
⢠Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term and low value leases on the date of initial application.
⢠Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
⢠Applied the practical expedient to grandfather the assessment of which transactions are leases. Accordingly, Ind AS 116 is applied only to contracts that were previously identified as leases under Ind AS 17.
(h) Inventories
Physical inventory (caravan, music card and others): Inventories are valued at lower of cost and net realisable value. The cost is determined on weighted average basis, and includes, where applicable, appropriate share of overheads, the same is charged off on sale of goods. The costs of purchase of inventories comprise the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling and other costs directly attributable to the acquisition of finished goods. Provision is made for obsolete / slow moving / defective stocks, where necessary.
Music rights are stated at lower of cost / unamortised cost or net realisable value. Cost comprises acquisition / direct production cost. Music rights are amortised over a period of one to ten years from the date of release of Music.
Untelecasted television serials are valued at lower of cost and net realisable value. Cost comprises direct production cost. Cost of a television serial is fully expensed on telecast/broadcasting.
Digital Films are stated at lower of cost / unamortised cost or net realisable value. Cost comprises acquisition / direct production cost. Expenses of under production films incurred till the films are ready for release are inventorised. 10% of cost of digital films is recognised as expense in Statement of Profit and Loss on the date of theatrical release of the film, balance is charged off on licencing of digital rights.
Net realisable value is 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.
(i) Investments in subsidiaries
Investments in subsidiaries are carried at cost less provision for impairment, if any. Investments in subsidiaries are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of investments exceeds its recoverable amount.
Transition to Ind AS
On transition to Ind AS, the Company has elected to measure its investments in all its subsidiaries at its previous GAAP carrying value and use those values as the deemed cost of such investments.
j) Investments (other than investments in subsidiaries) and other financial instruments
(i) 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 to be measured at amortised cost.
The classification depends on the Company''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 profit or loss or other comprehensive income. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
In accordance with Ind AS 101, the Company had irrevocably designated its investment in equity instruments as FVOCI on the date of transition to Ind AS.
(ii) 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 profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Equity Instruments : The Company subsequently measures all equity investments at fair value. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Changes in the fair value of financial assets at fair value through profit or loss are recognised in ''Other Income'' in the Statement of Profit and Loss.
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method.
(iii) Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets which are not fair valued through profit or loss. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 32(A) details how the Company determines whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach as per Ind AS 109,''Financial Instruments'', which requires expected lifetime losses to be recognised from initial recognition of the receivables.
(iv) Derecognition of financial assets
A financial asset is derecognised 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 entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised 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 recognised to the extent of continuing involvement in the financial asset.
(v) Financial liabilities: Classification, subsequent measurement and gains and losses Financial liabilities are classified as measured at amortised cost or FVTPL.
(vi) Financial liabilities through fair value through profit or loss (FVTPL)
A financial liability is classified as at FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in Statement of Profit and Loss. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109.
(vii) Financial liabilities at amortised cost
Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in Statement of Profit and Loss.
Any gain or loss on derecognition is also recognised in Statement of Profit and Loss.
For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximates fair value due to the short maturity of these instruments.
(viii) Fair value of financial instruments
In determining the fair value of financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis and available quoted market prices. All methods of assessing fair value result in general approximation of value, and such value may never actually be realised.
(k) Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise 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.
(l) Trade receivables
Trade receivables are amounts due from customers for goods sold or services rendered in the ordinary course of business. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
(m) Cash and cash equivalents
For the purpose of presentation in the Cash Flow Statement, cash and cash equivalents includes 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 and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(n) Trade payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
(o) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.
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 reporting period.
(p) Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred, unless they are capitalised.
(q) Foreign currency transactions and translation
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. At the year-end, monetary assets and liabilities denominated in foreign currencies are restated at the year - end exchange rates. The exchange differences arising from settlement of foreign currency transactions and from the year-end restatement are recognised in profit and loss.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Foreign currency non-monetary items carried in terms of historical cost are reported using the exchange rate at the date of the transactions.
(r) Employee benefits expense
(i) Short-term employee benefits
Liabilities for short-term employee benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as ''Employee Benefits Payable'' within ''Other Current Liabilities'' in the Balance Sheet.
(ii) Other long-term employee benefits
The liabilities for leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured annually by actuaries as the present value of expected future benefits in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
(iii) Post-employment benefits Defined benefit plans
The liability or asset recognised in the Balance Sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in ''Employee Benefits Expense'' in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income. These are included in ''Retained Earnings'' in the Statement of Changes in Equity in the balance sheet.
Defined contribution plans
The Company has certain defined contribution plans viz. provident fund and superannuation fund. Contributions for provident fund are made at specified percentage of the covered employee''s qualifying salary to a government administered fund. Contribution for superannuation fund are made yearly based on a specified percentage of each covered employee''s salary to a Trust set up by the Company. Contributions under Defined Contribution Plans are recognised as expenses for the period in which the employee has rendered the service.
(iv) Share-based payments
Share-based compensation benefits are provided to employees via Saregama Employee Stock Options Scheme 2013, Stock Appreciation Rights Scheme 2014.and Stock Appreciation Rights Scheme 2018.
Employee Options
The fair value of the options granted under the Saregama Employee Stock Option Scheme 2013 is recognised as an employee benefits expense in the statement of profit and loss with a corresponding increase in equity. The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and risk free interest rate for the term of the option.The total amount to be expensed is determined by reference to the fair value of the options granted:
- Including any market performance conditions (e.g., the entity''s share price);
- excluding the impact of any services and non-market performance vesting conditions (e.g. profitability, sales growth targets and remaining an employee of the entity over a specified time period); and
- including the impact of any non-vesting conditions (e.g. the requirement for employees to save or holdings shares for a specified period of time).
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in the statement of profit or loss, with a corresponding adjustment to equity.
Share appreciation rights
Liabilities for the Company''s Share Appreciation Rights (SAR), granted pursuant to Company''s share appreciation rights schemes, is measured initially and at the end of each reporting period until settled, at fair value of the SAR, by applying option pricing model, and is recognised as employee benefit expense over the relevant service period. The liabilities are presented as employee benefits obligations in the balance sheet.
(s) Royalty
Minimum Guarantee Royalty is recognised as expense within the license period or ten years, whichever is earlier. Royalty on sales, other than physical sales, is provided on the basis of management''s best estimate of the expenditure required to settle the obligation. Other royalty payments are charged at agreed rates on related sales.
(t) Income tax
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, unused tax credits and to unused tax losses, as applicable.
The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. 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 standalone financial statements. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income 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 realised or the deferred tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, if any, only if it is probable that future taxable amounts will be available to utilise those temporary differences, tax credits and losses.
Deferred tax assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries where it is not probable that the differences will reverse in the foreseeable future and taxable profit will not be available against which the temporary difference can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date 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 utilised.
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 liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax are recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, if any. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
(u) Provisions and contingencies
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period.
A disclosure for contingent liabilities is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources embodying economic benefits will be required to settle or a reliable estimate of the amount cannot be made.
(v) Dividend Distribution
Dividends paid are recognised in the period in which the interim dividends are approved by the Board of Directors, or in respect of the final dividend when approved by shareholders.
(w) Earnings per share
(i) Basic earnings per Share
Basic earnings per share is calculated by dividing:
- the profit attributable to owners of the Company
- by the weighted average number of equity shares outstanding during the financial year excluding treasury shares
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
(x) Rounding of amounts
All amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest lakhs (with two places of decimal) as per the requirement of Schedule III, unless otherwise stated.
(y) Recent pronouncements
Ministry of Corporate Affairs (âMCAâ) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 23 March 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from 1 April 2022, as below:
Ind AS 103 - Reference to Conceptual Framework
The amendments specify that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed 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 at the acquisition date. These changes do not significantly change the requirements of Ind AS 103. The Company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 16 - Proceeds before intended use
The amendments mainly prohibit an entity from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, an entity will recognise such sales proceeds and related cost in profit or loss. The Company does not expect the amendments to have any impact in its recognition of its property, plant and equipment in its financial statements.
Ind AS 37 - Onerous Contracts - Costs of Fulfilling a Contract
The amendments specify that 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. The amendment is essentially a clarification and the Company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 109 - Annual Improvements to Ind AS (2021)
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 amendment to have any significant impact in its financial statements.
Ind AS 106 - Annual Improvements to Ind AS (2021)
The amendments remove the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives were described in that illustration. The Company does not expect the amendment to have any significant impact in its financial statements.
2 Critical estimates and judgements
The preparation of standalone financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the date of these standalone financial statements and the reported amounts of revenues and expenses for the years presented. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed at each Balance Sheet date. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.
This Note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the standalone financial statements.
The areas involving critical estimates or judgements are:
Employee benefits (estimation of defined benefit obligations) - Notes 1(r) and 29
Post-employment benefits represent obligations that will be settled in future and require assumptions to estimate benefit obligations. Post-employment benefit accounting is intended to reflect the recognition of benefit costs over the employees'' approximate service period, based on the terms of the plans and the investment and funding decisions made. The accounting requires the Company to make assumptions regarding variables such as discount rate and salary growth rate. Changes in these key assumptions can have a significant impact on the defined benefit obligations.
Impairment of trade receivables â Notes 1 (j)(iii) and 32
For impairment of trade receivable, Company applies the simplified approach permitted by Ind AS 109,''Financial Instruments'', which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Estimation of expected useful lives of property, plant and equipment - Notes 1(c) and 3
Management reviews its estimate of useful lives of property, plant and equipment at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of property, plant and equipment.
Contingencies - Notes 1(u) and 36
Legal proceedings covering a range of matters are pending against the Company. Due to the uncertainty inherent in such matters, it is often difficult to predict the final outcome. The cases and claims against the Company often raise factual and legal issues that are subject to uncertainties and complexities, including the facts and circumstances of each particular case/ claim, the jurisdiction and the differences in applicable law. The Company consults with legal counsel and other experts on matters related to specific litigations where considered necessary. The Company accrues a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated. In the event an adverse outcome is possible or an estimate is not determinable, the matter is disclosed.
Valuation of deferred tax assets - Notes 1(t) and 16
Deferred income tax expense is calculated based on the differences between the carrying value of assets and liabilities for financial reporting purposes and their respective tax bases that are considered temporary in nature. Valuation of deferred tax assets is dependent on management''s assessment of future recoverability of the deferred tax benefit. Expected recoverability may result from expected taxable income in the future, planned transactions or planned optimising measures. Economic conditions may change and lead to a different conclusion regarding recoverability.
Fair value measurements â Notes 1(j)(viii) and 31
When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair values are measured using valuation techniques, including the discounted cash flow model, which involve various judgements and assumptions.
Estimation of uncertainties relating to the global health pandemic from COVID-19:
In view of pandemic relating to COVID - 19, the Company has considered internal and external information available up to the date of approval of these standalone financial statements and has performed analysis in assessing the recoverability of its assets including trade receivables, inventories, investments, other financial and non-financial assets, for possible impact on these standalone financial statements. The Company has also assessed the impact of this whole situation on its capital and financial resources, profitability, liquidity position, etc. On the basis of its present assessment and current indicators of future economic conditions, the Company does not anticipate any material impact on these standalone financial statements. However, the actual impact of COVID - 19 on the Company''s financial statements may differ from that estimated and the Company will continue to closely monitor any material changes to future economic conditions.
