(iv) Terms and rights attached to equity shares
The Company has only one class of equity shares having a par value of ' 2 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 the shareholders in ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation of the Company, the shareholders will be eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion to their shareholding.
(v) During the five years immediately preceding March 31,2024, no shares were bought back and no shares were issued for consideration other than cash nor as bonus shares.
(vi) Shares reserved for Issue under options
Information relating to Balaji Telefilms Employee Stock Option Scheme, including details of option issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting period, is set out in Note 50.
Nature and purpose of reserves :
A. General Reserve: General reserve is created out of transfer from retained earnings and is a free reserve.
B. Securities Premium Account: Securities Premium is created to record the premium on issue of shares. The reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
C. Capital Reserve: Capital Reserve, being consideration over net assets taken over, recognized as per the scheme of arrangement sanctioned by National Company Law Tribunal in earlier years.
D. Share options outstanding reserve: The share options outstanding reserve account is used to recognize the grant date fair value of option issued to employees under Schemes - Balaji Telefilms ESOP, 2017 and Balaji Telefilms ESOP 2023.
(i) Cash Credit Facilities from Axis Bank repayable on demand at Interest rate of 6.5% Repo 3% = Presently at 9.5% p.a. In current year, Cash credit is primarily secured against current assets of the Company both Present and Future, and Collateral charge by way of mortgage of Company’s Premises at Killfire, Andheri (West), Mumbai - 400053. (In previous year Cash credit was Primarily Secured against current assets of the Company both Present and Future, and Collateral charge by way of mortgage of Company’s Premises at Killfire, Andheri (West), Mumbai - 400053 and Fixed Deposits of ' 1,011 Lacs with Axis Bank)
(ii) Loan from Related parties is secured against Net receivable of a Film. (In previous year Theatrical distribution rights of a Film)
Management expects that transaction price allocated to the unsatisfied contracts as on March 31,2024'12,018 Lacs will be recognized as revenue during the next reporting period and balance ' 2,045 Lacs in subsequent periods. The amount disclosed above does not include variable consideration which is constrained. All other contracts are for periods of one year or less.
The Revenue recognized is equivalent to the contract price and there is no element of discount, rebates, incentives, etc. which are adjusted to revenue.
(!) In an earlier year, the Company has received a Show Cause Notice (SCN) from the Service Tax Department for the period April 2008 to March 2010, amounting to ' 2,943 Lacs, related to exports made to one of its customers. In a similar case involving the Company for the earlier period of April 2006 to March 2008, the Service Tax Department adjudicated in the Company’s favor and dropped the demand of ' 6,348 Lacs. The Department filed an appeal against this decision with the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), which was dismissed by the Hon’ble CESTAT in their order dated March 9, 2016. Subsequently, the Department filed an appeal against this order with the High Court on October 19, 2016, which is currently pending adjudication.
(2) In the Assessment Years 2010-11 and 2011-12, the Income Tax Department raised a demand on the grounds that the Company had short-deducted TDS on Telecasting fees amounting to ' 218.08 Lacs. The Company contested this assessment order, and the Hon’ble Mumbai Income Tax Appellate Tribunal (ITAT) dismissed the order. The Income Tax Department subsequently filed an appeal against the ITAT’s order in the Hon’ble High Court of Judicature at Bombay in February 2018, and the hearing is yet to take place as the appeal is still in the pre-admission stage.
With respect to Income Tax matters, a search was conducted on the Company’s premises on 30 April 2013. Following this search, block assessments under section 153A of the Income-tax Act, 1961 (Act) were conducted for the Assessment Years 2007-08 to 2012-13. The Company did not appeal against the additions made in the assessment orders for these years. However, penalties were levied for these assessment years, which the Company challenged before the Income-tax Appellate Tribunal-Mumbai (ITAT). The Company accounted for the penalty amount as an exceptional item in the financial statements for the year ended March 31,2018.
Subsequently, the ITAT deleted the penalties levied, and the Income Tax Department refunded the penalties amounting to '1,044.44 Lacs along with interest of '138.33 Lacs under the Act to the Company. This was disclosed as an exceptional item in the financial statements for the year ended March 31,2021.
Following this, the Income Tax Department preferred an appeal before the Hon’ble High Court (HC) Bombay challenging the deletion of the penalties by the ITAT. This appeal is still in the pre-admission stage.
