Accounting Policies of Shree Ashtavinayak Cine Vision Ltd. Company

Mar 31, 2013

I. Background

Shree Ashtavinayak Cine Vision Limited (“SACVL” or the “Company”) was incorporated in 2001 as a private limited Company. In 2004, the Company was converted into a public limited Company. The Company is listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. SACVL is engaged in production and distribution/exhibition of motion picture films.

ii. Basis of preparation

These financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting, in accordance with the applicable requirements of the Companies Act, 1956 (the ‘Act’) and comply in all material aspects with the Accounting Standards prescribed by the Central Government, in accordance with the Companies (Accounting Standards) Rules, 2006, to the extent applicable. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous period.

iii Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statement are prudent and reasonable. The key estimates made by the Company in preparing these financial statements comprise provision for expenses, retirement benefits, provision for doubtful debts and income taxes. Actual results could differ from those estimates. Any revisions to accounting estimates are recognised in the period in which such revisions are made.

iv Significant accounting policies

1.1 Fixed assets and depreciation

Fixed assets are stated at cost, less accumulated depreciation and impairment loss, if any. The cost includes purchase cost and all incidental expenses to bring the assets to their present location and condition.

Depreciation on fixed assets other than film productions and film distribution rights is provided on straight line method at the rates and in the manner specified under Schedule XIV to the Companies Act, 1956. ''

Depreciation on fixed assets added / disposed off / discarded during the year has been provided on pro-rata basis with reference to the date of addition / disposal / discarding.

Fixed assets having value lower than Rs. 5,000 are depreciated fully in the year of purchase.

1. 2 Intangible assets and amortisation

Intangible assets comprising motion pictures produced and motion picture rights which have been acquired and are controlled through custody or legal rights are capitalised at cost, where they can be reliably measured.

Where capitalised, intangible assets are regarded as having a limited useful economic life and the cost is amortised over the lower of economic useful life and period of the legal rights.

Where an assignment of rights is for a fixed fee or non refundable guaranteed fee under a non cancellable contract which permits the licensee to exploit those rights freely and the Company has no remaining obligation to perform, the cost capitalised is fully amortised in the year of sale of such rights.

At the expiry of the term of the distribution rights in motion pictures the intangible asset related to the - particular agreement is derecognised.

An asset is treated as intangible asset if it is an identifiable non-monetary asset, without physical substance, held for use in the production or supply of goods or services, for rental to others, or for administrative purposes. Intangible Assets are stated at cost of acquisition less accumulated amortization.

1. 3 Borrowing cost

Borrowing costs directly attributable to production of movies, and the acquisition or construction of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

1. 4 Impairment of Assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/ external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss if any is charged to Profit and Loss Account in the year in which an asset is identified as impaired. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreases.

1. 5 Revenues

a) Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

b) In case of distribution rights of films:

(i) produced or rights acquired, revenue is recognised on accrual basis on receipt of business statements from theatres / sub distributors, etc.

(ii) in case of sale of such distribution rights of films, revenue is recognised on the date of sale of such rights.

c) In respect of films produced by the Company and distributed by others, overflow of excess collection over minimum guarantee, net of eligible expenses/ write off is recognised on intimation by distributor.

d) Revenue from sale of:

(i) film’s satellite rights and video rights are recognised when it arise, based on payment/delivery/telecast milestones specified in the agreements/ arrangements entered with concerned parties.

(ii) other rights of films such as music rights and ring tone rights are recognised from effective date of exploitation of such rights.

e) Sale of film produced by the Company is recognised as under:

(i) upon receipt of theatrical release certificate in respect of self release, and

(ii) upon delivery of exploitation rights in other cases.

f) Interest income is recognised on a time proportion basis.

1. 6 Leases

Rental income or expense on operating leases is recognised on a straight-line basis over the term of the relevant lease.

1. 7 Investments

Long term investments are stated at cost. A provision for diminution is made to recognise a decline, other than temporary, in the value of long-term investments and is determined separately for each individual investment. Current investments are stated at lower of cost or fair market value. Cost of investments, includes original cost of acquisition, including brokerage and stamp duty.

1. 8 Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Any income or expense on account of exchange differences either on settlement or on translation of transactions is recognised in the Profit and Loss Account. Monetary items denominated in foreign currencies at the period-end are translated at the exchange rates items denominated in foreign currencies at the period-end are translated at the exchange rates prevailing on the date of the Balance Sheet. Non-monetary items denominated in foreign currencies are carried at historical value. Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, are be recognized as income or as expenses in the period in which they arise. Exchange differences arising on a monetary item that, in substance, forms part of Company’s net investment in a non-integral foreign operation are accumulated in a foreign currency translation reserve until the disposal of the net investment which are recognized as income or as expenses at the time of disposal of such investments.