Mar 31, 2019
1 SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied by the Company in the preparation of its standalone financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these standalone financial statements.
(a) Basis of preparation
(i) Compliance with Ind AS
These standalone financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the âActâ) [Companies (Accounting Standards) Rules, 2015] and other relevent provisions of the Act.
(ii) Basis of measurement
(a) Historical cost convention
The standalone financial statements have been prepared on a historical cost basis, except for the following:
- Certain financial assets and liabilities (including derivative instruments) that is measured at fair value;
- Net Defined benefit (assets)/Liability - Fair value of plan assets less present value of defined benefit obligations; and
- Share based payments.
(b) Functional and presentation currency
Items included in the standalone financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ). The standalone financial statements are presented in Indian Rupee (T), which is the Companyâs functional and presentation currency.
(iii) Current versus non-current classification
All assets and liabilities have been classified as current or non current as per the Companyâs normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013 and Ind AS 1 - Presentation of financial statement based on the nature of products / service and the time between the acquisition of assets for processing / providing the services and their realisation in cash and cash equivalents. The Company has ascertained its operating cycle as 12 months for the purpose of current, non current classification of assets and liabilities.
Assets
An asset is classified as current when it satisfies any of the following criteria:
(a) it is expected to be realised in, or is intended for sale or consumption in, the Companyâs normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the reporting date; or
(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
(a) it is expected to be settled in the Companyâs normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the reporting date; or
(d) the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
(b) Revenue recognition
Effective 1 April 2018, the Company has applied Ind AS 115, Revenue from Contracts with Customers, which establishes a comprehensive framework for determining whether, how much and when revenue is to be recognised. Ind AS 115 replaces Ind AS 18 Revenue and Ind AS 11 Construction Contracts. The Company has adopted Ind AS 115 using the cumulative effect method. The effect of initially applying this standard is recognised at the date of initial application (i.e. 1 April 2018). The comparative information in the statement of profit and loss is not restated - i.e. the comparative information continues to be reported under Ind AS 18. Refer note 1(b) of the Financial Statement - Significant accounting policies - Revenue recognition in the Financial Statement of the Company for the year ended 31 March 2018, for the revenue recognition policy as per Ind AS 18. The impact of the adoption of the standard on the financial statements of the Company is insignificant.
Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services.
- Revenue from the sale of products is recognised at the point in time when control is transferred to the customer. Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.
- For sale of product on a bill-and-hold basis, Company recognises revenue when it satisfies its performance obligation to transfer the control of a product to the customer. For a customer to have obtained control of a product in a bill-and-hold arrangement, Company has applied the guidance as set out in Ind AS 115.
- Revenue from Music licensing where the customer obtains a âright to useâ is recognized at the time the license is made available to the customer. Revenue from licenses where the customer obtains a âright to accessâ is recognized over the access period.
- Revenue from the sale of televeision software is recognised upfront at the point in time when the software is delivered to the customer.
- Revenue from sale of free commercial time (net of trade discount, as applicable) are recognised when the related advertisement or commercials appears before the public, i.e. on telecast.
- Revenue from theatrical distribution is recognised on exhibition of films. In case of distribution through theatres, revenue is recognised on the basis of box office reports received from various exhibitors. Contracted minimum guarantees are recognised on theatrical release.
- Revenue from Sale of films rights are recognised on assignment of such rights as per terms of the sale/licencing agreements. The billing schedules agreed with customers include periodic performance based payments and / or milestone based progress payments. Invoices are payable within contractually agreed credit period.
Unearned and deferred revenue (âcontract liabilityâ) is recognised when there is billings in excess of revenues.
Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.
Use of significant judgements in revenue recognition :
- The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits as services are rendered, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc. Judgement is also required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, price concessions and incentives.
Interest income
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the effective interest rate applicable.
Dividend income
Dividend income from investments is recognised when the shareholderâs rights to receive payment have been established. Rental income
Rental income from investment properties and subletting of properties is recognised on a straight line basis over the term of the relevant leases.
(c) Property, plant and equipment - (PPE)
All items of property, plant and equipment other than freehold land 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 items.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to statement of profit and loss during the reporting period in which they are incurred.
Revaluation of Land is made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date. When the fair value differs materially from its carrying amount, the carrying amount is adjusted to the revalued amount. The fair value is determined based on appraisal undertaken by a professionally qualified valuer.
Depreciation method, estimated useful lives and residual values
Depreciation is calculated on a pro-rata basis using the straight-line method to allocate their cost, net of their estimated residual values, over the estimated useful lives of the asset as prescribed under Schedule II to the Companies Act, 2013.
The useful lives, residual values and the method of depreciation of property, plant and equipment are reviewed, and adjusted if appropriate, at the end of each reporting period.
An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated recoverable amounts.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in profit or loss within âOther Incomeâ/âOther Expensesâ.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as âCapital Advancesâ under other non- current assets.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
(d) Investment properties
Properties that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost of item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
Investment properties are depreciated using the straight-line method over their estimated useful lives of the assets as prescribed under Schedule II to the Companies Act, 2013.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment properties recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of investment properties.
(e) Intangible assets
Intangible assets has a finite useful life and are stated at cost less accumulated amortisation and accumulated impairment losses, if any.
(i) Music Copyrights
Outright acquisition of music copyrights wherein future economic benefits are established are capitalised. They have finite useful lives and are subsequently carried at cost less accumulated amortisation and impairment losses.
(ii) Computer Software
Software for internal use, which is primarily acquired from third-party vendors is capitalised. Subsequent costs associated with maintaining such software are recognised as expense as incurred. Cost of software includes license fees and cost of implementation/system integration services, where applicable.
Amortisation method and year
The Company amortises intangible assets with a finite useful lives using the straight-line method over the following periods: Music Copyrights are amortised on straight line basis over a period of 1-10 years. The Company reviews the expected future revenue potential at the end of each accounting period and recognises impairment loss, where required.
Softwares are amortised on a straight line basis over a period of three to five years from the date of capitalisation.
Advances paid towards the cost of intangible assets outstanding at each balance sheet date is classified as âCapital advancesâ under other non- current assets.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.
(f) Impairment of non-financial assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assetâs 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 group of assets (cash-generating units).
(g) Leases
As a lessee
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
As a lessor
Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
(h) Inventories
Inventories are valued at lower of cost and net realisable value. The cost is determined on weighted average basis, and includes, where applicable, appropriate share of overheads. Provision is made for obsolete / slow moving / defective stocks, where necessary. The costs of purchase of inventories comprise the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling and other costs directly attributable to the acquisition of finished goods, materials and services.
Television serials under production are included under âWork-in-Progressâ. Untelecasted television serials are stated at lower of cost and net expected revenue and included under âFinished Goodsâ.
Digital Films under production are included under âWork-in-Progressâ. Expenses of under production films incurred till the films are ready for release are inventorised. Cost comprises acquisition / direct production cost. 10% of Cost of digital films is recognised as expense in Statement of Profit and Loss on the date of theatrical release of the Film, balance is charged of on licencing of digital rights.
Net realisable value is 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.
(i) Investments in subsidiaries
Investments in subsidiaries are carried at cost less provision for impairment, if any. Investments in subsidiaries are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of investments exceeds its recoverable amount.
Transition to Ind AS
On transition to Ind AS, the Company has elected to measure its investments in all its subsidiaries at its previous GAAP carrying value and use those values as the deemed cost of such investments.
(j) Investments (other than investments in subsidiaries) and other financial instruments
(i) 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 to be measured at amortised cost.
The classification depends on the Companyâs 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 profit or loss or other comprehensive income. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. In accordance with Ind AS 101, the Company had irrevocably designated its investment in equity instruments as FVOCI on the date of transition to Ind AS.
(ii) 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 profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Equity Instruments : The Company subsequently measures all equity investments at fair value. Where the Companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Changes in the fair value of financial assets at fair value through profit or loss are recognised in âOther Incomeâ in the Statement of Profit and Loss.
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method.
(iii) Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets which are not fair valued through profit or loss. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 33(A) details how the Company determines 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, âFinancial Instrumentsâ, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
(iv) Derecognition of financial assets
A financial asset is derecognised 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 entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised 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 recognised to the extent of continuing involvement in the financial asset.
(v) Financial liabilities: Classification, subsequent measurement and gains and losses Financial liabilities are classified as measured at amortised cost or FVTPL.
(vi) Financial liabilities through fair value through profit or loss (FVTPL)
A financial liability is classified as at FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in Statement of Profit and Loss. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109.
(vii) Financial liabilities at amortised cost
Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in Statement of Profit and Loss. Any gain or loss on derecognition is also recognised in Statement of Profit and Loss.
For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximates fair value due to the short maturity of these instruments.
(viii)Fair value of financial instruments
In determining the fair value of financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis and available quoted market prices. All methods of assessing fair value result in general approximation of value, and such value may never actually be realised.
(k) 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 recognised amounts and there is an intention to settle on a net basis or realise 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.
(l) Trade receivables
Trade receivables are amounts due from customers for goods sold or services rendered in the ordinary course of business. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
(m) Cash and cash equivalents
For the purpose of presentation in the Cash Flow Statement, cash and cash equivalents includes 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 and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(n) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
(o) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired. 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 reporting period.
(p) Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred, unless they are capitalised.
(q) Foreign currency transactions and translation
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. At the year-end, monetary assets and liabilities denominated in foreign currencies are restated at the year - end exchange rates. The exchange differences arising from settlement of foreign currency transactions and from the year-end restatement are recognised in profit and loss.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
(r) Employee benefits expense
(i) Short-term employee benefits
Liabilities for short-term employee benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as âEmployee Benefits Payableâ within âOther Current Liabilitiesâ in the Balance Sheet.
(ii) Other long-term employee benefits
The liabilities for leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured annually by actuaries as the present value of expected future benefits in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
(iii) Post-employment benefits Defined benefit plans
The liability or asset recognised in the Balance Sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in âEmployee Benefits Expenseâ in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income. These are included in âRetained Earningsâ in the Statement of Changes in Equity and in the balance sheet.
Defined contribution plans
Contributions to Provident Fund and Superannuation Fund are accounted for on accrual basis. Contributions under Defined Contribution Plans payable in keeping with the related schemes are recognised as expenses for the period in which the employee has rendered the service.
(iv) Share-based payments
Share-based compensation benefits are provided to employees via Saregama Employee Stock Options Scheme 2013, Stock Appreciation Rights Scheme 2014 and Stock Appreciation Rights Scheme 2018.
Employee Options
The fair value of the options granted under the Saregama Employee Stock Option Scheme 2013 is recognised as an employee benefits expense with a corresponding increase in equity. The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and risk free interest rate for the term of the option.The total amount to be expensed is determined by reference to the fair value of the options granted:
- Including any market performance conditions (e.g., the entityâs share price);
- excluding the impact of any services and non-market performance vesting conditions (e.g. profitability, sales growth targets and remaining an employee of the entity over a specified time period); and
- including the impact of any non-vesting conditions (e.g. the requirement for employees to save or holdings shares for a specified period of time).
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in the statement of profit or loss, with a corresponding adjustment to equity.
