Accounting Policies of VELS Film International Ltd. Company

Mar 31, 2025

2. Significant Accounting Policies

A) Basis of preparation of Financial Statements

The financial statements of the Company have
been prepared in accordance with the Generally
Accepted Accounting Principles in India (Indian
GAAP) to comply with the Accounting Standards
notified under the Companies (Accounting
Standards) Rules, 2021 (as amended) and the
relevant provisions of the Companies Act, 2013.
The financial statements have been prepared on
accrual basis under the historical cost convention.
The accounting policies adopted in the
preparation of the financial statements are
consistent with those followed in the previous
year.

B) Use of estimates

The preparation of the financial statements in
conformity with Indian GAAP requires the
Management to make estimates and assumptions
considered in the reported amounts of assets and
liabilities (including contingent liabilities) and
the reported income and expenses during the
year. The Management believes that the
estimates used in preparation of the financial
statements are prudent and reasonable. Future
results could differ due to these estimates and
the differences between the actual results and
the estimates are recognised in the periods in
which the results are known / materialise.

C) Inventories

The inventories are valued at cost or NRV
whichever is lower. The company holds work in
progress of movie projects which are in the
process of production. All the expenses incurred

directly in connection to the specified movie is
added to the cost of the inventory of the
corresponding movie till such date of sale or
release.

D) Cost and Expenses

Film costs include all direct costs incurred in the
physical production of a film, such as the costs of
story; compensation of cast, directors, producers,
and extras; costs of set construction, operations,
and wardrobe; costs of sound synchronization;
costs of rental facilities on location; and
postproduction costs (music, special effects, and
editing).

Production overhead consists of the costs of the
individuals and departments that have a
significant (or exclusive) responsibility for the
production of the film. These costs do not include
administrative and general expenses.

E) Cash and Cash Equivalents

Cash comprises cash on hand and demand
deposits with banks. Cash equivalents are short¬
term balances (with an original maturity of three
months or less from the date of acquisition),
highly liquid investments that are readily
convertible into known amounts of cash and
which are subject to insignificant risk of changes
in value.

F) Cash Flow Statement

''The statement of cash flows has been prepared
under indirect method, whereby profit or loss is
adjusted for the effects of transactions of a non¬
cash nature, any deferrals. The cash flows from
operating, investing and financing activities of
the Company are segregated.

G) Revenue Recognition

Revenue from sale or licensing of film is
recognized when:

a) Persuasive evidence of a sale or licensing
agreement with a customer exists and

b) Film is certified by authorities for release in
case of own exhibition of films produced and

c) The film is complete and has been delivered
or is available for immediate and
unconditional delivery (in accordance with the
terms of the arrangement) and

d) The customer can begin its exploitation,
exhibition, or sale and

e) The fee is fixed or determinable and

f) Collection of the fee is reasonably assured.
All other revenue, including but not limited to,
the following, is recognised on the basis of sale
or licensing agreements.

Nature of Income

(i) Revenue from Theatrical rights (Domestic &
Overseas)

(ii) Revenue from Dubbing Rights (Domestic &
Overseas)

(iii) Revenue from Satellite Rights (Domestic &
Overseas)

(iv) Revenue from Music Rights (Domestic &
Overseas)

(v) Revenue from Sale of Transfer of Rights
(Domestic & Overseas)

(vi) Revenue from Sale of Digital Rights
(Domestic & Overseas)

Other income:

Interest on loans given is recognised as per the
terms of agreement and accounted on time
proportionate basis in the books of accounts. All
other income is recognised based on the terms
of contract with third parties and corresponding
billings made.

Subsidies received from the Government are
recognised in the profit & loss account where there
are no conditions attached to the subsidy.
Income from Social Media platforms received are
recognised in the profit & loss account on receipt
basis.

H) Property, Plant and Equipment

Property, plant and equipment are stated at cost
comprising of purchase price, including non¬
refundable taxes and duties and any initial
directly attributable cost of bringing the asset to
its working condition for its intended use, less
accumulated depreciation and impairment loss,
if any.

Depreciation is provided for property, plant, and
equipment on written down value basis to
expense the cost less residual value over their
estimated useful lives. The estimated useful
lives and residual values are reviewed at the end
of each reporting period. Useful life of assets
are as prescribed under Schedule II of the
Companies Act, 2013.