42 The Company has investments in subsidiaries namely Balaji Motion Pictures Limited (BMPL), ALT Digital Media Entertainment Limited (ALT), Marinating Films Private Limited (MFPL) and Ding Infinity Private Limited (DING) aggregating to ' 82,020.62 Lacs (Previous year ' 81,936.78 Lacs).
Further, the Company has receivables on account of loans (including accrued interest) of ' 832.29 Lacs from BMPL (Previous year ' 617.98 Lacs) and ' 10,297.20 Lacs from ALT (Previous year ' 309.08 Lacs). As per the latest audited balance sheet of BMPL for the year ended March 31, 2024, the accumulated losses have fully eroded the net-worth of the Company and as per the latest audited balance sheet of ALT and MFPL the net worth is partially eroded as at March 31, 2024. DING has been incurring continuous losses since aquisition. However, basis the management evaluation there is no requirement of impairment provision of its investments in and loans to such subsidiaries, as the carrying amount of the investments does not exceed its recoverable amount.
Recoverable amounts for BMPL, ALT, MFPL and DING has been determined with the assistance of external valuation expert. The Company is committed to provide financial support to BMPL, ALT, MFPL and DING for a period of at least 12 months from the date of signature of these financial statements, in case if assistance is needed.
For Chhayabani Balaji Entertainment Private Limited, in the financial year 2019-20, Company had taken an impairment charge of ' 240.70 Lacs. Based on the approvals of Company’s Board of Directors, Chhayabani Balaji Entertainment Private Limited has filed for liquidation on October 22, 2020. Further, as per disolution order dated April 1 1, 2022 Chhayabani Balaji Entertainment Private Limited has ceased to be a Company effective this date.
During the Financial year ended March 31, 2024, the Company considered indicators of impairment for investments in subsidiaries held either directly or indirectly, such as declines in operational performance or changes in the outlook of future profitability or weaker market conditions, among other potential indicators. The Company estimated the recoverable amount based on the value in use of the underlying businesses. The computation uses cash flow forecasts based on the most recent financial budgets and strategic forecasts
which covers future projections taking the analysis into perpetuity. Key assumptions for the value in use computations are those regarding the discount rates, growth rates, market demand, expected changes to selling prices and costs. Changes in revenue, costs and demand are based on historical experience and expectations of future changes in the market.
For detailed assessment on ALT refer note 57.
(i) There are no provision for doubtful debts, amounts written off or written back during the year in respect of debts due from or due to related parties.
(ii) Figures in bracket relate to the previous financial year.
(iii) The Company provides long term benefits in the form of gratuity and leave encashment to its key managerial person along with all employees, cost of the same is not identifiable separately and hence not disclosed.
(iv) Includes amount cross charged to subsidiary.
45 EMPLOYEE BENEFITSa) Defined Contribution Plans
Both the employees and the Company make pre-determined contributions to the provident fund. Amount recognized as expense amounts to ' 59.94 Lacs (Previous Year ' 56.12 Lacs)
b) Defined Benefit Plans Gratuity
The Company operates a gratuity plan covering qualifying employees. The benefit payable is as per the Payment of Gratuity Act, 1972. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company makes annual contribution to the group gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund.
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the Balance sheet.
The methods and types of assumptions used in preparing the sensitivity analyses did not change compared to previous period.
The Company expects to contribute ' 39.14 Lacs to the gratuity fund during the next financial year. (Previous Year ' 54.22 Lacs)
The expected rate of return on plan assets is based on the average long term rate of return expected on investments of the fund during the estimated term of obligation.
The estimate of future salary increases, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Risk Exposure
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:
Interest rate risk: A fall in the discount rate which is linked to the Government Securities will increase the present value of the liability requiring higher provision.
Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan’s liability.
Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.
Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk. Mortality Risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.
c) Other Long term employee benefits:
The liability towards non-funded compensated absences (privilege leave) for the year ended March 31, 2024 based on actuarial valuation carried out by using Projected Unit Credit Method resulted in increase in liability by ' 10.36 Lacs. (Previous Year Nil)
As at the year-end, the stock options granted under Tranche I and Tranche II of Balaji Telefilms ESOP Scheme 2023 as referred in Note 50 are dilutive in nature and accordingly diluted earning per share is calculated.