Share appreciation rights
Liabilities for the Companyâs share appreciation rights are recognised as employee benefit expense over the relevant service period. The liabilities are remeasured to fair value at each reporting date and are presented as employee benefits obligations in the balance sheet.
(s) Royalty
Minimum Guarantee Royalty is recognised as expense within the license period or ten years, whichever is earlier. Royalty on sales, other than physical sales, is provided on the basis of managementâs best estimate of the expenditure required to settle the obligation. Other royalty payments are charged at agreed rates on related sales.
(t) Income tax
The income tax expense for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax credits and to unused tax losses, as applicable.
The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. 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 standalone financial statements. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income 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 realised or the deferred tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, if any, only if it is probable that future taxable amounts will be available to utilise those temporary differences, tax credits and losses.
Deferred tax assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries where it is not probable that the differences will reverse in the foreseeable future and taxable profit will not be available against which the temporary difference can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date 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 utilised.
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 liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax are recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, if any. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
(u) Provisions and contingencies
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Provisions are measured at the present value of managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period.
A disclosure for contingent liabilities is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources embodying economic benefits will be required to settle or a reliable estimate of the amount cannot be made.
(v) Earnings per share
(i) Basic earnings per Share
Basic earnings per share is calculated by dividing:
- the profit attributable to owners of the Company
- by the weighted average number of equity shares outstanding during the financial year
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
(w) Rounding of amounts
All amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest lakhs (with two places of decimal) as per the requirement of Schedule III, unless otherwise stated.
(x) Recent accounting pronouncements- Standard issued but not yet effective
I Ind AS 116, Leases
-The Company is required to adopt Ind AS 116, Leases from 1 April 2019. Ind AS 116 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard - i.e. lessors continue to classify leases as finance or operating leases. It replaces existing leases guidance, Ind AS 17, Leases.
The Company has completed an initial assessment of the potential impact on its standalone financial statements but has not yet completed its detailed assessment. The quantitative impact of adoption of Ind AS 116 on the standalone financial statements in the period of initial application is not reasonably estimable as at present.
i. Leases in which the Company is a lessee
The Company will recognise new assets and liabilities for its operating leases of offices, warehouse and factory facilities. The nature of expenses related to those leases will now change because the Company will recognise a depreciation charge for right-of-use assets and interest expense on lease liabilities.
Previously, the Company recognised operating lease expense on a straight-line basis over the term of the lease, and recognised assets and liabilities only to the extent that there was a timing difference between actual lease payments and the expense recognised.
In addition, the Company will no longer recognise provisions for operating leases that it assesses to be onerous. Instead, the Company will include the payments due under the lease in its lease liability and apply Ind AS 36, Impairment of Assets to determine whether the right-of-use asset is impaired and to account for any impairment.
No significant impact is expected for the Companysâs finance leases.
ii. Leases in which the Company is a lessor
The Company will reassess the classification of sub-leases in which the Company is a lessor. Based on the information currently available, the Company expects that it will reclassify one sub-lease as a finance lease.
No significant impact is expected for other leases in which the Company is a lessor.
iii. Transition
The Company plans to apply Ind AS 116 initially on 1 April 2019, using the modified retrospective approach. Therefore, the cumulative effect of adopting Ind AS 116 will be recognised as an adjustment to the opening balance of retained earnings at 1 April 2019, with no restatement of comparative information.
The Company plans to apply the practical expedient to grandfather the definition of a lease on transition. This means that it will apply Ind AS 116 to all contracts entered into before 1 April 2019 and identified as leases in accordance with Ind AS 17.
II Ind AS 12 - Income taxes (amendments relating to income tax consequences of dividend and uncertainty over income tax treatments)
The amendment relating to income tax consequences of dividend clarify that an entity shall recognise the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events. The Company does not expect any impact from this pronouncement. It is relevant to note that the amendment does not amend situations where the entity pays a tax on dividend which is effectively a portion of dividends paid to taxation authorities on behalf of shareholders. Such amount paid or payable to taxation authorities continues to be charged to equity as part of dividend, in accordance with Ind AS 12.
The amendment to Appendix C of Ind AS 12 specifies that the amendment is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. It outlines the following: (1) the entity has to use judgement, to determine whether each tax treatment should be considered separately or whether same can be considered together. The decision should be based on the approach which provides better predictions of the resolution of the uncertainty (2) the entity is to assume that the taxation authority will have full knowledge of all relevant information while examining any amount (3) entity has to consider the probability of the relevant taxation authority accepting the tax treatment and the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates would depend upon the probability. The Company does not expect any significant impact of the amendment on its financial statements.
III Ind AS 19 - Plan Amendment, Curtailment or Settlement
The amendments clarify that if a plan amendment, curtailment or settlement occurs, it is mandatory that the current service cost and the net interest for the period after the re-measurement are determined using the assumptions used for the re-measurement. In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. The Company does not expect this amendment to have any significant impact on its financial statements.
IV Ind AS 23 - Borrowing Costs
The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings. The Company does not expect any impact from this amendment.
Mar 31, 2018
BACKGROUND
Saregama India Limited (âthe Companyâ) is a Company limited by shares, incorporated and domiciled in India. The Company is engaged in the business of manufacturing and sale of Music storage device viz. Carvaan, Mini Carvaan, Music Card, Audio Compact Discs, Digital Versatile Discs and dealing with related music rights. The Company is also engaged in production and sale/telecast/broadcast of films/Tv Serials, pre-recorded programmes and dealing in film rights. Equity shares of the Company are listed on the BSE Limited (BSE), the National Stock Exchange of India Limited (NSE) and the Calcutta Stock Exchange (CSE). The registered office of the Company is located in Kolkata, West Bengal, India.
The standalone financials statements were approved and authorised for issue with the resolution of the Board of Directors on 11 May 2018.
1 SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied by the Company in the preparation of its standalone financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these standalone financial statements and in preparing the opening Ind AS Balance Sheet as at 1 April 2016 for the purpose of transition to Ind AS, unless otherwise indicated.
(a) Basis of preparation
(i) Statement of compliance
These standalone financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the âActâ) [Companies (Accounting Standards) Rules, 2015] and other relevent provisions of the Act.
The standalone financial statements up to year ended 31 March 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (Previous GAAP).
The transition from Previous GAAP to Ind AS has been accounted for in accordance with Ind AS 101 âFirst Time Adoption of Indian Accounting Standardsâ, with 1 April 2016 being the transition date.
In accordance with Ind AS 101 âFirst time adoption of Indian Accounting Standardâ, the Company has presented a reconciliation from the presentation of standalone financial statements under accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (âPrevious GAAPâ) to Ind AS of total equity as at 1 April 2016 and 31 March 2017, total comprehensive income and cash flow for the year ended 31 March 2017.â
(ii) Basis of measurement
(a) Historical cost convention
The standalone financial statements have been prepared on a historical cost basis, except for the following:
- Certain financial assets and liabilities (including derivative instruments) that is measured at fair value.
- Net Defined benefit (assets)/liability - Fair value of plan assets less present value of defined benefit obligations; and
- Share based payments
(b) Functional and presentation currency
Items included in the standalone financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currencyâ). The standalone financial statements are presented in Indian Rupee (''), which is the Companyâs functional and presentation currency.
(iii) Current versus non-current classification
All assets and liabilities have been classified as current or non current as per the Companyâs normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013 and Ind AS 1 - Presentation of financial statement based on the nature of products / service and the time between the acquisition of assets for processing / providing the services and their realisation in cash and cash equivalents. The Company has ascertained its operating cycle as 12 months for the purpose of current, non current classification of assets and liabilities.
Assets
An asset is classified as current when it satisfies any of the following criteria:
(a) it is expected to be realised in, or is intended for sale or consumption in, the Companyâs normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the reporting date; or
(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
(a) it is expected to be settled in the Companyâs normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the reporting date; or
(d) the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
(b) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade discounts, incentives, rebates, value added taxes, goods and service taxes and amounts collected on behalf of third parties.
The Company recognises revenue when the amount of revenue can be measured reliably, there is no continuing effective control over or managerial involvement with the goods and it is probable that future economic benefits will flow to the Company and specific criteria have been met for each of the Companyâs activities as described below. Revenue from services is recognised in the periods in which the services are rendered. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Sale of products and licence fees
Revenue from sales is recognised on transfer of significant risks and rewards of ownership to customers based on agreement with the customers, the amount of revenue can be measured reliably, there is no continuing effective control over or managerial involvement with the goods and recovery of the consideration is probable. Licence Fees represent income from music rights.
Income from sale of tv software (including free commercial time)
Revenue on sale/licensing of television software are recognised on delivery. The amount recognised is at the predetermined price, the collection of which is reasonably assured.
Revenue from sale of free commercial time(net of trade discount, as applicable) are recognised when the related advertisement or commercials appears before the public, i.e. on telecast.
Theatrical sales: Revenue from theatrical distribution is recognised on exhibition of films. In case of distribution through theatres, revenue is recognised on the basis of box office reports received from various exhibitors. Contracted minimum guarantees are recognised on theatrical release.
Sale/licencing of film rights: Sale of rights is recognised on effective delivery of materials to customers as per terms of the sale/ licencing agreements. Sale of overseas rights are recognised on licencing of such rights.
Interest income
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the effective interest rate applicable.
Dividend income
Dividend income from investments is recognised when the shareholderâs rights to receive payment have been established.
Rental income
Rental income from investment properties and subletting of properties is recognised on a straight line basis over the term of the relevant leases.
(c) Property, plant and equipment - (PPE)
All items of property, plant and equipment other than freehold land 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 items.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Revaluation of Land is made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date. When the fair value differs materially from its carrying amount, the carrying amount is adjusted to the revalued amount. The fair value is determined based on appraisal undertaken by a professionally qualified valuer.
Depreciation method, estimated useful lives and residual values
Depreciation is calculated on a pro-rata basis using the straight-line method to allocate their cost, net of their estimated residual values, over the estimated useful lives of the asset as prescribed under Schedule II to the Companies Act, 2013.
The useful lives, residual values and the method of depreciation of property, plant and equipment are reviewed, and adjusted if appropriate, at the end of each reporting period.
An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated recoverable amounts.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in profit or loss within âOther Incomeâ/âOther Expensesâ.
Advances paid towards the cost of property, plant and equipment outstanding at each balance sheet date is classified as âCapital Advancesâ under other non- current assets.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
(d) Investment properties
Properties that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost of item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
Investment properties are depreciated using the straight-line method over their estimated useful lives.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment properties recognised as at 1 April, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of investment properties.
(e) Intangible assets
Intangible assets has a finite useful life and are stated at cost less accumulated amortisation and accumulated impairment losses, if any.
(i) Music Copyrights
Outright acquisition of music copyrights wherein future economic benefits are established are capitalised. They have finite useful lives and are subsequently carried at cost less accumulated amortisation and impairment losses.
(ii) Computer Software
Software for internal use, which is primarily acquired from third-party vendors is capitalised. Subsequent costs associated with maintaining such software are recognised as expense as incurred. Cost of software includes license fees and cost of implementation/system integration services, where applicable.