1. 9 Employee benefits

All short term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees.

Defined contribution plan:

In accordance with the provisions of the employees provident fund regulations, eligible employees of the Company are entitled to receive benefits with respect to provident fund, a defined contribution plan in which both the Company and the employee contribute monthly at a determined rate (currently 12% of employee’s basic salary). The Company’s contribution to provident fund is charged to the Profit & Loss Account.

Defined benefit plan:

Benefits payable to eligible employees of the Company with respect to gratuity, a defined benefit plan is accounted for on the basis of an actuarial valuation as at the balance sheet date. In accordance with local regulations, the plan provides for lump sum payments to vested employees on retirement, death while in service or on termination of employment in an amount equivalent to 15 days basic salary for each completed year of service. Vesting occurs upon completion of five years of service. The expense is recognised at the present value of the amount payable determined using actuarial valuation carried out by an independent actuary at the balance sheet date using Projected Unit Credit Method.

There is no defined policy enabling the employees to avail encashment of leave.

1.10 Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

1.11 Provisions and contingent liabilities

The Company creates a provision when there is present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required, and a reliable estimate can be made of the amount required to settle the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

1. 12 Income taxes

Income tax expense comprises current income tax and deferred tax.

Current taxes

Provision for current income-tax is recognised in accordance with the provisions of (Indian) Income Tax Act, 1961, and is made annually based on the tax liability after taking credit for tax allowances and exemptions.

Deferred taxes

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted at the balance sheet date. The effect of a change in tax rates on deferred tax assets and liabilities is recognised in the year that includes the enactment date.

Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in the future, however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty, supported by convincing evidence of recognition of such assets. Deferred tax assets are reassessed for the appropriateness of their respective carrying values at each balance sheet date. ''

1.13 Cash Flow Statement

Cash flows are reported using the indirect method, whereby the net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of the past or future cash receipts or payments. The cash flows from regular revenue generating, investing & financing activities of the company are segregated.

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Mar 31, 2012

I. Background

Shree Ashtavinayak Cine Vision Limited ("SACVL" or the "Company") was incorporated in 2001 as a private limited Company. In 2004, the Company was converted into a public limited Company. The Company is listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. SACVL is engaged in production and distribution/exhibition of motion picture films.

These accounts were made up for the previous year (Comparison period) of six months from 1st October 2010 to 31st March 2011. Any reference to term "year" in these financial statements with reference to finalcial period from 1st October 2010 to 31st March 2011 may be construed as "period" accordingly.

Since previous period of the accounts are made up for six months, the figures of the Current year (12 months) are not strictly comparable with that of the figures of the current period.

ii. Basis of preparation

These financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting, in accordance with the applicable requirements of the Companies Act, 1956 (the Act') and comply in all material aspects with the Accounting Standards prescribed by the Central Government, in accordance with the Companies (Accounting Standards) Rules, 2006, to the extent applicable. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous period.

iii Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statement are prudent and reasonable. The key estimates made by the Company in preparing these financial statements comprise provision for expenses, retirement benefits, provision for doubtful debts and income taxes. Actual results could differ from those estimates. Any revisions to accounting estimates are recognised in the period in which such revisions are made.

iv Significant accounting policies 1. 1 Fixed assets and depreciation

Fixed assets are stated at cost, less accumulated depreciation and impairment loss, if any. The cost includes purchase cost and all incidental expenses to bring the assets to their present location and condition.

Depreciation on fixed assets other than film productions and film distribution rights is provided on straight line method at the rates and in the manner specified under Schedule XIV to the Companies Act, 1956.

Depreciation on fixed assets added / disposed off/ discarded during the year has been provided on pro-rata basis with reference to the date of addition / disposal / discarding.

Fixed assets having value lower than Rs. 5,000 are depreciated fully in the year of purchase.

1. 2 Intangible assets and amortisation

Intangible assets comprising motion pictures produced and motion picture rights which have been acquired and are controlled through custody or legal rights are capitalised at cost, where they can be reliably measured.

Where capitalised, intangible assets are regarded as having a limited useful economic life and the cost is amortised over the lower of economic useful life and period of the legal rights.

Where an assignment of rights is for a fixed fee or non refundable guaranteed fee under a non cancellable contract which permits the licensee to exploit those rights freely and the Company has no remaining obligation to perform, the cost capitalised is fully amortised in the year of sale of such rights.

At the expiry of the term of the distribution rights in motion pictures the intangible asset related to the particular agreement is derecognised.