I) Foreign currency transactions and translations
Initial recognition and treatment of exchange
differences

Transactions in foreign currencies entered by the
Company are accounted at the exchange rates
prevailing on the date of the transaction or at
rates that closely approximate the rate at the date
of the transaction. They are re-translated at the
exchange rate prevailing at the Balance sheet
date. The unrealised gains or losses are
recognised as income or expense in the
Statement of Profit and Loss on restatement at
the end of reporting period.

J) Investments

The cost of an investment includes acquisition
charges such as brokerage, fees, and duties.

Any receivables from these investments are
recognised as income in the Statement of Profit
and Loss.

On disposal of an investment, the difference
between the carrying amount and the disposal
proceeds, net of expenses, is recognised in the
profit and loss statement.

K) Employee Benefits

The provisions of gratuity, provident fund and
employee state insurance do not apply to the
Company; hence no provision is made.

The company does not have the policy of
compensating absences and encashment of
leave.

L) Borrowing cost:

The borrowing costs that are directly attributable
to the acquisition, construction or production of
a qualifying asset are capitalised to the asset.

To the extent that funds are borrowed specifically
for the purpose of obtaining a qualifying asset,
the amount of borrowing costs eligible for
capitalisation on that asset is determined as the
actual borrowing costs incurred on that borrowing
during the period less any income on the
temporary investment of those borrowings.

In case of other borrowing costs, the interest is
recognised as expenses as per terms of the
borrowing, as and when they become payable and
on time proportionate basis.

M) Segment reporting
Business Segment:

A business segment is a distinguishable
component of an enterprise that is engaged in

providing an individual product or service or a
group of related products or services and that is
subject to risks and returns that are different from
those of other business segments.

The Company is engaged in only one single activity
of Production of films and sale of film rights.
Hence, there are no different business segments
to be reported separately.

Geographical Segment:

A geographical segment is a distinguishable
component of an enterprise that is engaged in
providing products or services within a particular
economic environment and that is subject to risks
and returns that are different from those of
components operating in other economic
environments.

The Company operates from only one
geographical/ economic environment and hence
there are no separate reportable segments.

N) Earnings per share

Basic earnings per share is computed by dividing
profit or loss attributable to equity shareholders
of the Company by the weighted average number
of equity shares outstanding during year. Diluted
EPS is computed by dividing profit or loss
attributable to equity shareholders by weighted
average number of additional equity shares that
would have been outstanding assuming
conversion of all dilutive potential equity shares.

O) Taxes on Income

Income tax expense comprises current tax
expense and the net change in the deferred tax
asset or liability during the year. Current and
deferred taxes are recognised in statement of
profit and loss.

Current Income Taxes

Current tax is the amount of tax payable on the
taxable income for the year as determined in
accordance with the provisions of the Income Tax
Act, 1961.

Deferred tax is recognised on timing differences,
being the differences between the taxable
income and the accounting income that originate
in one period and are capable of reversal in one
or more subsequent periods. Deferred tax is
measured using the tax rates and the tax laws
enacted or substantially enacted as at the
reporting date. Deferred tax liabilities are
recognised for all timing differences. Deferred
tax assets in respect of unabsorbed depreciation

and carry forward of losses are recognised only if
there is virtual certainty that there will be
sufficient future taxable income available to
realise such assets. Deferred tax assets are
recognised for timing differences of other items
only to the extent that reasonable certainty exists
that sufficient future taxable income will be
available against which these can be realised.
Deferred tax assets and liabilities are offset if
such items relate to taxes on income levied by
the same governing tax laws and the Company
has a legally enforceable right for such set off.
Deferred tax assets and liabilities are reviewed
at each Balance Sheet date for their realisability.

---

Mar 31, 2024

2. Significant Accounting Policies

A) Basis of preparation of Financial Statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2021 (as amended) and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

B) Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

C) Inventories

The inventories are valued at cost or NRV whichever is lower. The company holds work in progress of movie projects which are in the process of production. All the expenses incurred directly in connection to the specified movie is added to the cost of the inventory of the

corresponding movie till such date of sale or release.

D) Cash and Cash Equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are shortterm balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

E) Cash Flow Statement

''The statement of cash flows has been prepared under indirect method, whereby profit or loss is adjusted for the effects of transactions of a noncash nature, any deferrals. The cash flows from operating, investing and financing activities of the Company are segregated.