Amortisation method and year
The Company amortises intangible assets with a finite useful lives using the straight-line method over the following periods:
Music Copyrights are amortised on straight line basis over a period of 1-10 years. The Company reviews the expected future revenue potential at the end of each accounting period and recognises impairment loss, where required.
Softwares are amortised on a straight line basis over a period of three years from the date of capitalisation.
Advance paid towards the cost of intangible assets outstanding at each balance sheet date is classified as ''Capital Advances'' under other non current assets.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.
(f) Impairment of non-financial assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assetâs 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 group of assets (cash-generating units).
(g) Leases
As a lessee
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
As a lessor
Lease income from operating leases where the Company is a lessor is recognised as income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
(h) Inventories
Inventories are valued at lower of cost and net realisable value. The cost is determined on weighted average basis, and includes, where applicable, appropriate share of overheads. Provision is made for obsolete / slow moving / defective stocks, where necessary.
Television serials under production are included under âWork-in-Progressâ. Untelecasted television serials are stated at lower of cost and net expected revenue and included under âFinished Goodsâ.
Digital Films under production are included under âWork-in-Progressâ.
Net realisable value is 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.
(i) Investments in subsidiaries
Investments in subsidiaries are carried at cost less provision for impairment, if any. Investments in subsidiaries are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of investments exceeds its recoverable amount.
Transition to Ind AS
On transition to Ind AS, the Company has elected to measure its investments in all its subsidiaries at its previous GAAP carrying value and use those values as the deemed cost of such investments.
(j) Investments (other than investments in subsidiaries) and other financial assets
(i) 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 to be measured at amortised cost.
The classification depends on the Companyâs 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 profit or loss or other comprehensive income. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
(ii) 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 profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Equity Instruments : The Company subsequently measures all equity investments at fair value. Where the Companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Changes in the fair value of financial assets at fair value through profit or loss are recognised in the Statement of Profit and Loss.
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method.
(iii) Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets which are not fair valued through profit or loss. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 33(A) details how the Company determines 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,âFinancial Instrumentsâ, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
(iv) Derecognition of financial assets
A financial asset is derecognised 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 entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised 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 recognised to the extent of continuing involvement in the financial asset.
(v) Fair value of financial instruments
In determining the fair value of financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis and available quoted market prices. All methods of assessing fair value result in general approximation of value, and such value may never actually be realised.
(k) 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 recognised amounts and there is an intention to settle on a net basis or realise 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.
(l) Trade receivables
Trade receivables are amounts due from customers for goods sold or services rendered in the ordinary course of business. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
(m) Cash and cash equivalents
Cash and cash equivalents includes 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 and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(n) Financial liabilities
Trade payables and other financial liabilities are initially recognised at the value of the respective contractual obligations. They are subsequently measured at amortised cost. Any discount or premium on redemption / settlement is recognised in the Statement of Profit and Loss as finance cost over the life of the liability using the effective interest method and adjusted to the liability figure disclosed in the Balance Sheet.
Financial liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation is discharged, cancelled and on expiry.
(o) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.
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 reporting period.
(p) Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred.
(q) Foreign currency transactions and translation
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. At the year-end, monetary assets and liabilities denominated in foreign currencies are restated at the year - end exchange rates. The exchange differences arising from settlement of foreign currency transactions and from the year-end restatement are recognised in profit and loss.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
(r) Employee benefits expense
(i) Short-term employee benefits
Liabilities for short-term employee benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as âEmployee Benefits Payableâ within âOther financial liabilitiesâ in the Balance Sheet.
(ii) Other long-term employee benefits
The liabilities for leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured annually by actuaries as the present value of expected future benefits in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
(iii) Post-employment benefits Defined benefit plans
The liability or asset recognised in the Balance Sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in âEmployee Benefits Expenseâ in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income. These are included in âRetained Earningsâ in the Statement of Changes in Equity and in the Balance Sheet.
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions for employee provident fund to Government administered provident fund scheme, which are defined contribution plans. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in Statement of Profit and Loss in the periods during which the related services are rendered by employees.
(iv) Share-based payments
Share-based compensation benefits are provided to employees via Saregama Employee Stock Options Scheme 2013 and Stock Appreciation Rights Scheme 2014.
Employee options (equity settled)
The fair value of the options granted under the Saregama Employee Stock Option Scheme 2013 is recognised as an employee benefits expense with a corresponding adjustments to equity. The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and risk free interest rate for the term of the option.The total amount to be expensed is determined by reference to the fair value of the options granted:
- Including any market performance conditions (e.g., the entityâs share price)
- excluding the impact of any services and non-market performance vesting conditions (e.g. profitability, sales growth targets and remaining an employee of the entity over a specified time period), and
- including the impact of any non-vesting conditions (e.g. the requirement for employees to save or holdings shares for a specified period of time).
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in the statement of profit or loss, with a corresponding adjustment to equity.
Transition to Ind AS
On transition to Ind AS, the cost of Saregama Employee Stock Option Scheme 2013 (Stock Options) is recognised based on the fair value of Stock Options as on the grant date. In terms of the exemptions, the fair value of unvested Stock Options as on the date of transition have been accounted for as part of Reserves. While the fair value of Stock Options granted and vesting after the transition date are recognised in profit and loss.
Share Appreciation Rights (SARs) (cash settled)
The fair value of the amount payable to employees in respect of SARs, which are settled in cash, is recognised as an expense with a corresponding increase in liabilities, over the period that the employees unconditionally become entitled to the payment. The liability is remeasured at each reporting date and at settlement date based on the fair value of the SARs. Any changes in the fair value of the liability are recognised in profit or loss.
(s) Royalty
Minimum Guarantee Royalty paid for acquiring rights is recognised as expense within the license period or ten years, whichever is earlier. Royalty on sales, licence fees and other royalty payments are charged to statement of Profit and Loss at agreed rates on related sales.
(t) Income tax
The income tax expense for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax credits and to unused tax losses, as applicable.
The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. 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 standalone financial statements. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income 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 realised or the deferred tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, if any, only if it is probable that future taxable amounts will be available to utilise those temporary differences, tax credits and losses.
Deferred tax assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries where it is not probable that the differences will reverse in the foreseeable future and taxable profit will not be available against which the temporary difference can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date 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 utilised.
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 liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Minimum Alternate Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax in excess of MAT during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax in excess of MAT during the specified period.
Current and deferred tax are recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, if any. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
(u) Provisions and contingencies
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Provisions are measured at the present value of managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period.
A disclosure for contingent liabilities is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources embodying economic benefits will be required to settle or a reliable estimate of the amount cannot be made.
(v) Dividend
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Company, on or before the end of the reporting period but not distributed at the end of the reporting period.
(w) Earnings per share
(i) Basic earnings per Share
Basic earnings per share is calculated by dividing:
- the profit attributable to owners of the Company
- by the weighted average number of equity shares outstanding during the financial year
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
(x) Rounding of amounts
All amounts disclosed in these Standalone Financial Statements and notes have been rounded off to the nearest lakhs (with two places of decimal) as per the requirement of Schedule III, unless otherwise stated.
(y) Recent accounting pronouncements- Standard issued but not yet effective
Revenue from contracts with customers- Ind AS 115
Ind AS 115 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including Ind AS 18 Revenue and Ind AS 11 Construction Contracts. On 28 March 2018, the Ministry of Corporate Affairs (MCA) has notified that Ind AS 115 will be effective for accounting periods beginning on or after 1 April 2018. The impact of this amendment is yet to be assessed by the Company.
Mar 31, 2017
1 Significant Accounting Policies
(a) Basis of the Preparation of the Financial Statements
These Financial Statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis, except for certain Tangible Fixed Assets which are being carried at revalued amounts (as indicated in Notes 8(i), 8(ii), 8(iii) and 8(iv)). Pursuant to Section 133 of the Companies Act, 2013 read with Rule 7(1) of the 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 are prepared to comply in all material aspects, with the accounting standards notified under Section 211(3C) of the Companies Act, 1956 [Companies (Accounting Standards) Rules, 2006 as amended] and the other relevant provisions of the Companies Act, 2013.
All assets and liabilities have been classified as current or non current as per the Companyâs normal operating cycle and other criteria set out in Schedule III (Division I) to the Companies Act, 2013. Based on the nature of products / service and the time between the acquisition of assets for processing / providing the services and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current, non current classification of assets and liabilities.
(b) Use of Estimates
The preparation of the financial statements in conformity with the generally accepted accounting principles in India requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities as at the balance sheet date, the reported amount of revenue and expenses for the period and disclosure of contingent liability as at the balance sheet date. The estimates and assumptions used in the financial statements are based upon managementâs evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results could differ from estimates.
(c) Fixed Assets [Property, Plant and Equipment - (PPE)]
(i) Tangible Assets
Tangible Fixed Assets other than land are stated at their cost [also refer note 8(iv)] less accumulated depreciation and accumulated impairment losses, where applicable. Land is stated at revalued amount, as referred to in Notes 8(i), 8(ii), 8(iii) and 8(iv).
Impairment loss is recognized wherever the carrying amount of tangible fixed assets of a cash generating unit exceeds its recoverable amount ( i.e. higher of net selling price and value in use).
Revaluation of Land is made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date. When the fair value differs materially from its carrying amount, the carrying amount is adjusted to the revalued amount. The fair value is determined based on appraisal undertaken by a professionally qualified valuer.
(ii) Intangible Assets
The cost incurred for producing / purchasing feature films wherein future economic benefits are established to accrue over medium to long term period are recognized as intangible asset in the year of release at 50% of the cost of making the film including negatives or purchase cost.
Outright acquisition of music copyrights wherein future economic benefits are established are capitalized.
Softwares are capitalized where it is expected to provide future enduring economic benefits. Capitalization costs includes license fees and cost of implementation / system integration services. The costs are capitalized in the year in which the relevant software is implemented for use.
Impairment loss is recognized wherever the carrying amount of intangible fixed assets of a cash generating unit exceeds its recoverable amount ( i.e. higher of net selling price and value in use).
(d) Depreciation / Amortization
Depreciation on tangible fixed assets is provided on a pro rata basis on the straight line method based on the estimated useful lives of the asset as prescribed under Schedule II to the Companies Act, 2013 which is in line with the technical evaluation carried out in 2014-15 by the Companyâs expert. Aforesaid technical evaluation carried out in 2014-15 have been revisited by the Companyâs management during the year and no change to the evaluated life considered necessary.
Feature Films / Music Copyrights are amortized on straight line basis over a period of 1-10 years. The Company reviews the expected future revenue potential at the end of each accounting period and recognizes impairment loss, where required.
Softwares are amortized on a straight line basis over a period of three years from the date of capitalization.
(e) Investments
Long term investments are stated at cost / cost less write down. Provision for diminution is made to recognize a decline other than temporary in the carrying amount of long term investments as determined by the Board of Directors on periodical review.
Current investments are carried at lower of cost and fair value.
(f) Inventories
Inventories are valued at lower of cost and net realizable value.
The cost is determined on weighted average basis, and includes, where applicable, appropriate share of overheads.
Provision is made for obsolete / slow moving / defective stocks, where necessary.
Television serials under production are included under âWork-in-Progressâ.
Untelecasted television serials are stated at lower of cost and net expected revenue and included under âFinished Goodsâ.
Digital Films under production are included under âWork-in-Progressâ.
