3. Material Accounting Policies:
a. Basis of Accounting and Preparation of Financial Statements:
The Financial Statements have been prepared on historical cost convention on a going concern basis except for certain financial instruments (Refer Note 3 h - Accounting Policy for Financial Instruments) and defined benefit plan assets which are measured at fair value.
Covid:
World Health Organisation declared COVID-19 as a global pandemic on 11 March 2020. It spread across globally and many countries implemented lockdown. In our country, on 24 March 2020, the Government of India announced a 21 days lockdown initially, considering the severe health hazard associated with COVID-19 pandemic, the lockdown was extended continuously at various times across the country to contain the spread of the virus. There was high level of uncertainty about the duration of the lockdown and the time required to return to normalcy. Due to this extra ordinary situation, Company operations were halted and have resumed operations as per directives of the State and Central Government guidelines. Due to the unprecedented pandemic, Company was not in a position to ascertain its financial impact in entirety because of its associated uncertainties in nature and its duration. The direct impact could not be assessed in financial terms. Nevertheless, there were some identifiable causes such as drastic drop in revenue, severe cash flow issues, inherent covid protocol expenses activity, delay in decision on content approval, unavoidable accruing fixed cost expenses apart from the exclusion of the Company policy with respect to impairment test for the investment made in the Subsidiary company in Singapore. Company continues to closely monitor any material changes and impact of the future economic conditions though the identified impact, relief package, moratorium and restructure for repayment of installment and interest extended by bank were duly recorded. Though WHO had declared pandemic was over on 5th May, 2023, company has to overcome from this impact.
b. Property, Plant and Equipments:
1. Property, Plant and Equipments are stated at cost less depreciation.
2. Intangible Assets are valued at cost less accumulated amortisation and impairment losses if any, and are amortised over their estimated useful life based on a straight-line method.
3. Capital Work In Progress: Capital work in progress includes cost of UDS land and for property construction including interest on borrowed funds for the property, plant and equipment under installation & under development including related expenses and attributable interest as at the reporting date.
4. Lease arrangement and Right to use Assets are recognised and amortised over the lease term.
c. Depreciation / Amortization:
1. Depreciation on Fixed Assets provided based on useful life of the assets in accordance with requirement of Part C of Schedule II of Companies Act, 2013.
2. Brand Equity, Goodwill and Software Library depreciated over a period of their effective life as determined by the management not exceeding ten years from the date of acquisition.
3.Intangible assets in the nature of copyrights etc., are amortized over a period of 5 years.
4.Leases are accounted in accordance with accounting standard Ind AS 116 for Right to Use and Lease Liability.
5.Improvements effected on premises taken on lease amortized over remaining period of lease.
6. Cost of Tele-Serials / Tele-Films / Events / Game shows / Contents of any nature not having any repeat telecast value and other future exploitation benefits are written off in full in the year of telecast or exploitation or completion of the obligation.
7. Cost of Tele-Serials / Web-series / Tele-Films / Events / Game shows / contents will be absorbed in full other than those in the nature of having repeat telecast value and other future exploitation benefits and in respect of which the company holds right of exploitation - 80% of the cost is written off in the year of telecast and balance 20% is written off equally over the next two years calculated based on absorption method.
8. Cost of film production:
In the case of exploitation rights assigned on an Outright / Minimum Guarantee basis:- Entire expenditure incurred for production of the film is charged to the profit & loss account.
In the case of exploitation rights held for own release or assigned on distribution basis or with a combination of outright, minimum guarantee and distribution basis:- Expenditure incurred for the production of the film is charged to profit & loss account equally over the period of 3 financial years commencing from the date of release of the film(s).
d. Inventories / Value of Unsold FCTs and Work-in-progress (Inventories):
Contents including work-in-progress at various stages is calculated based on absorption method valued at cost or market price whichever is less and unsold free commercial times banked on programs telecasted are valued at cost.
e. Cash Flow Statement:
Cash flows are presented using indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of noncash nature and any deferrals or accruals of past or future cash receipts or payments.