47 SEGMENT INFORMATION
The Company has presented data relating to its segments in its Consolidated Financial Statements. Accordingly, in terms of paragraph 4 of the Indian Accounting Standard (Ind AS 108) "Operating Segments", no disclosure related to its segments are presented in the Standalone Financial Statements.
49 The Company has advances / receivable from one of its co-producers and a film director (the "Parties"), amounting to ' 1,619 Lacs which are subject to litigation as at March 31,2024. On the basis of the evaluation carried out by the management of the matter under litigation, in consultation with the legal counsel, and the management assessment of the ability of the Parties to settle, the amounts are considered good and fully recoverable.
50 SHARE BASED PAYMENTS
The Nomination and Remuneration Committee ("NRC") of the Board of Directors of the Company has formulated the Balaji Telefilms ESOP 2017 ("the ESOP Scheme 1") to grant Stock Options to eligible employees of the Company and its subsidiaries. The ESOP Scheme has been adopted by the NRC by a Resolution passed at its meeting held on February 13, 2018 pursuant to the enabling authority granted under resolution passed by the members of the Company by way of Postal Ballot or electronic voting held on December 30, 2017. ESOP Scheme has been formulated in accordance with the provisions of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 ("the SEBI Regulations"), as amended.
The NRC, vide a resolution passed at its meeting held on May 19, 2018, and June 20, 2018 has granted Options, 1,663,734 Options on May 19, 2018 and 2,125,239 Options on June 20, 2018 to the eligible employees of the Company and its subsidiaries (as per terms decided by the NRC).
The Options granted would vest over a period of 3 years (Refer Tables 1 and 2 below). Once vested, the option remain exercisable for the period of 3 years from the last vesting date
The NRC, vide a resolution passed at its meeting held on January 08, 2021, granted additional 14,00,000 Employee Stock Options to the eligible employees of the Company. Each option when exercised would be converted into one equity share of ' 2/- each, fully paid up, of the Company. The resolution passed by NRC on January 08, 2021 included a variation in terms of the Scheme. The variation was that all the options granted under the aforesaid grant would vest after completion of 12 months from date of grant. Once vested, the option remain exercisable for the period of 3 years from the last vesting date. (Refer Table 3 below)
Furthermore, Additional Options were granted during F.Y. 2021-22 and 2022-23 at the NRC’s meetings held as follows:
On June 18, 2021, granted 3,00,000 Employee Stock Options to the eligible employee of the Company. Each option when exercised would be converted into one equity share of ' 2/- each, fully paid up, of the Company. The Options granted would vest over a period of 3 years (Refer Table 4 below). Once vested, the option remain exercisable for the period of 3 years from the last vesting date.
On August 10, 2021, granted 18,00,000 Employee Stock Options to the eligible employees of the Company. Each option when exercised would be converted into one equity share of ' 2/- each, fully paid up, of the Company. Out of 18,00,000 Options granted, 12,00,000 Options grant would vest after completion of 12 months from date of grant and balance 6,00,000 would vest over a period of 3 years (Refer Tables 5 and 6 below). Once vested, the option remain exercisable for the period of 3 years from the last vesting date.
On February 11,2022, granted 2,50,000 Employee Stock Options to the eligible employees of the subsidiary Company. Each option when exercised would be converted into one equity share of ' 2/- each, fully paid up, of the Company. The Options granted would vest after completion of 12 months from date of grant. Once vested, the option remain exercisable for the period of 3 years from the last vesting date. (Refer Table 7 below)
On July 15, 2022, granted 10,00,000 Employee Stock Options to the eligible employees of the Company. Each option when exercised would be converted into one equity share of ' 2/- each, fully paid up, of the Company. The Options granted would vest over a period of 3 years (Refer Table 8 below). Once vested, the option remain exercisable for the period of 3 years from the last vesting date.
On August 30, 2022, granted 18,00,000 Employee Stock Options to the eligible employees of the Company. Each option when exercised would be converted into one equity share of ' 2/- each, fully paid up, of the Company. The Options granted would vest over a period of 3 years (Refer Table 9 below). Once vested, the option remain exercisable for the period of 3 years from the last vesting date.