(g) Employee Benefits
Short-term Employee Benefits (i.e. benefits payable within one year) are recognized in the period in which employee services are rendered. Contribution towards superannuation at rates specified in related approved scheme covering eligible employees opting for such contribution is recognized as expense and funded.
Liability towards gratuity (defined benefit), covering eligible employees, is provided on the basis of year-end actuarial valuation using Projected Unit Credit Method. Gratuity is funded.
Accrued liability towards leave encashment benefits (defined benefit), covering eligible employees, evaluated on the basis of year-end actuarial valuation using Projected Unit Credit Method is recognized as charge.
Contribution towards provident fund to Government administered provident fund is recognized as expense.
Actuarial gains / losses arising in Defined Benefit Plans are recognized immediately in the Statement of Profit and Loss as income / expense for the year in which they occur.
Termination benefits represent compensation towards Voluntary Retirement Scheme which is expensed on accrual of liability.
(h) Sales and License Fees
Revenue from sales is recognized on transfer of significant risks and rewards of ownership to customers based on agreement with the customers. License Fees represent income from music rights.
Revenue relating to television serials is recognized on the basis of telecast / delivery of content, as applicable.
(i) Other Income
Interest: Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend: Dividend income is recognized when the right to receive dividend is established.
(j) Royalty
Minimum Guarantee Royalty is recognized as expense within the license period or ten years, whichever is earlier.
Royalty on sales, other than physical sales, is provided on the basis of managementâs best estimate of the expenditure required to settle the obligation.
Other royalty payments are charged at agreed rates on related sales.
(k) Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange rates prevailing on the date of transactions. Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year-end exchange rates. The resultant exchange differences arising from settlement of foreign currency transaction and from year-end restatement are recognized in the Statement of Profit and Loss.
(l) Borrowing Cost
Borrowing costs, if any, attributable to the acquisition and construction of qualifying assets are added to the cost up to the date when such assets are ready for their intended use. Other borrowing costs are recognized as expense in the period in which these are incurred.
(m) Taxes on Income
Current tax is provided as the amount of tax payable in respect of taxable income for the year measured using the applicable tax rules and laws.
Deferred tax is provided on timing differences between taxable income and accounting income measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets are recognized only if there is a virtual / reasonable certainty, as applicable, in keeping with Accounting Standard 22 on âAccounting for Taxes on Incomeâ that there will be sufficient future taxable income available to realize such assets. Deferred tax assets are reviewed for the appropriateness of their respective carrying amount at each Balance Sheet date.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax in excess of MAT during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax in excess of MAT during the specified period.
(n) Provisions and Contingent Liabilities
Provisions are recognized when there is a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation as at the Balance Sheet date and are not discounted to its present value.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
Mar 31, 2015
(a) Basis of the Preparation of the Financial Statements
These Financial Statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis, except for certain Tangible Fixed
Assets which are being carried at revalued amounts (as indicated in
Notes 11.1,11.2,11.3 and 11.4). Pursuant to Section 133 of the
Companies Act, 2013 read with Rule 7 of the Companies ( Accounts
).Rules,2014, till the standards of Accounting or any addendum thereto
are prescribed by Central Government in consultation and recommendation
of the National F inancial Reporting Authority, the existing Accounting
Standards notified under the Companies Act,
1956 shall continue to apply.Consequently, these financial statements
are prepared to comply in all material aspects, with the accounting
standards notified under Section 211 (3C) [Companies (Accounting
Standards) Rules 2006 as amended] and the other relevant provisions of
the Companies Act, 2013. -
All assets and liabilities have been classified as current or non
current as per the Company''s normal operating cycle and other criteria
set out in Schedule III to the Companies Act, 2013. Based on the nature
of products / service and the time between the acquisition of assets
for processing / providing the services and their realisation in cash
and cash equivalents, the Company has ascertained its operating cycle
as 12 months for the purpose of current, non current classification of
assets and liabilities.
(b) Use of Estimates
The preparation of the financial statements in conformity with the
generally accepted accounting principles in India requires the
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities as at the balance sheet date, the
reported amount of revenue and expenses for the period and disclosure
of contingent liability as at the balance sheet date. The estimates and
assumptions used in the financial statements are based upon
management''s evaluation of the relevant facts and circumstances as of
the date of the financial statements. Actual results could differ from
estimates.
(c) Fixed Assets
(i) Tangible Assets -
Tangible Fixed Assets are stated at their original cost less
depreciation, where applicable, other than revalued items which are
stated -
at valuation less depreciation, where applicable, as referred to in
Notes 11.1,11.2,11.3 and 11.4.
Impairment loss is recognised wherever the carrying amount of tangible
fixed assets of a cash generating unit exceeds its recoverable . -
amount (i.e. higher of net selling price and value in use).
(ii) Intangible Assets
The cost incurred for producing / purchasing feature films wherein
future economic benefits are established to accrue over medium to long
term period are recognised as intangible asset in the year of release
at 50% of the cost of making the film including negatives or purchase
cost.
Outright acquisition ofmusic copyrights wherein future economic
benefits are established are capitalised.
Softwares are capitalised where it is expected to provide future
enduring economic benefits. Capitalisation costs includes license fees
and cost of implementation / system integration services. The costs are
capitalised in the year in which the relevant software is implemented
for use.
Impairment loss is recognised wherever the carrying amount of
intangible fixed assets of a cash generating unit exceeds its
recoverable amount (i.e. higher of net selling price and value in use).
(d) Depreciation/Amortisation
Depreciation on, original cost and amount added on revaluation of
tangible fixed assets is provided on a pro rata basis on the straight
line method based on the estimated useful lives of the asset as
prescribed under Schedule II to the Companies Act, 2013 which is in
line with the technical evaluation carried out during the year by the
Company''s expert. (Also ReferNote 28.1)
Feature Films / Music Copyrights are amortised on straight line basis
over a period of 1-10 years. The Company reviews the expected future
revenue potential at the end of each accounting period for appropriate
adjustments, where required.
Softwares are amortised on a straight line basis over a period of three
years from the date of capitalisation.
(e) Investments
Long term investments are stated at cost / cost less write down.
Provision for diminution is made to recognise a decline other than ''
temporary in the carrying amount of long term investments as determined
by the Board of Directors on periodical review.
Currentinvestmentsarecarriedatlowerofcostandfairvalue.
(f) Inventories
Inventories are valued at lower of cost and net realisable value. -
(i) Raw Materials and Finished Goods
The cost is determined on specific identification / weighted average
basis, as considered appropriate by the Company, and includes, where
applicable, appropriate share of overheads.
Provision is made for obsolete / slow moving / defective stocks, where
necessary.
(ii) Television Serials
Television serials under production are included under
''Work-in-Progress'' at cost or under.
Untelecasted television serials are stated at lower of cost and net
expected revenue and included under ''Finished Goods''.
(g) Employee Benefits
Short-term Employee Benefits (i.e. benefits payable within one year)
are recognised in the period in which employee services are rendered.
Contribution towards superannuation at rates specified in related
approved scheme covering eligible employees opting for such -
contribution is recognised as expense and funded.
Liability towards gratuity (defined benefit), covering eligible
employees, is provided on the basis of year-end actuarial valuation
using Proj ected Unit Credit Method. Gratuity is fUnded.
Accrued liability towards leave encashment benefits (defined benefit),
covering eligible employees, evaluated on the basis of year-end
actuarial valuation using Projected Unit Credit Method is recognised as
charge.
Contribution towards provident fund to Government administered
provident fund is recognised as expense.
Actuarial gains / losses arising in Defined Benefit Plans are
recognised immediately in the Statement of Profit and Loss as income /
expense for the year in which they occur.
Termination benefits represent compensation towards Voluntary
Retirement Scheme which is expensed on accrual of liability.
(h) Sales and Licence Fees
Revenue from sales is recognised on transfer of significant risks and
rewards of ownership to customers based on agreement with the
customers. Licence Fees represent income from music rights.
Revenue relating to television serials is recognised on the basis of
telecast / delivery of content, as applicable.
(i) Royalty
Minimum Guarantee Royalty is recognised as expense within the license
period or ten years, whichever is earlier.
Royalty on sales, other than physical sales, is provided on the basis
of management''s best estimate of the expenditure required to settle the
obligation.
Other royalty payments are charged at agreed rates on related sales.
(j) Foreign Currency Transactions .
Transactions in foreign currency are accounted for at the exchange
rates prevailing on the date of transactions. Monetary assets and
liabilities related to foreign currency transactions remaining
unsettled at the end of the year are translated at year-end exchange
rates.The resultant exchange differences arising from settlement of
foreign currency transaction and from year-end restatement are
recognised in the Statement of Profit and Loss.
(k) Borrowing Cost
Borrowing costs, if any, attributable to the acquisition and
construction of qualifying assets are added to the cost upto the date
when such assets are ready for their intended use. Other borrowing
costs are recognised as expense in the period in which these are
incurred.
(l) Taxes on Income '' -
Current tax is provided as the amount of tax payable in respect of
taxable income for the year measured using the applicable tax rules and
laws.
Deferred tax is provided on timing differences between taxable income
and accounting income measured using tax rates and tax laws that have
been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets are recognised only if there is a virtual /
reasonable certainty, as applicable, in keeping with Accounting
Standard 22 on ''Accounting for Taxes on Income'' that there will be
sufficient future taxable income available to realise such assets.
Deferred tax assets are reviewed for the appropriateness of their
respective carrying amount at each Balance Sheet date.
Minimum Alternate Tax (MAT) credit is recognised as an asset only when
and to the extent there is convincing evidence that the Company will
pay normal income tax in excess of MAT during the specified period.
Such asset is reviewed at each Balance Sheet date and the canying
amount of the MAT credit asset is written down to the extent there is
no longer a convincing evidence to the effect that the Company will pay
normal income tax in excess of MAT during the specified period.
(m) Provisions and Contingent Liabilities
Provisions are recognised when there is a present obligation as a
result of a past event and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and there is a reliable estimate of the amount of the obligation.
Provisions are measured at the best estimate of the expenditure
required to settle the present obligation as at the Balance Sheet date
and are not discounted to its present value.
Contingent liabilities are disclosed when there is a possible
obligation arising from past events, the existence of which will be
confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the Company or
a present obligation that arises from past events where it is either
not probable that an outflow of resources will be required to settle or
a reliable estimate of the amount cannot be made.
11.1 Based on valuation reports of valuers, appointed for the purpose,
the tangible fixed assets (other than furniture and fittings, office
equipment, vehicles and certain items of plant and equipment) were
revalued on 31st March, 1984 and again (except for those relating to
record making machinery items) on 30th September, 1987 after
considering the then (a) current market value/ derived rates
attributable to land (b) current replacement cost after depreciation
etc. and an amount ofRs.587.31 lacs and Rs.628.19 lacs were added to the
book value of the related assets (with corresponding credit to Fixed
Asset Revaluation Reserve) on 31 st March, 1984 and 30th September,
1987 respectively.
11.2 Certain tangible fixed assets of the Company viz Land and
Buildings were revalued in June 2003 by registered valuers at the lower
of current replacement cost and realisable value. Resultant incremental
value amounting to Rs.2,374.11 lacs were added to the book value of the
related assets with utilisation of the corresponding credit amount
pursuant to an approved scheme of arrangement.