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances with original maturity of less than 3 months, highly liquid investments that are readily convertible into cash. Bank borrowings generally considered to be financing activities.
f. Revenue Recognition:
Television content:
Income from Tele-Serials / Web series / Tele-Films / Game shows / Events / contents of any nature is recognised on accrual basis as per the terms of the Agreement entered into for telecasting / exploitation / completion of the obligation.
• In case of Domestic telecast, Revenue is recognised with respect to the concerned program.
• In case of overseas telecast, Revenue is recognised at the point, when the contents are delivered.
• In the case of digital upload contents, Revenue is recognised on receipt of such exploitation.
Film - own production:
• In the case of outright / minimum guarantee assignment:
- Income is recognised on accrual basis as per terms of agreement entered into for release / exploitation.
• In the case of own exploitation / Distribution assignment:
- Income is recognised on receipt basis during the period of receipt.
Film - Distribution:
Distribution margin income is recognized on accrual basis as per terms of agreement entered into for release / exploitation.
g. Foreign Currency Transactions:
Transactions pertaining to income and expenditure are accounted at the rate prevailing on the date of transaction. Outstanding balances of Current Assets and Current Liabilities relating to Foreign Currency transactions are restated in rupees by adopting the rate of exchange prevailing on the date of Balance Sheet and the resultant exchange gain / loss is recognized / written off in the Profit & Loss Account accordingly.
h. Financial Instruments:
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets and liabilities are offset and the net amount is presented in the Balance sheet when and only when the Company has a legal right to offset the recognised amounts and intends either to settle on a net basis or to realise the assets and settle the liabilities simultaneously.
The Company initially determines the classification of financial assets and liabilities. After initial recognition, no re-classification is made for financial assets which are categorised as equity instruments at FVTOCI (Fair value through other comprehensive income) and financial assets / liabilities that are specifically designated as FVTPL (Fair value through profit or loss). However, other financial assets are re-classifiable when there is a change in the business model of the Company. When the Company reclassifies the financial assets, such reclassifications are done prospectively from the first day of the immediately next reporting period. The Company does not restate any previously recognised gains, losses including impairment gains or losses or interest.
Financial Assets
Financial assets comprises of investments in equity and mutual funds, trade receivables, cash and cash equivalents and other financial assets.
Depending on the business model (i.e) nature of transactions for managing those financial assets and its contractual cash flow characteristics, the financial assets are initially measured at fair value and subsequently measured and classified at: a) Amortised cost; or b) Fair value through other comprehensive income (FVTOCI); or c) Fair value through profit or loss (FVTPL). Amortised cost represents carrying amount on initial recognition at fair value plus or minus transaction cost.
The Company has evaluated the facts and circumstances on date of transition to Ind AS for the purpose of classification and measurement of financial assets. Accordingly, financial assets are measured at FVTPL except for those financial assets whose contractual terms give rise to cash flows on specified dates that represents solely payments of principal and interest thereon, are measured as detailed below depending on the business model:
Financial liabilities are derecognised when and only when it is extinguished (i.e) when the obligation specified in the contract is discharged or cancelled or expired.
Upon derecognition of its financial liabilities or part thereof, the difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid including any non-cash assets transferred or liabilities assumed is recognised in the Statement of Profit and Loss.
F air value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value of an asset or a liability is measured using the assumptions that the market participants would use when pricing the asset or liability, assuming that the market participants act in the economic best interest.
All assets and liabilities for which fair value is measured are disclosed in the financial statements are categorised within fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole as described in the following manner: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities, Level 2: Valuation techniques for which the lowest level inputs that are significant to the fair value measurement are directly or indirectly observable, Level 3: Valuation techniques for which the lowest level inputs that are significant to the fair value measurement are unobservable.
For assets and liabilities that are recognized in the Balance sheet on a recurring basis, the company determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation at the end of each reporting period (i.e) based on the lowest level input that is significant to the fair value measurement as a whole.