The Nomination and Remuneration Committee ("NRC") of the Board of Directors of the Company has formulated the Balaji Telefilms ESOR 2023 ("the ESOP Scheme 2") to grant Stock Options in the form of Options to the eligible employees of the Company and its subsidiaries. The ESOP Scheme has been adopted by the NRC by a Resolution passed at its meeting held on February 14, 2023 pursuant to the enabling authority granted under resolution passed by the members of the Company by way of Postal Ballot or electronic voting held on March 29, 2023 respectively. ESOP Scheme has been formulated in accordance with the provisions of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 ("the SEBI Regulations"), as amended.
Options were granted during 2023-24 at the NRC’s meetings held as follows:
On November 09, 2023, granted 21,14,552 Employee Stock Options under Balaji Telefilms ESOP scheme, 2023 to the eligible employees of the Company. Each option when exercised would be converted into one equity share of ' 2/- each, fully paid up, of the Company. The Options granted would vest after completion of 12 months (Refer Table 10 below). Once vested, the option remain exercisable for the period of 3 years from the last vesting date.
On February 9, 2024, granted 2,50,000 Employee Stock Options under Balaji Telefilms ESOP scheme, 2023 to the eligible employees of the Company. Each option when exercised would be converted into one equity share of ' 2/- each, fully paid up, of the Company. The Options granted would vest after completion of 12 months (Refer Table 11 below). Once vested, the option remain exercisable for the period of 3 years from the last vesting date.
When exercisable, each option is convertible into one equity share. The exercise price of the options is based on the stock exchange last closing market price after deducting 25% discount as determined by the Members of Nomination and Remuneration Committee.
During the year ended March 31, 2024 the Company recorded an employee compensation expense of ' 22.80 Lacs (previous year write back of ' 46.22 Lacs) in the statement of profit and loss. (Refer summary of options granted given below).
Certain employees of the Subsidiaries are allotted employee stock options of the Company. The Company does not charge any cost for this benefit, Accordingly, fair value of the award granted to subsidiary's employees is recognized over the vesting period; and the same is treated as a capital contribution to the subsidiary. Accordingly, ' 891.62 Lacs (previous year : ' 807.79 Lacs) was added to the cost of the investments as a capital contribution at the year end.
During the year ended March 31,2024 an employee has excercised 3,98,525 options (2,76,303 options from Tranche 1 and 1,22,222 options from Tranche 2) provided under Balaji ESOP scheme, 2017.
* The fair value at grant date is determined using the Binomial Tree 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 the risk free interest rate for the term of the option.
The model inputs for options granted under ESOP Scheme, 2017 during the year ended March 31, 2023,
March 31,2022, March 31,2021 and March 31,2019 includes:
a) Options are granted for no consideration and vest upon completion of service for a period of one to three years from the date of grant. Vested options are exercisable for a period of three years after last vesting date.
b) Exercise price as given in the table above for each grant.
c) Grant date as per the table above for each grant.
d) Expiry date as per the table above for each grant.
e) Share price at grant date: '119.80 (Tranche 1), ' 123.45 (Tranche 2) and ' 69.65 (Tranche 3), ' 87.10 (Tranche 6), ' 42.50 (Tranche 7) and ' 50.80 (Tranche 8)
f) Expected price volatility of the Company’s shares: 46.05% (Tranche 1), 45.87% (Tranche 2), 42.59% (Tranche 3), 43.16% (Tranche 6), 43.41% (Tranche 7) and 43.90% (Tranche 8)
g) Expected dividend yield: 0.91% (Tranche 1 and 2), 0.67% (Tranche 3), 0.62% (Tranche 6), 0.62% (Tranche 7)and 0.62% (Tranche 8)
h) Risk-free interest rate: 7.92% (Tranche 1), 8.05% (Tranche 2), 4.92% (Tranche 3), 5.70% (Tranche 6), 7.25% (Tranche 7) and 7.04% (Tranche 8)
The model inputs for options granted under ESOP Scheme, 2023 during the year ended March 31, 2024 includes:
a) Options are granted for no consideration and vest upon completion of service for a period of one year from the date of grant. Vested options are exercisable for a period of three years after last vesting date.
b) Exercise price as given in the table above for each grant.
c) Grant date as given in the table above for each grant.
d) Expiry date as given in the table above for each grant.