11.3 Company''s land was revalued on 31 st March, 2007 by registered
valuers, at lower of current replacement cost and realisable value.
Resultant incremental value amounting to Rs.4,421.30 lacs were added to
the book value of land with corresponding credit to Revaluation Reserve
of Rs.2,697.56 lacs and utilisation of the balance amount of Rs.1,723.74
lacs pursuant to a sanctioned scheme of amalgamation of erstwhile
Saregama Films Limited with the Company in 2006-07.
11.4 In respect of tangible fixed asset covered by revaluation made in
the earlier years, depreciation has been calculated on their respective
revalued amounts. Depreciation on account of incremental amount to the
extent of Rs. 13.68 lacs for the current year and Rs.2.5 7 lacs for the
previous year has been transferred from Revaluation Reserve to General
Reserve and the Statement of Profit and Loss respectively.
# In terms of the order passed by the Hon''ble High Court at Calcutta on
3rd March,2015 sanctioning the reduction of paid up share capital ofRs.
10/- per share to Re.0.15 per share, shareholding in Open Media Network
Private Limited stand reduced and consolidated into 6,30,640 equity
shares of Rs.10/- folly paidup .Further, the Company have purchased
1,77,960 equity shares of Rs.1 G each from Rainbow Investments Limited.
Also refer Note 43(b).
@ Acquired during the year 2012-13 pursuant to clause 3.8 of the
agreement entered into between Saregama India Limited and Timbre Media
Private Limited.
* Investments made during the year includes 1,67,58,000 equity shares
of Rs. 10/- each through conversion of receivables from the investee
company on sale of company''s investment in shares for reason set out in
Note 43(a).
Mar 31, 2014
(a) Basis of the Preparation of the Financial Statements
These Financial Statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis, except for certain Tangible Fixed
Assets which are being carried at revalued amounts (as indicated in
Notes 11.1,11.2,11.3 and 11.4). Pursuant to circular 15/2013 dated
13-09-2013 read with circular 08/2014 dated 04-04-2014, 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 are prepared to comply in all
material aspects, with the accounting standards notified under section
211(3C) [Companies (Accounting Standards) Rules 2006 as amended] and
the other relevant provisions of the Companies Act, 1956.
All assets and liabilities have been classified as current or non
current as per the Company''s normal operating cycle and other criteria
set out in Schedule VI to the Companies Act, 1956. Based on the nature
of products / service and the time between the acquisition of assets
for processing / providing and their realisation in cash and cash
equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current, non- current classification of
assets and liabilities.
(b) Use of Estimates
The preparation of the financial statements in conformity with the
generally accepted accounting principles in India requires the
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities as at the balance sheet date, the
reported amount of revenue and expenses for the period and disclosure
of contingent liability as at the balance sheet date. The estimates and
assumptions used in the financial statements are based upon
managements'' evaluation of the relevant facts and circumstances as of
the date of the financial statements. Actual results could differ from
estimates.
(c) Fixed Assets
(i) Tangible Assets
Tangible Fixed Assets are stated at their original cost less
depreciation other than revalued items which are stated at valuation
less depreciation, as referred to in Notes 11.1,11.2,11.3 and 11.4.
Impairment loss is recognised wherever the carrying amount of tangible
fixed assets of a cash generating unit exceeds its recoverable amount
(i.e. higher of net selling price and value in use).
(ii) Intangible Assets
The cost incurred for producing / purchasing feature films wherein
future economic benefits are established to accrue over medium to long
term period are recognised as intangible asset in the year of release
at 50% of the cost of making the film including negatives or purchase
cost.
Outright acquisition of music copyrights wherein future economic
benefits are established are capitalised.
Softwares are capitalised where it is expected to provide future
enduring economic benefits. Capitalisation costs includes license fees
and cost of implementation / system integration services. The costs are
capitalised in the year in which the relevant software is implemented
for use.
Impairment loss is recognised wherever the carrying amount of
intangible fixed assets of a cash generating unit exceeds its
recoverable amount (i.e. higher of net selling price and value in use).
(d) Depreciation /Amortisation
Depreciation on original cost of tangible fixed assets is provided on
straight line method at rates prescribed in Schedule XIV to the
Companies Act, 1956 of India. Additional Depreciation on the amount
added on revaluation is provided on straight line basis and is adjusted
against the available balance in revaluation reserve account in respect
of the related items.
Feature Films / Music Copyrights are amortised on a straight-line basis
over a period of 1-10 years. The Company reviews the expected future
revenue potential at the end of each accounting period and recognises
impairment loss, where required.
Softwares are amortised on a straight line basis over a period of three
years from the date of capitalisation.
(e) Investments
Long term investments are stated at cost / cost less write down.
Provision for diminution is made to recognise a decline other than
temporary in the carrying amount of long term investments as determined
by the Board of Directors on periodical review.
Current investments are carried at lower of cost and fair value.
(f) Inventories
Inventories are valued at lower of cost and net realisable value.
(i) Raw Materials and Finished Goods
The cost is determined on specific identification / weighted average
basis, as considered appropriate by the Company, and includes, where
applicable, appropriate share of overheads.
Provision is made for obsolete / slow moving / defective stocks, where
necessary.
(ii) Films
Films under production are included under ''Work-in-Progress'' at cost or
under.
The cost incurred for producing / purchasing feature film wherein
future economic benefits are established to accrue over a short tern
period are recognised as inventory and the cost is amortised over such
period, based on net expected revenue. (iii) Television Serials
Television serials under production are included under
''Work-in-Progress'' at cost or under and charged off on the basis of
telecast. Untelecasted television serials are stated at lower of cost
and net expected revenue and included under ''Finished Goods''. (g)
Employee Benefits
Short-term Employee Benefits (i.e. benefits payable within one year)
are recognised in the period in which employee services are rendered
Contribution towards superannuation at rates specified in related
approved scheme covering eligible employees opting for such
contribution is recognised as expense and funded.
Liability towards gratuity (defined benefit), covering eligible
employees, is provided on the basis of year-end actuarial valuation
using Projected Unit Credit Method. Gratuity is funded.
Accrued liability-towards leave encashment benefits (defined benefit),
covering eligible employees, evaluated on the basis of year-end
actuarial valuation using Projected Unit Credit Method is recognised as
charge.
Contribution towards provident fund to Government administered
provident fund is recognised as expense.
Actuarial gains / losses arising in Defined Benefit Plans are
recognised immediately in the Statement of Profit and Loss as income /
expense for the year in which they occur.
Termination benefits represent compensation towards Voluntary
Retirement Scheme which is expensed on accrual of liability. (h) Sales
and Licence Fees
Sales represent invoiced value of products sold (net of trade discount)
and services rendered. Licence Fees represent income from music rights.
Revenue from films is recognised on assignment of distribution rights
and revenue relating to television serials is recognised on the basis
of telecast / sale of content, as applicable.
(i) Royalty
Minimum Guarantee Royalty is recognised as expense within the license
period or ten years, whichever is earlier.
Royalty on sales, other than physical sales, is provided on the basis
of management''s best estimate of the expenditure required to settle the
obligation.
Other royalty payments are charged at agreed rates on related sales.
(j) Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange
rates prevailing on the date of transactions. Monetary assets and
liabilities related to foreign currency transactions remaining
unsettled at the end of the year are translated at year-end exchange
rates.The resultant exchange differences arising from settlement of
foreign currency transaction and from year-end restatement are
recognised in the Statement of Profi and Loss.
(k) Taxes on Income
Current tax is provided as the amount of tax payable in respect of
taxable income for the year measured using the applicable tax rules and
laws.
Deferred tax is provided on timing differences between taxable income
and accounting income measured using tax rates and tax laws that have
been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets are recognised only if there is a virtual /
reasonable certainty, as applicable, in keeping with Accounting
Standard 22 on ''Accounting for Taxes on Income'' that there will be
sufficient future taxable income available to realise such assets.
Deferred tax assets are reviewed for the appropriateness of their
respective carrying amount at each Balance Sheet date.
Minimum Alternate Tax (MAT) credit is recognised as an asset only when
and to the extent there is convincing evidence that the Company will
pay normal income tax in excess of MAT during the specified period.
Such asset is reviewed at each Balance Sheet date and the carrying
amount of the MAT credit asset is written down to the extent there is
no longer a convincing evidence to the effect that the Company will pay
normal income tax in excess of MAT during the specified period. (1)
Provisions and Contingent Liabilities
Provisions are recognised when there is a present obligation as a
result of a past event and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and there is a reliable estimate of the amount of the obligation.
Provisions are measured at the best estimate of the expenditure
required to settle the present obligation as at the Balance Sheet date
and are not discounted to its present value.
Contingent liabilities are disclosed when there is a possible
obligation arising from past events, the existence of which will be
confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the Company or
a present obligation that arises from past events where it is either
not probable that an outflow of resources will be required to settle or
a reliable estimate of the amount cannot be made.
2.1 Out of 53,38,628 equity shares issued for cash at a premium of
Rs.35/- (issue price- Rs.45/-) pursuant to the Rights Issue in 2005,
allotment of 5,290 (31.03.2013Rs. 5,290) equity shares (relating to cases
under litigation/pending clearance from the concerned authorities) are
kept in abeyance as on31stMarch,2014.
2.3 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 Directors is subject to
the approval of shareholders in the ensuing Annual General Meeting
except in case of interim dividend.
In the event of liquidation of the Company, the holder of equity shares
are eligible to receive remaining assets of the Company, in proportion
to their shareholding.
11.1 Based on valuation reports of valuers, appointed for the purpose,
the tangible fixed assets (other than furniture and fittings, office
equipment, vehicles and certain items of plant and equipment) were
revalued on 31st March, 1984 and again (except for those relating to
record making machinery items) on 30th September, 1987 after
considering the then (a) current market value/ derived rates
attributable to land (b) current replacement cost after depreciation
etc. and an amount of Rs.587.31 lacs and Rs.628.19 lacs were added to the
book value of the related assets (with corresponding credit to Fixed
Asset Revaluation Reserve) on 31 st March, 1984 and 30th September,
1987 respectively.
11.2 Certain tangible fixed assets of the Company viz Land and
Buildings were revalued in June 2003 by registered valuers at the lower
of current replacement cost and realisable value. Resultant incremental
value amounting to Rs.2,374.11 lacs were added to the book value of the
related assets with utilisation of the corresponding credit amount
pursuant to an approved scheme of arrangement.
11.3 Company''s land was revalued on 31st March, 2007 by registered
valuers, at lower of current replacement cost and realisable value.
Resultant incremental value amounting to Rs.4,421,30 lacs were added to
the book value of land with corresponding credit to Revaluation Reserve
of Rs.2,697.56 lacs and utilisation of the balance amount of Rs.1,723.74
lacs pursuant to a sanctioned scheme of amalgamation of erstwhile
Saregama Films Limited with the Company in 2006-07.
11.4 In respect of tangible fixed asset covered by revaluation made in
the earlier years,depreciation has been calculated on their respective
amounts and includes additional charge of Rs.2.57 lacs (Previous year Rs.
3.05 lacs) which has been transferred from Revaluation Reserve.