F) Revenue Recognition

Revenue from sale or licensing of film is recognized when:

a ) Persuasive evidence of a sale or licensing agreement with a customer exists and

b) Film is certified by authorities for release in case of own exhibition of films produced and

c) The film is complete and has been delivered or is available for immediate and unconditional delivery (in accordance with the terms of the arrangement) and

d) The customer can begin its exploitation, exhibition, or sale and

e) The fee is fixed or determinable and

f) Collection of the fee is reasonably assured. All other revenue, including but not limited to, the following, is recognised on the basis of sale or licensing agreements.

Nature of Income

(i) Revenue from Theatrical rights (Domestic & Overseas)

(ii) Revenue from Dubbing Rights (Domestic & Overseas)

(iii) Revenue from Satellite Rights (Domestic & Overseas)

(iv) Revenue from Music Rights (Domestic & Overseas)

(v) Revenue from Sale of Transfer of Rights (Domestic & Overseas)

(vi) Revenue from Sale of Digital Rights (Domestic & Overseas)

Other Income :

Interest on loans given is recognised as per the terms of agreement and accounted on time proportionate basis in the books of accounts. All other income is recognised based on the terms of contract with third parties and corresponding billings made.

Subsidies received from the Government are recognised in the profit & loss account where there are no conditions attached to the subsidy.

G) Costs and Expenses

Film costs include all direct costs incurred in the physical production of a film, such as the costs of story; compensation of cast, directors, producers, and extras; costs of set construction, operations, and wardrobe; costs of sound synchronization; costs of rental facilities on location; and postproduction costs (music, special effects, and editing). Production overhead consists of the costs of the individuals and departments that have a significant (or exclusive) responsibility for the production of the film. These costs do not include administrative and general expenses.

H) Property, Plant and Equipment

Property, plant and equipment are stated at cost comprising of purchase price, including nonrefundable taxes and duties and any initial directly attributable cost of bringing the asset to its working condition for its intended use, less accumulated depreciation and impairment loss, if any.

Depreciation is provided for property, plant, and equipment on written down value basis to expense the cost less residual value over their estimated useful lives. The estimated useful lives and residual values are reviewed at the end of each reporting period. Useful life of assets are as prescribed under Schedule II of the Companies Act, 2013.

I) Foreign currency transactions and translations

Initial recognition and treatment of exchange differences

Transactions in foreign currencies entered by the Company are accounted at the exchange rates

prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction. They are re-translated at the exchange rate prevailing at the Balance sheet date. The unrealised gains or losses are recognised as income or expense in the Statement of Profit and Loss on restatement at the end of reporting period.

J) Investments

The cost of an investment includes acquisition charges such as brokerage, fees, and duties.

Any receivables from these investments are recognised as income in the Statement of Profit and Loss.

On disposal of an investment, the difference between the carrying amount and the disposal proceeds, net of expenses, is recognised in the profit and loss statement.

K) Employee Benefits

The provisions of gratuity, provident fund and employee state insurance do not apply to the Company; hence no provision is made.

The company does not have the policy of compensating absences and encashment of leave.

L) Borrowing cost:

The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised to the asset. To the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation on that asset is determined as the actual borrowing costs incurred on that borrowing during the period less any income on the temporary investment of those borrowings.

In case of other borrowing costs, the interest is recognised as expenses as per terms of the borrowing, as and when they become payable and on time proportionate basis.

M) Segment reporting

Business Segment:

A business segment is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments.

The Company is engaged in only one single activity of Production of films and sale of film rights.

Hence, there are no different business segments to be reported separately.

Geographical Segment:

A geographical segment is a distinguishable component of an enterprise that is engaged in providing products or services within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments.

The Company operates from only one geographical/ economic environment and hence there are no separate reportable segments.

N) Earnings per share

Basic earnings per share is computed by dividing profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during year. Diluted EPS is computed by dividing profit or loss attributable to equity shareholders by weighted average number of additional equity shares that would have been outstanding assuming conversion of all dilutive potential equity shares.

O) Taxes on Income

Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred taxes are recognised in statement of profit and loss.

Current Income Taxes

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised.

Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets and liabilities are reviewed at each Balance Sheet date for their realisability.

---

Mar 31, 2023

2. Significant Accounting Policies

A) Basis of preparation of Financial Statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2021 (as amended) and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

B) Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

C) Inventories

The inventories are valued at cost or NRV whichever is lower. The company holds work in progress of movie projects which are in the process of production. All the expenses incurred

directly in connection to the specified movie is added to the cost of the inventory of the corresponding movie till such date of sale or release.