e) Share price at grant date: ' 73.70 (Tranche I) and ' 128.40 (Tranche II)
f) Expected price volatility of the Company’s shares: 45.60% (Tranche I) and 47.64% (Tranche II)
g) Expected dividend yield: 0.52% (Tranche I) and 0.52% (Tranche II)
h) Risk-free interest rate: 7.38% (Tranche I) and 7.24% (Tranche II)
The expected price volatility is based on the historic volatility (based on the remaining life of the options). 51 FAIR VALUE MEASUREMENTS
'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 in the principal or, in its absence, the most advantageous market to which the Company has access at that date. The fair value of a liability reflects its non-performance risk. The best evidence of the fair value of a financial instrument on initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received.
(i) Fair Value hierarchy
This section explains the judgements and estimates made in determining the fair value of the financial instruments that are (a) recognized and measured fair value and (b) measured at amortized cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
The fair value of financial instruments as referred to in note above have been classified into three categories depending on the inputs used in valuation technique. The hierarchy gives highest priority to quoted prices in active market for identical assets or liabilities (Level 1 measurement) and lowest priority to unobservable inputs (Level 3 measurement). The categories used are as follows:
Level-1 Hierarchy includes financial instruments measured using quoted price. Mutual funds are valued at the closing NAV.
Level-2 The fair value of financial instruments that are not traded in an active market is determined using valuation technique which maximise the use of observable market data and rely as little as possible on entity -specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level-2.
Level -3 If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
(ii) Valuation technique used to determine fair value
Specific valuation technique used to value financial instruments include:
1) The mutual funds are valued using closing NAV available in the market.
The carrying value of current trade receivables, cash and cash equivalents, current loans, other current financial assets, short term borrowings, trade payables and other current financial liabilities are considered to be the same as their fair values due to their short term nature. The fair value of noncurrent financial asset is not materially different than its carrying value.
52 FINANCIAL RISK MANAGEMENT Risk management framework
The Company’s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company’s primary risk management focus is to minimize potential adverse effects of market risk on its financial performance. The Company’s risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Board of Directors and the management is responsible for overseeing the Company’s risk assessment and management policies and processes.
(A) Credit Risk
Credit risk arises when a counterparty defaults on its contractual obligations to pay resulting in financial loss to the Company. The Company deals with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Company uses publicly available financial information and its own trading records to rate its major customers. The Company’s exposure and credit ratings of its counterparties are regularly monitored and the aggregate value of transactions concluded is spread amongst counterparties. (i) Credit Risk Management
Financial instruments and cash deposits
The Company maintains exposure in cash and cash equivalents, term deposits with banks and investments in mutual funds. The Company has diversified portfolio of investment with various number of counter-parties which have good credit ratings and hence the risk is reduced. The credit worthiness
of such banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be good. As a practice, the Company only invests with high rated banks/institutions. The Company’s maximum exposure to credit risk as at March 31, 2024 and March 31, 2023 is the carrying value of each class of financial assets as disclosed in note 51.
Security deposits given to lessors
The Company has given security deposit to lessors for premises leased by it as at March 31,2024 and March 31,2023. The credit worthiness of such lessors is evaluated by the management on an ongoing basis and is considered to be good.
Trade receivables, unbilled revenue and contract assets
To measure the expected credit losses, trade receivables, unbilled revenue and contract assets have been grouped based on shared credit risk characteristics and the days past dues. The Contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Company has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rate for the unbilled revenue and contract assets.
Trade receivables, unbilled revenue and contract assets are typically unsecured and are derived from revenue earned from customers. Credit risk has been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses.
The Company measures the expected credit loss of trade receivables, unbilled revenue, contract assets and other financial assets which are subject to credit risk, based on historical trend, industry practices and the business environment in which the entity operates and adjusted for forward looking information. Loss rates are based on actual credit loss experience and past trends.
The Company has used practical expedient by computing the expected credit loss allowance for trade receivables based on provision matrix. The provision matrix has taken into account historical credit loss experience and adjusted to reflect current and forward looking information. The expected credit loss allowance is based on ageing of the days the receivables are due.
The following table summarizes the Gross carrying amount of the financial assets and provision made:
There is no Provision or reversal of provsion made for the receivables and loans for year ended March 31,2024 and March 31,2023.