26.1 In keeping with the Company''s gratuity scheme (a defined benefit
plan-funded), eligible employees are entitled to gratuity benefit (at
one half months eligible salary for each completed year of service) on
retirement / death / incapacitation / resignation etc. Also refer Note
1 (g) for accounting policy relating to gratuity. Following are the
further particulars with respect to gratuity.
30.1 The Company has made advances from time to time to support ongoing
publication business activities of Open Media Network Private Limited
(OMNPL) (Subsidiary company). Balance of such advances as on 27th
March,2014 is Rs. 3203.26 Lacs [including Rs. 738.66 Lacs (net) given in
2013-14]. However, as a part of restructuring activities undertaken by
OMNPL during the year, the said advances have been considered as
contributions for investments in equity shares of OMNPL.Upon conversion
of advances into Investments, the provision for doubtful advances has
been written back and provision for diminution in value of investments
has been created to recognise the decline, other than temporary, in the
carrying amount of company''s long term investments in OMNPL''s
Publication business.
As a part of restructuring activities as above, OMNPL has also allotted
2,96,64,000 equity shares ofRs. 10/- each to other companies in
aggregrate during the year. Upon allotment of the said shares, OMNPL
has ceased to be a wholly owned subsidiary of the Company.
31. Capital commitments (net of advances of Rs.11.18Lacs;31.03.13
Rs.14.72Lacs) as at 31st March, 2014 are estimated at Rs.14.181acs
(31.03.13-Rs.22.53Lacs).
Mar 31, 2013
(a) Basis of the Preparation of the Financial Statements
These Financial Statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis, except for certain Tangible Fixed
Assets which are being carried at revalued amounts (as indicated in
Notes 11.1,11.2,11.3 and 11.4). These Financial Statements are prepared
to comply in all material aspects, with the accounting standards
notified under section 211(3C) [Companies (Accounting Standards) Rules
2006 as amended] and the other relevant provisions ofthe Companies Act,
1956.
All assets and liabilities have been classified as current or non
current as per the Company''s normal operating cycle and other criteria
set out in Schedule VI to the Companies Act, 1956. Based on the nature
of products and the time between the acquisition of assets for
processing and their realisation in cash and cash equivalents, the
Company has ascertained its operating cycle as 12 months for the p
urpose of current, non- current classification of assets and
liabilities,
(b) FixedAssets
(i) Tangible Assets
Tangible Fixed Assets are stated at their original cost less
depreciation other than revalued items which are stated at valuation
less depreciation, as referred to in Notes 11.1,11.2,11.3 and 11.4.
Impairment loss is recognised wherever the carrying amount of tangible
fixed assets of a cash generating unit exceeds its recoverable amount
(i.e. higher of net selling price and value in use).
(ii) Intangible Assets
The cost incurred for producing/purchasing feature films wherein future
economic benefits are established to accrue over medium to long term
period are recognised as intangible asset in the year of release at 50%
of the cost of making the film including negatives or purchase cost.
Outright acquisition of music copyrights wherein future economic
benefits are established are capitalised.
Softwares are capitalised where it is expected to provide future
enduring economic benefits. Capitalisation costs includes license fees
and cost of implementation/system integration services. The costs are
capitalised in the year in which the relevant software is implemented
for use.
Impairment loss is recognised wherever the carrying amount of
intangible fixed assets of a cash generating unit exceeds its
recoverable amount (i.e. higher of net selling price and value in use).
(c) Depreciation/Amortisation
Depreciation on original cost of tangible fixed assets is provided on
straight line method at rates prescribed in Schedule XIV to the
Companies Act, 1956 of India. Additional Depreciation on the amount
added on revaluation is provided on straight line basis and is adjusted
against the available balance in revaluation reserve account in respect
of the related items.
Feature Films / music copyrights are amortised over a period of 1-10
years, based on license period or management estimation of future
revenue potential, as the case may be. The Company reviews the expected
future revenue potential at the end of each accounting period and
recognises impairment loss, where required.
Softwares are amortised on a straight line basis over a period of three
years from the date of capitalisation.
(d) Investments
Long term investments are stated at cost/ cost less write down.
Provision for diminution is made to recognise a decline other than
temporary in the carrying amount of long term investments as determined
by the Board of Directors on periodical review.
Current investments are carried at lower of cost and fair value.
(e) Inventories Inventories are valued at lower of cost and net
realisable value.
(i) Raw Materials and Finished Goods
The cost is determined on specific identification / weighted average
basis, as considered appropriate by the Company, and includes, where
applicable, appropriate share of overheads.
Provision is made for obsolete/slow moving/defective stocks, where
necessary.
(ii) Films
Films under production are included under'' Work-in-Progress'' at cost or
under.
The Cost incurred for producing/purchasing feature film wherein future
economic benefits are established to accrue over a short ter period are
recognised as inventory and the cost is amortised over such period,
based on net expected revenue.
(iii) Television Serials
Television serials under production are included under
''Work-in-Progress'' at cost or under and charged off on the basis of
telecast. Untelecasted television serials are stated at lower of cost
and net expected revenue and included under ''Finished Goods''.
(f) Employee Benefits
Shor t-term Employee Benefits (i.e. benefits payable within one year)
are recognised in the period in which employee services are rendered
Cont ribution towards superannuation at rates specified in related
approved scheme covering eligible employees opting for sue contri
bution is recognised as expense and funded.
Liability towards gratuity (defined benefit), covering eligible
employees, is provided on the basis of year-end actuarial valuation
usin Projected Unit Credit Method. Gratuity is funded.
Acc rued liability towards leave encashment benefits (defined benefit),
covering eligible employees, evaluated on the basis of year-en actu
arial valuation using Projected Unit Credit Method is recognised as
charge.
Contribution towards provident fund to Government administered
provident fund is recognised as expense.
Actuarial gains/losses arising in Defined Benefit Plans are recognised
immediately in the Statement of Profit and Loss as income/expens for
the year in which they occur.
Term ination benefits represent compensation towards Voluntary
Retirement Scheme which is expensed on accrual of liability.
(g) Sales and Licence Fees
Sales represent invoiced value of products sold (net of trade discount)
and services rendered. Licence Fees represent income from musi rights.
Revenue from films is recognised on assignment of distribution rights
and revenue relating to television serials is recognised on the basis o
telecast/Sale ofContent, as applicable.
(h) Royalty
Minimum Guarantee Royalty is recognised as expense within the license
period or ten years, whichever is earlier.
Royalty on sales, other than physical sales, is provided on the basis
of management''s best estimate of the expenditure required to settle th<
obligation.
Other royalty payments are charged at agreed rates on related sales.
(i) Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange
rates prevailing on the date of transactions. Monetary assets anc
liabilities related to foreign currency transactions remaining
unsettled at the end of the year are translated at year-end exchange
rates. The resultant exchange differences arising from settlement of
foreign currency transaction and from year-end restatement are
recognised in the Statement of Profi and Loss.
(j) Taxes on Income
Current tax is pro vided as the amount of tax payable in respect of
taxable income for the year measured using the applicable tax rules and
laws.
Deferred tax is provided on timing differences between taxable income
and accounting income measured using tax rates and tax laws that have
been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets are recognised only if there is a
virtual/reasonable certainty, as applicable, in keeping with Accounting
Standard 22 on ''Accounting for Taxes on Income'' that there will be
sufficient future taxable income available to realise such assets.
Deferred tax assets are reviewed for the appr opriateness of their
respective carrying amount at each Balance Sheet date.
Mar 31, 2012
(a) Basis of the Preparation of the Financial Statements
These Financial Statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis, except for certain Tangible Fixed
Assets which are being carried at revalued amounts (as indicated in
Notes 11.1,11.2,11.3 and 11.4). These Financial Statements are prepared
to comply in all material aspects with the accounting standards
notified under section 211(3C) [Companies (Accounting Standards) Rules
2006 as amended] and the other relevant provisions of the Companies
Act, 1956.
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out in Schedule VI to the Companies Act,1956. Based on the
nature of products and the time between the acquisition of assets for
processing and their realization in cash and cash equivalents, the
Company has ascertained its operating cycle as 12 months for the
purpose of current, non-current classification of assets and
liabilities.
(b) Fixed Assets
(i) Tangible Assets
Tangible Fixed Assets are stated at their original cost less
depreciation other than revalued items which are stated at valuation
less depreciation, as referred to in Notes 11.1,11.2,11.3 and 11.4.
Impairment loss is recognized wherever the carrying amount of tangible
fixed assets of a cash generating unit exceeds its recoverable amount
(i.e. higher of net selling price and value in use).
(ii) Intangible Assets
The cost incurred for producing/purchasing feature films wherein future
economic benefits are established to accrue over medium to long term
period are recognized as intangible asset in the year of release at 50%
of the cost of making the film including negatives or purchase cost.
Outright acquisition of music copyrights wherein future economic
benefits are established are capitalized.
Software's are capitalized where it is expected to provide future
enduring economic benefits. Capitalization costs includes license fees
and cost of implementation/system integration services. The costs are
capitalized in the year in which the relevant software is implemented
for use.
(c) Depreciation/Amortization
Depreciation on original cost of tangible fixed assets is provided on
straight line method at rates prescribed in Schedule XIV to the
Companies Act, 1956 of India. Additional Depreciation on the amount
added on revaluation is provided on straight line basis and is adjusted
against the available balance in revaluation reserve account in respect
of the related items.
Feature Films / music copyrights are amortized over a period of 1-10
years, based on license period or management estimation of future
revenue potential, as the case may be. The company reviews the expected
future revenue potential at the end of each accounting period and
recognizes impairment loss, where required.
Soft wares are amortized on a straight line basis over a period of three
years from the date of capitalization.
(d) Investments
Long term investments are stated at cost/ cost less write down.
Provision for diminution is made to recognize a decline other than
temporary in the carrying amount of long term investments as determined
by the Board of Directors on periodical review.
- Current investments are carried at lower of cost and fair value.
(e) Inventories
Inventoriesarevaluedatlowerofcostandnetrealisablevalue.
(i) Raw Materials, Stores & Spares and Finished Goods
The cost is determined on specific identification / weighted average
basis, as considered appropriate by the Company, and includes, where
applicable, appropriate share of overheads.
Provision is made for obsolete/slow moving/defective stocks, where
necessary.
(ii) Films
Films under production are included under' Work-in-Progress' at cost or
under. .
The Cost incurred for producing/purchasing feature film wherein future
economic benefits are established to accrue over a short term period of
1 - 2 years are recognized as inventory and the cost is amortized over
a period of 1 - 2 years, based on net expected revenue.
(iii) Television Serials
Television serials under production are included under
'Work-in-Progress' at cost or under and charged off on the basis of
telecast. Unreleased television serials are stated at lower of cost
and net expected revenue under 'Finished Goods'
(f) Employee Benefits
Short-term Employee Benefits (i.e. benefits payable within one year)
are recognized in the period in which employee services are rendered.
Contribution towards superannuation at rates specified in related
approved scheme covering eligible employees opting for such
contribution is recognized as expense and funded.
Liability towards gratuity (defined benefit), covering eligible
employees, is provided on the basis of year-end actuarial valuation
using Projected Unit Credit Method. Gratuity is funded.
Accrued liability towards leave encashment benefits (defined benefit),
covering eligible employees, evaluated on the basis of year-end
actuarial valuation using Projected Unit Credit Method is recognized as
charge.