An asset is treated as intangible asset if it is an identifiable non-monetary asset, without physical substance, held for use in the production or supply of goods or services, for rental to others, or for administrative purposes. Intangible Assets are stated at cost of acquisition less accumulated amortization.

1. 3 Borrowing cost

Borrowing costs directly attributable to production of movies, and the acquisition or construction of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

1.4 Impairment of Assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/ external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss if any is charged to Profit and Loss Account in the year in which an asset is identified as impaired. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreases

1. 5 Revenues

a) Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

b) In case of distribution rights of films:

(i) produced or rights acquired, revenue is recognised on accrual basis on receipt of business statements from theatres / sub distributors, etc.

(ii) in case of sale of such distribution rights of films, revenue is recognised on the date of sale of such rights.

c) In respect of films produced by the Company and distributed by others, overflow of excess collection over minimum guarantee, net of eligible expenses/ write off is recognised on intimation by distributor.

d) Revenue from sale of:

(i) film's satellite rights and video rights are recognised when it arise, based on payment/delivery/telecast milestones specified in the agreements/ arrangements entered with concerned parties.

(ii) other rights of films such as music rights and ring tone rights are recognised from effective date of exploitation of such rights.

e) Sale of film produced by the Company is recognised as under:

(i) upon receipt of theatrical release certificate in respect of self release, and (ii) upon delivery of exploitation rights in other cases.

f) Interest income is recognised on a time proportion basis.

1. 6 Leases

Rental income or expense on operating leases is recognised on a straight-line basis over the term of the relevant lease.

1. 7 Investments

Long term investments are stated at cost. A provision for diminution is made to recognise a decline, other than temporary, in the value of long-term investments and is determined separately for each individual investment. Current investments are stated at lower of cost or fair market value. Cost of investments, includes original cost of acquisition, including brokerage and stamp duty.

1.8 Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Any income or expense on account of exchange differences either on settlement or on translation of transactions is recognised in the Profit and Loss Account. Monetary items denominated in foreign currencies at the period-end are translated at the exchange rates prevailing on the date of the Balance Sheet. Non-monetary items denominated in foreign currencies are carried at historical value. Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, are be recognized as income or as expenses in the period in which they arise. Exchange differences arising on a monetary item that, in substance, forms part of Company's net investment in a non-integral foreign operation are accumulated in a foreign currency translation reserve until the disposal of the net investment which are recognized as income or as expenses at the time of disposal of such investments

1.9 Employee benefits

All short term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees.

Defined contribution plan:

In accordance with the provisions of the employees provident fund regulations, eligible employees of the Company are entitled to receive benefits with respect to provident fund, a defined contribution plan in which both the Company and the employee contribute monthly at a determined rate (currently 12% of employee's basic salary). The Company's contribution to provident fund is charged to the Profit & Loss Account.

Defined benefit plan:

Benefits payable to eligible employees of the Company with respect to gratuity, a defined benefit plan is accounted for on the basis of an actuarial valuation as at the balance sheet date. In accordance with local regulations, the plan provides for lump sum payments to vested employees on retirement, death while in service or on termination of employment in an amount equivalent to 15 days basic salary for each completed year of service. Vesting occurs upon completion of five years of service. The expense is recognised at the present value of the amount payable determined using actuarial valuation carried out by an independent actuary at the balance sheet date using Projected Unit Credit Method.

There is no defined policy enabling the employees to avail encashment of leave.

1. 10 Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

1.11 Provisions and contingent liabilities

The Company creates a provision when there is present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required, and a reliable estimate can be made of the amount required to settle the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

1.12 Income taxes

Income tax expense comprises current income tax and deferred tax.

Current taxes

Provision for current income-tax is recognised in accordance with the provisions of (Indian) Income Tax Act, 1961, and is made annually based on the tax liability after taking credit for tax allowances and exemptions.

Deferred taxes

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted at the balance sheet date. The effect of a change in tax rates on deferred tax assets and liabilities is recognised in the year that includes the enactment date.

Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in the future, however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty, supported by convincing evidence of recognition of such assets. Deferred tax assets are reassessed for the appropriateness of their respective carrying values at each balance sheet date.

1.13 Cash Flow Statement

Cash flows are reported using the indirect method, whereby the net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of the past or future cash receipts or payments. The cash flows from regular revenue generating, investing & financing activities of the company are segregated.

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Mar 31, 2011

1 Background

Shree Ashtavinayak Cine Vision Limited ("SACVL" or the "Company1) was incorporated in 2001 as a private limited Company. In 2004, the Company was converted into a public limited Company. The Company is listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited SACVL is engaged in production and distribution/exhibition of motion picture films.