Of the Trade Receivables balance as at March 31,2024 of '12,562.27. Lacs (as at March 31,2023 of '22,318.72 Lacs), the top 3 customers of the Company represent the balance of' 9,015.79 Lacs as at March 31,2024 ( as at March 31,2023 of ' 17,206.06 Lacs).
No significant changes in estimation techniques or assumptions were made during the reporting period.
(B) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The responsibility for liquidity risk management rests with the Board of directors, which has an appropriate liquidity risk management framework for the management of the Company’s short-, medium-and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities by regularly monitoring forecast and actual cash flows.
(C ) Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk such as equity price risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
(a) Foreign currency risk exposure:
The Company does not have any exposure to foreign currency risk as at March 31, 2024 (Previous year Nil).
(c) Price risk (i) Exposure
The Company’s exposure to price risk arises from investment held by the Company in mutual funds and classified in the balance sheet as fair value through profit or loss.
Investments are made by the finance team under the policies approved by the Board of Directors. To manage its price risk arising from investments in mutual funds, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.
53 CAPITAL MANAGEMENT
The Company’s objectives when managing capital are to
- Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
- Maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business.
The Company considers the following components of its balance sheet to be managed capital:
Total equity as shown in the balance sheet including reserves, retained earnings and share capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend paid to shareholders, return capital to shareholders or issue new shares.
55 ADDITIONAL REGULATORY INFORMATION REQUIRED BY SCHEDULE III
a) Details of benami property held
No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions Prohibition Act, 1988 (45 of 1988) and Rules made thereunder.
b) Borrowing secured against current assets
The Company has borrowed funds from banks on the basis of security of current assets and Company’s premises. The quarterly returns/ statements filed by the Company with the bank is in agreement with books of accounts.
c) Wilful defaulter
The Company has not been declared wilful defaulter by any banks or financial institution or government or any government authority.
d) Relationship with struck off companies
The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.
e) Compliance with number of layers of companies
The Company has complied with the number of layers prescribed under Companies Act 2013
f) Compliance with approved scheme(s) of arrangements
The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
g) Utilization of borrowed funds and share premium
The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the group (Ultimate Beneficiaries) or
ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries
The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
ii) provide any guarantee, security or the like on behalf of the ultimate beneficiaries
h) Undisclosed income
There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
i) Details of crypto currency or virtual currency
The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
j) Valuation of PP&E, intangible asset and investment property
The Company has not revalued its property, plant and equipment (including right-of-use assets) during the current or previous year. There are no intangible assets.
Other Regulatory Information
a) Title deeds of immovable properties not held in name of the Company
The title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee), as disclosed in note 4 to the standalone financial statements, are held in the name of the Company.
b) Utilization of borrowings availed from banks and financials institutions
The borrowings obtained by the Company from banks and financial institutions have been applied for the purposes for which such loans were was taken.
c) Registration of charges or satisfaction with Registrar of Companies
There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.
Notes:
1. Earnings for Debt service = Net profit after tax Depreciation and amortization Finance cost Other adjustments *
* Other adjustments include all non cash items like fair valuation of investments, provision for doubtful debts & Obsolescence, forex exchange gain/loss less finance cost paid.
2. Debt Service = Current Borrowings
3. Working Capital = Current assets - Current Liabilities
4. EBIT = Profit before Interest and tax Finance cost
5. Total Purchases = Cost of Production / Acquisition Fees Marketing and distribution expenses Other expenses
6. Net Profit After Taxes : This excludes exceptional item.
57 The Company has investment in equity shares of a subsidiary, namely, ALT Digital Media Entertainment Limited (ALT) amounting to ' 79,557 Lacs as at March 31, 2024. Further, as at March 31,2024, the Company has outstanding trade receivables and loans given amounting to ' 1,781 Lacs and ' 10,297 Lacs respectively. As per the audited financial statements the net-worth of ALT as at March 31,2024 is ' 7,773 Lacs.
Since March 2019 the Company carries out an annual review of the valuation of ALT Digital at each year-end. For the year ended March 2024, the Company engaged independent valuation experts, Big4, to carry out the enterprise valuation of ALT. In performing the valuation, the experts have independently tested the business assumption for these projections and have factored the performance of financial year 23-24. Based on the valuation performed, the experts independently valued ALT Digital at 32% premium to its carrying cost at ' 1,20,990 Lacs.