Contribution towards provident fund to Government administered
provident fund is recognized as charge.
Actuarial gains/losses arising in Defined Benefit Plans are recognized
immediately in the Statement of Profit and Loss as income/expense for
the year in which they occur.
(g) Sales and License Fees
Sales represent invoiced value of products sold (net of trade discount)
and services rendered. License Fees represent income from music rights.
Revenue from films is recognized on assignment of distribution rights
and revenue relating to television serials is recognized on the basis
of telecast/Sale of Content, as applicable.
(h) Royalty
Minimum Guarantee Royalty is recognized as expense within the license
period or ten years, whichever is earlier.
Royalty on sales, other than physical sales, is provided on the basis
of management's best estimate of the expenditure required to settle the
obligation.
Other royalty payments are charged at agreed rates on related sales.
(i) Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange
rates prevailing on the date of transactions. Monetary assets and
liabilities related to foreign currency transactions remaining
unsettled at the end of the year are translated at year-end exchange
rates. The resultant exchange differences arising from settlement of
foreign currency transaction and from year-end restatement are
recognized in the Statement of Profit and Loss.
(j) Taxes on Income
Current tax is provided as the amount of tax payable in respect of
taxable income for the year measured using the applicable tax rules and
laws.
Deferred tax is provided on timing differences between taxable income
and accounting income measured using tax rates and tax laws that have
been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets are recognized only if there is a
virtual/reasonable certainty, as applicable, in keeping with Accounting
Standard 22 on Accounting for Taxes on Income' that there will be
sufficient future taxable income available to realize such assets.
Deferred tax assets are reviewed for the appropriateness of their
respective carrying amount at each Balance Sheet date.
Mar 31, 2011
(a) Basis of the Preparation of the Financial Statements
The Financial Statements have been prepared under the Historical Cost
Convention (except for revaluation of certain Fixed Assets as detailed
below and in Notes 5(a), 5(b) and 5(c) on Schedule XX) in accordance
with the accounting principles generally accepted in India and the
applicable Accounting Standards in India. The Financial Statements have
also been prepared in accordance with relevant presentational
requirements of the Companies Act, 1956 of India. A summary of
important accounting policies, which have been applied, is set out
below.
(b) Fixed Assets
(i) Tangible Assets
Fixed Assets are stated at their original cost less depreciation other
than revalued items which are stated at valuation less depreciation, as
referred to in Notes 5(a), 5(b), 5(c) and 5(d ) on Schedule XX.
Impairment loss is recognised wherever the carrying amount of fixed
assets of a cash generating unit exceeds its recoverable amount i.e.
net selling price or value in use, whichever is higher.
(ii) Intangible Assets
The cost incurred for producing and purchasing feature films wherein
future economic benefits are established to accrue over medium to long
term period are treated as intangible asset in the year of release 50%
of the cost of making the film including negatives or purchase cost.
Outright acquisition of music copyrights wherein future economic
benefits are established are capitalised.
Softwares are capitalised where it is expected to provide future
enduring economic benefits. Capitalisation costs includes license fees
and cost of implementation/system integration services. The costs are
capitalised in the year in which the relevant software is implemented
for use.
(c) Depreciation / Amortisation
Depreciation on original cost of tangible fixed assets is provided on
straight line method at rates prescribed in Schedule XIV to the
Companies Act, 1956 of India. Additional depreciation on the amount
added on revaluation is provided on straight line basis and is adjusted
against the available balance in revaluation reserve account in respect
of the related items.
Feature Films/music copyrights are amortised over a period of 1-10
years based on license period or management estimation of future
revenue potential as the case may be. The Company reviews the expected
future revenue potential at the end of each accounting period and
recognised impairment loss, where required.
Softwares are amortised on a straight line basis over a period of three
years from the date of capitalisation.
(d) Investments
Long term investments are stated at cost/ cost less write down.
Provision for diminution is made to recognise a decline other than
temporary in the carrying amount of long term investments as determined
by the Board of Directors on periodical review.
Current investments are carried at lower of cost and fair value.
(e) Inventories (i) Raw Materials, Stores & Spares and Finished Goods
Inventories are valued at lower of cost and net realisable value.
The cost is determined on specific identification / weighted average
basis, as considered appropriate by the Company, and includes, where
applicable, appropriate share of overheads.
Provision is made for obsolete, slow moving and defective stocks, where
necessary.
(ii) Films
Films under production are included under Work-in-Progress at cost or
under.
The cost incurred for producing and purchasing feature film wherein
future economic benefits are established to accrue over a short term
period of 1 - 2 years are recognised as inventory and the cost is
amortised over a period of 1 - 2 years, based on net expected revenue.
Significant Accounting Policies (Contd.)
(iii) Television Serials
Television serials under production are included under
Work-in-Progress at cost or under and charged off on the basis of
telecast. Untelecasted television serials are stated at lower of cost
and net expected revenue under Finished Goods.
(f) Employee Benefits
Short-term Employee Benefits (i.e. benefits payable within one year)
are recognised in the period in which employee services are rendered.
Contribution towards superannuation at rates specified in related
approved scheme covering eligible employees opting for such
contribution is recognised as expense and funded.
Contribution towards provident fund to Government administered
provident fund is recognised as expense.
Liability towards gratuity (defined benefit), covering eligible
employees, is provided and funded on the basis of year-end actuarial
valuation.
Accrued liability towards leave encashment benefits (defined benefit),
covering eligible employees, evaluated on the basis of year-end
actuarial valuation is recognised as charge.
Contribution to Government administered Employees State Insurance
Scheme for eligible employees is recognised as charge.
Actuarial gains/losses arising in Defined Benefit Plans are recognised
immediately in the Profit and Loss Account as income/expense for the
year in which they occur.
(g) Sales and Licence Fees
Sales represent invoiced value of products sold (net of trade
discounts) and services rendered. Licence Fees represent income from
music rights.
Revenue from films is recognised on assignment of distribution rights
and revenue relating to television serials is recognised on the basis
telecast.
(h) Royalty
Minimum guarantee royalty is recognised as expense within the license
period or ten years, whichever is earlier.
Royalty on sales, other than physical sales, is provided on the basis
of managements best estimate of the expenditure required to settle the
obligation.
Other royalty payments are charged at agreed rates on related sales.
(i) Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange
rates prevailing on the date of transactions. Monetary assets and
liabilities related to foreign currency transactions remaining
unsettled at the end of the year are translated at year-end exchange
rates. Gains / losses arising out of fluctuations in the exchange
rates are recognised in Profit and Loss Account in the period in which
they arise.
(j) Taxes on Income
Current tax is determined as the amount of tax payable in respect of
taxable income for the year based on applicable tax rate and laws.
Deferred tax is provided/recognised on timing differences between
taxable income and accounting income subject to consideration of
prudence. Deferred tax asset on the unabsorbed depreciation and carry
forward of losses under the tax laws are not recognised unless there is
virtual certainty that there will be sufficient future taxable income
available to realise such assets.
Mar 31, 2010
(a) Basis of the Preparation of the Financial Statements
The Financial Statements have been prepared under the Historical Cost
Convention (except for revaluation of certain Fixed Assets as detailed
below and in Notes 6(a), 6(b) and 6(c) on Schedule XX) in accordance
with the accounting principles generally accepted in India and the
applicable Accounting Standards in India. The Financial Statements have
also been prepared in accordance with relevant presentational
requirements of the Companies Act, 1956 of India. A summary of
important accounting policies, which have been applied, is set out
below.
(b) Fixed Assets
Fixed Assets are stated at their original cost less depreciation other
than revalued items which are stated at valuation less depreciation, as
referred to in Notes 6 (a), 6 (b), 6 (c) and 6 (d ) on Schedule XX.
Outright acquisition of copyrights wherein future economic benefits are
established are capitalised.
Softwares are capitalised where it is expected to provide future
enduring economic benefits. Capitalisation costs includes license fees
and cost of implementation/system integration services. The costs are
capitalised in the year in which the relevant software is implemented
for use.
Impairment loss is recognised wherever the carrying amount of fixed
assets of a cash generating unit exceeds its recoverable amount i.e.
net selling price or value in use, whichever is higher.
(c) Depreciation
Copyrights (outright acquisition) are depreciated under the straight
line method over 10 years.
Softwares capitalised are amortised on a straight line basis over a
period of three years from the date of capitalisation.
Depreciation on original cost of fixed assets is provided on straight
line method at the rates prescribed in Schedule XIV to the Companies
Act, 1956 of India. Additional Depreciation on the amount added on
revaluation is provided on straight line basis and is adjusted against
the available balance in revaluation reserve account in respect of the
related items.
(d) Investments
Long term investments are stated at cost/ cost less write down.
Provision for diminution is made to recognise a decline other than
temporary in the carrying amount of long term investments as determined
by the Board of Directors on periodical review. Current investments are
carried at lower of cost and fair value.
(e) Inventories
Inventories are valued at lower of cost and net realisable value.
The cost is determined on specific identification/weighted average
basis, as considered appropriate by the Company, and includes, where
applicable, appropriate share of overheads.
Provision is made for obsolete, slow moving and defective stocks, where
necessary.
(f) Employee Benefits
Short-term Employee Benefits (i.e. benefits payable within one year)
are recognised in the period in which employee services are rendered.
Contribution towards superannuation at rates specified in related
approved scheme covering eligible employees opting for such
contribution is recognised as expense and funded.
Contribution towards provident fund to Government administered
provident fund is recognised as expense.
Liability towards gratuity (defined benefit), covering eligible
employees, is provided and funded on the basis of year-end actuarial
valuation.
Accrued liability towards leave encashment benefits (defined benefit),
covering eligible employees, evaluated on the basis of year-end
actuarial valuation is recognised as charge.
Contribution to Government administered Employees State Insurance
Scheme for eligible employees is recognised as charge.
Actuarial gains/losses arising in Defined Benefit Plans are recognised
immediately in the Profit and Loss Account as income/expense for the
year in which they occur.
(g) Sales and Licence Fees
Sales represent invoiced value of products sold and are net of trade
discounts. Licence Fees represent income from music rights.
Revenue from films is recognised on assignment of distribution rights
and revenue relating to television serials is recognised on telecast.
(h) Royalty
Minimum guarantee advance is recognised as expense within the license
period or ten years, whichever is lower.
Royalty on sales, other than physical sales, is provided on the basis
of managements best estimate of the expenditure required to settle the
obligation.
Other royalty payments are charged at agreed rates on related sales.
(i) Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange
rates prevailing on the date of transactions. Monetary assets and
liabilities related to foreign currency transactions remaining
unsettled at the end of the year are translated at year-end exchange
rates. Gains / losses arising out of fluctuations in the exchange
rates are recognised in Profit and Loss Account in the period in which
they arise.
(j) Taxes on Income
Current tax is determined as the amount of tax payable in respect of
taxable income for the year based on applicable tax rate and laws.
Deferred tax is provided/recognised on timing differences between
taxable income and accounting income using the liability method subject
to consideration of prudence. Deferred tax asset on the unabsorbed
depreciation and carry forward of losses under the tax laws are not
recognised unless there is virtual certainty that there will be
sufficient future taxable income available to realise such assets.
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