D) Cash and Cash Equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are shortterm balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

E) Cash Flow Statement

''The statement of cash flows has been prepared under indirect method, whereby profit or loss is adjusted for the effects of transactions of a noncash nature, any deferrals. The cash flows from operating, investing and financing activities of the Company are segregated.

F) Revenue Recognition

Revenue from sale or licensing of film is recognized when:

a) Persuasive evidence of a sale or licensing agreement with a customer exists and

b) Film is certified by authorities for release in case of own exhibition of films produced and

c) The film is complete and has been delivered or is available for immediate and unconditional delivery (in accordance with the terms of the arrangement) and

d) The customer can begin its exploitation, exhibition, or sale and

e) The fee is fixed or determinable and

f) Collection of the fee is reasonably assured.

All other revenue, including but not limited to, the following, is recognised on the basis of sale or licensing agreements. Nature of Income

(i) Revenue from Theatrical rights (Domestic & Overseas)

(ii) Revenue from Dubbing Rights (Domestic & Overseas)

Other income:

Interest on loans given is recognised as per the terms of agreement and accounted on time proportionate basis in the books of accounts. All other income is recognised based on the terms of contract with third parties and corresponding billings made.

Subsidies received from the Government are recognised in the profit & loss account where there are no conditions attached to the subsidy.

A) Costs and Expenses

Film costs include all direct costs incurred in the physical production of a film, such as the costs of story; compensation of cast, directors, producers, and extras; costs of set construction, operations, and wardrobe; costs of sound synchronization; costs of rental facilities on location; and postproduction costs (music, special effects, and editing).

Production overhead consists of the costs of the individuals and departments that have a significant (or exclusive) responsibility for the production of the film. These costs do not include administrative and general expenses.

B) Property, Plant and Equipment

Property, plant and equipment are stated at cost comprising of purchase price, including nonrefundable taxes and duties and any initial directly attributable cost of bringing the asset to its working condition for its intended use, less accumulated depreciation and impairment loss, if any.

Depreciation is provided for property, plant, and equipment on written down value basis to expense the cost less residual value over their estimated useful lives. The estimated useful lives and residual values are reviewed at the end of each reporting period. Useful life of assets are as prescribed under Schedule II of the Companies Act, 2013.

C) Foreign currency transactions and translations Initial recognition and treatment of exchange differences

Transactions in foreign currencies entered by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction. They are re-translated at the exchange rate prevailing at the Balance sheet date. The unrealised gains or losses are recognised as income or expense in the Statement of Profit and Loss on restatement at the end of reporting period.

D) Investments

The cost of an investment includes acquisition charges such as brokerage, fees, and duties.

Any receivables from these investments are recognised as income in the Statement of Profit and Loss.

On disposal of an investment, the difference between the carrying amount and the disposal proceeds, net of expenses, is recognised in the profit and loss statement.

E) Employee Benefits

The provisions of gratuity, provident fund and employee state insurance do not apply to the Company; hence no provision is made.

The company does not have the policy of compensating absences and encashment of leave.

F) Borrowing cost:

The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised to the asset.

To the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation on that asset is determined as the actual borrowing costs incurred on that borrowing during the period less any income on the temporary investment of those borrowings.

In case of other borrowing costs, the interest is recognised as expenses as per terms of the borrowing, as and when they become payable and on time proportionate basis.

G) Segment reporting Business Segment:

A business segment is a distinguishable component of an enterprise that is engaged in

providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments.

The Company is engaged in only one single activity of Production of films and sale of film rights. Hence, there are no different business segments to be reported separately.

Geographical Segment:

A geographical segment is a distinguishable component of an enterprise that is engaged in providing products or services within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments.

The Company operates from only one geographical/ economic environment and hence there are no separate reportable segments.

H) Earnings per share

Basic earnings per share is computed by dividing profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during year. Diluted EPS is computed by dividing profit or loss attributable to equity shareholders by weighted average number of additional equity shares that would have been outstanding assuming conversion of all dilutive potential equity shares.

I) Taxes on Income

Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred taxes are recognised in statement of profit and loss.

Current Income Taxes

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation

and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets and liabilities are reviewed at each Balance Sheet date for their realisability.