In the previous years, ALT has focused on cost rationalization, right sizing of staff and reducing the cash burn, focused performance marketing resulting into positive operating cash inflow. ALT now emphasizes a studio-centric approach, producing high-quality shows that will be distributed not only on its platform but also across other OTT apps. This strategic shift ensures better cash flows and profitability. The efforts of management are reflective of improved operating performance of ALT. The EBITDA losses have been consistently reducing from ' 13,555 Lacs in financial year 21-22 to ' 6,591 Lacs (51% reduction) in financial year 22-23 to ' 2,104 Lacs in financial year 23-24 (68% reduction). As on March 2024, ALT also has liquid investments in Mutual Fund of ' 1,950 Lacs.
ALT continues to work on it’s business plan to drive its subscription business, foray into AVOD model and has an order book of over ' 23,000 Lacs of web-series for the leading OTT platforms, syndication/licenses of the content and definitive agreement are in place for over ' 10,000 Lacs. The Management is hopeful that these efforts will yield further positive results in the coming year.
ALT has maintained a steady run-rate of revenue and undertaken significant cost cutting measures and any improvement on time lines is expected to have significant growth in EBIDTA in future years. Also, ALT has started its own shows for ALTT platform which is an new addition from previous years to boost the SVOD sales coupled with enhanced performance marketing spend. A leading professional agency has been hired to drive the customer acquisition and also AVOD and Meta platform revenue. This agency also manages many other leading platforms for this line of revenue. Accordingly the management of ALT has plans in place to ensure successful execution of it’s strategies incorporating learnings of the previous year.
There is lag in meeting the targets in the last six months, primarily due to delays in certain shows by the leading OTT platform, the delivery of it is expected in financial year 24-25. The management is confident of covering the shortfall in coming year with enhanced content and marketing and continuing the cost efficiency built in the previous year.
The Board of Directors of the Company had given an in-principle approval to merge ALT into the Company at its meeting held on February 09, 2024. At their meeting held on May 30, 2024 the Board of Directors have approved the Scheme of Arrangement for the said merger which will be placed before the shareholders for their approval in the ensuing General Meeting.
Basis the business plans provided by the management of ALT, which have been validated by an independent valuation specialist for the purpose of determining enterprise value of ALT, as well as considering the future merger plan of ALT with the Company, the management is of the view that there is no adjustment required to the carrying value of the Company’s investment in ALT together with amounts loaned to ALT and trade receivables from ALT.
The Company’s revised strategy, profitability through partner deals, and favorable macroeconomic conditions position it well for both the near and long-term future. Overall, the Company remains optimistic about its prospects in the dynamic OTT landscape.
58 The Board of Directors in their meeting held on February 09, 2024 granted approval for proposed amalgamation of Alt Digital Media Entertainment Limited ('ALT') and Marinating Films Private Limited ('MFPL'), wholly owned Subsidiaries of the Company, with Balaji Telefilms Limited ('BTL') (Holding Company) In their meeting on May 30, 2024, the Board of Directors considered and approved the Draft Composite Scheme of Arrangement between Balaji Telefilms Limited (BTL), ALT, and MFPL and their respective shareholders, under sections 230 to 232, read with sections 52 and 66 of the Companies Act, 2013 (“The Scheme"). The Scheme inter alia provides for capital reduction in the books of the Company and amalgamation of ALT and MFPL with BTL.
The Scheme is subject to approvals of shareholders and / or creditors, and other concerned regulatory authorities as the case may be.
59 The Company uses an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the accounting software. However, the audit trail feature was not enabled for certain direct changes to data when using certain privileged / administrative access rights to the underlying database. The privileged access to database was restricted to limited set of users who necessarily require this access for maintenance and administration of the database. Further no instance of audit trail feature being tampered with was noted in respect of the accounting software.
Subsequent to the year end, the Company has initiated the necessary steps for compliance of the regulation. The Company has established and maintained an adequate internal control framework over its financial reporting and based on its assessment, has concluded that the internal controls for the year ended March 31,2024 were effective.
60 The figures for the previous year have been regrouped, wherever necessary to conform to current year classification.
61 APPROVAL OF FINANCIAL STATEMENTS
The Financial Statements were approved for issue by the Board of Directors on May 30, 2024
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