These accounts are made up for six months from 1ST October 2010 to 31ST March 31, 2011. Any reference to term "year" in these financial statements with reference to March 2011 may be construed as "period" accordingly.

Since these are accounts for six months, the figures of the previous period (18 months) are not strictly comparable with that of the figures of the current period

2 Basis of preparation

These financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting, in accordance with the applicable requirements of the Companies Act, 1956 (the 'Act') and comply in all material aspects with the Accounting Standards prescribed by the Central Government, in accordance with the Companies (Accounting Standards) Rules, 2006, to the extent applicable. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous period.

3 Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statement are prudent and reasonable. The key estimates made by the Company in preparing these financial statements comprise provision for expenses, retirement benefits, provision for doubtful debts and income taxes. Actual results could differ from those estimates. Any revisions to accounting estimates are recognised in tho period in which such revisions are made.

4 Significant accounting policies

4.1 Fixed assets and depreciation

Fixed assets are stated at cost, less accumulated depreciation and impairment loss, if any. The cost includes purchase cost and all incidental expenses to bring the assets to their present location and condition.

Depreciation on fixed assets other than film productions and film distribution rights is provided on straight line method at the rates and in the manner specified under Schedule XIV to the Companies Act, 1956.

Depreciation on fixed assets added/ disposed off/discarded during the year has been provided on pro-rata basis with reference to the date of addition/ disposal/ discarding.

Fixed assets having value lower than " 5,000 are depreciated fully in the year of purchase.

4. 2 Intangible assets and amortisation

Intangible assets comprising motion pictures produced and motion picture rights which have been acquired and are controlled through custody or legal rights are capitalised at cost, where thev can be reliably measured.

Where capitalised, intangible assets are regarded as having a limited useful economic life and the cost is amortised over the lower of economic useful life and period of the leqal rights.

Where an assignment of rights is for a fixed fee or non refundable guaranteed fee under a non cancellable contract which permits the licensee to exploit those rights freely and the Company has no remaining obligation to perform, the cost capitalised is fully amortised in the year of sale of such rights.

At the expiry of the term of the distribution rights in motion pictures the intangible asset related to the particular agreement is derecognised.

4. 3 Borrowing cost

Borrowing costs directly attributable to production of movies, and the acquisition or construction of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale

4. 4 Impairment of Assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/ external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss if any is charged to Profit and Loss Account in the year in which an asset is identified as impaired. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreases.

4.5 Revenues

a) Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

b) In case of distribution rights of films:

(i) produced or rights acquired, revenue is recognised on accrual basis on receipt of business statements from theatres / subdistributors etc

(ii) in case of sale of such distribution rights of films, revenue is recognised on the date of sale of such rights.

c) In respect of films produced by the Company and distributed by others, overflow of excess collection over minimum guarantee, net of eligible expenses/ write off is recognised on intimation by distributor

d) Revenue from sale of:

ft) film's satellite rights and video rights are recognised when it arise, based on payment/del i very/telecast milestones specified in the agreements/ arrangements entered with concerned parties.

(ii) other rights of films such as music rights and ring tone rights are recognised from effective date of exploitation of

e) Sale of film produced by the Company is recognised as under:

ft) upon receipt of theatrical release certificate in respect of self release, and

(ii) upon delivery of exploitation riqhts in other cases.

f) Interest income is recoanised on a time proportion basis.

4.6 Leases

Rental income or expense on operating leases is recognised on a straight-line basis over the term of the relevant

4.7 Investments

Long term investments are stated at cost. A provision for diminution is made to recognise a decline, other than temporary, in the value of long-term investments and is determined separately for each individual investment. Current investments are stated at lower of cost or fair market value. Cost of investments, includes original cost of acquisition, including brokerage and stamp duty.

4.8 Foreign currert cv transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Any income or expense on account of exchange differences either on settlement or on translation of transactions is recognised in the Profit and Loss Account. Monetary items denominated in foreign currencies at the period-end are translated at the exchange rates prevailing on the date of the Balance Sheet. Non-monetary items denominated in foreign currencies are earned at historical value. Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, are be recognized as income or as expenses in the period in which they arise. Exchange differences arising on a monetary item that, in substance, forms part of Company's net investment in a non- inteoralforeion operation are accumulated in aforeion currency translation reserve until the disposal of the net

4. 9 Employee benefits

All short term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees.

Defined contribution plan:

In accordance with the provisions of the employees provident fund regulations, eligible employees of the Company are entitled to receive benefits with respect to provident fund, a defined contribution plan in which both the Company and the employee contribute monthly at a determined rate (currently 12% of employee's basic salary). The Company's contribution to provident fund is charged to the Profit & Loss Account.