For the purpose of fair value disclosures, the company has determined the classes of assets and liabilities based on the nature, characteristics and risks of the assets or liabilities and the level of the fair value hierarchy as explained above.
The basis for fair value determination for measurement and / or disclosure purposes is detailed below:
Investments in Equity:
The fair value is determined by reference to their quoted prices at the reporting date. In the absence of the quoted price, the fair value of the equity is measured using valuation techniques.
Trade and other receivables:
The fair value is estimated as the present value of the future cash flows, discounted at the market rate of interest at the reporting date. However, the fair value generally approximates the carrying amount due to the short term nature of such assets.
However, the policy is excluded during the period due to pandemic situation as stated in 3 (a) under the head Covid.
i. Employee Benefits
Short-term employee benefits viz., Salaries and Wages are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related service is rendered.
Defined Contribution Plan viz., Contributions to Provident Fund and Superannuation Fund are recognized as an expense in the Statement of Profit and Loss for the year in which the employees have rendered services.
The Company contributes monthly to Employees’ Provident Fund & Employees’ Pension Fund administered by the Employees’ Provident Fund Organisation, Government of India, at applicable rate on the employee’s basic salary. The Company has no further obligations. The Company has its own Defined Benefit Plan viz., an approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement, death while in employment or on termination of employment, for an amount equivalent to 15 days basic salary for each completed year of service. Vesting occurs upon completion of five years of continuous service. The Company makes annual contributions to “Radaan Mediaworks India Limited Employees Group Gratuity Assurance Scheme” administered by trustees and managed by LIC of India and report its status.
The Company has formalized the existing rules for leave encashment under a scheme administered by Life Insurance Corporation of India for Group Leave Encashment Assurance Scheme for the benefit of employees. The contributions will be made annually based on leave credit available to the employees at the end of each financial year.
Remeasurement of net defined benefit asset / liability comprising of actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions are charged / credited to other comprehensive income in the period in which they arise and immediately transferred to retained earnings. Other costs are accounted in the Statement of Profit and Loss.
j. Earnings Per Share:
The Company reports Basic and Diluted Earnings per Share (EPS). The Basic / Diluted EPS has been computed by dividing the income available to equity shareholders by the weighted average number of equity shares (including Bonus Shares, if any) during the accounting period.
k. Accounting for Taxes on Income:
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates, the provisions of the Income tax Act, 1961 and other applicable tax laws.
Minimum Alternate T ax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future tax liability, is recognized as an asset viz. MAT Credit Entitlement, to the extent there is convincing evidence that the Company will pay normal Income tax and it is highly probable that future economic benefits associated with it will flow to the Company during the specified period. The Company reviews the “MAT Credit Entitlement” at each Balance Sheet date and writes down the carrying amount of the same to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income tax during the specified period.
Current tax assets and liabilities are offset, when the Company has legally enforceable right to set off the recognized amounts and intends to settle the asset and the liability on a net basis.
Deferred tax is recognized using the balance sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting at the reporting date.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year where the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by same governing tax laws and the Company has legally enforceable right to set off current tax assets against current tax liabilities.
Both current tax and deferred tax relating to items recognized outside the Profit or Loss is recognized either in “Other Comprehensive Income” or directly in “Equity” as the case may be.
l. Impairment of Non-financial Assets
The carrying values of assets include property, plant and equipment, investment properties, cash generating units and intangible assets are reviewed for impairment at each Balance Sheet date, if there is any indication of impairment based on internal and external factors.
Non-financial assets are treated as impaired when the carrying amount of such asset exceeds its recoverable value. After recognition of impairment loss, the depreciation for the said assets is provided for remaining useful life based on the revised carrying amount, less its residual value if any, on straight line basis.
An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. An impairment loss is reversed when there is an indication that the impairment loss may no longer exist or may have decreased.
However, the policy is excluded during the period due to pandemic situation as stated in 3 (a) under the head Covid.
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