Defined benefit plan:

Benefits payable to eligible employees of the Company with respect to gratuity, a defined benefit plan is accounted for on the basis of an actuarial valuation as at the balance sheet date. In accordance with local regulations, the plan provides for lump sum payments to vested employees on retirement, death while in service or on termination of employment in an amount equivalent to 15 days basic salary for each completed year of service. Vesting occurs upon completion of five years of service The expense is recognised at the present value of the amount payable determined using actuarial valuation carried out by an independent actuary at the balance sheet date using Projected Unit Credit Method. There is no defined policy enabling the employees to avail encashment of leave.

4.10 Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

4.11 Provisions and contingent liabilities

The Company creates a provision when there is present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required, and a reliable estimate can be made of the amount required to settle the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

4.12 Income taxes

Income tax expense comprises current income tax and deferred tax.

Current taxes

Provision for current income-tax is recognised in accordance with the provisions of (Indian) Income Tax Act, 1961, and is made annually based on the tax liability after taking credit for tax allowances and exemptions.

Deferred taxes

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted at the balance sheet date. The effect of a change in tax rates on deferred tax assets and liabilities is recognised in the year that includes the enactment date.

Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in the future, however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty, supported by convincing evidence of recognition of such assets. Deferred tax assets are reassessed for the appropriateness of their respective carrying values at each balance sheet date

4.13 Cash Flow Statement

Cash flows are reported using the indirect method, whereby the net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of the past or future cash receipts or payments. The cash flows from regular revenue generating, investing & financing activities of the company are segregated.

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Sep 30, 2010

1. Basis of preparation

These financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting, are in accordance with the applicable requirements of the Companies Act, 1956 (the Act) and comply in all material aspects with the Accounting Standards prescribed by the Central Government, in accordance with the Companies (Accounting Standards) Rules, 2006, to the extent applicable. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous period.

2. Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statement are prudent and reasonable. The key estimates made by the Company in preparing these financial statements comprise provision for expenses, retirement benefits, provision for doubtful debts and income taxes. Actual results could differ from those estimates. Any revisions to accounting estimates are recognised in the period in which such revisions are made.

3. Significant accounting policies

3.1. Fixed assets and depreciation

Fixed assets are stated at cost, less accumulated depreciation and impairment loss, if any. The cost includes purchase cost and all incidental expenses to bring the assets to their present location and condition.

Depreciation on fixed assets other than film productions and film distribution rights is provided on straight line method at the rates and in the manner specified under Schedule XIV to the Companies Act, 1956.

Depreciation on fixed assets added/disposed off/discarded during the year has been provided on pro-rata basis with reference to the date of addition/disposal/discarding.

Fixed assets having value lower than Rs. 5,000 are depreciated fully in the year of purchase.

3.2. Intangible assets and amortisation

Intangible assets comprising motion pictures produced and motion picture rights which have been acquired and are controlled through custody or legal rights are capitalised at cost, where they can be reliably measured.

Where capitalised, intangible assets are regarded as having a limited useful economic life and the cost is amortised over the lower of economic useful life and period of the legal rights.

Where an assignment of rights is for a fixed fee or non refundable guaranteed fee under a non cancellable contract which permits the licensee to exploit those rights freely and the Company has no remaining obligation to perform, the cost capitalised is fully amortised in the year of sale of such rights.

At the expiry of the term of the distribution rights in motion pictures the intangible asset related to the particular agreement is derecognised.

3.3. Borrowing cost

Borrowing costs directly attributable to production of movies, and the acquisition or construction of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

3.4. Impairment of Assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss if any is charged to Profit and Loss Account in the year in which an asset is identified as impaired. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreases.

3.5. Revenues

a) Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

b) In case of distribution rights of films:

a) produced or rights acquired, revenue is recognised on accrual basis on receipt of business statements from theatres / sub distributors, etc.

b) in case of sale of such distribution rights of films, revenue is recognised on the date of sale of such rights.

c) In respect of films produced by the Company and distributed by others, overflow of excess collection over minimum guarantee, net of eligible expenses is recognised on intimation by distributor.

d) Revenue from sale of:

a) films satellite rights and video rights are recognised when it arise, based on payment/delivery/telecast milestones specified in the agreements/ arrangements entered with concerned parties.

b) other rights of films such as music rights and ring tone rights are recognised from effective date of exploitation of such rights.

e) Sale of film produced by the Company is recognised as under:

a) upon receipt of theatrical release certificate in respect of self release, and

b) upon delivery of exploitation rights in other cases.

f) Interest income is recognised on a time proportion basis.