Provisions, contingent liabilities and contingent assets Provisions
A provision is recognized in the statement of profit and loss if, as a result of a past event, the
Company has a present legal or constructive obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits wall be required to settle the obligation. If the
effect of the time value of money is material, provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current market assessments of the
time value of money and the risks specific to the liability. Where discounting is used, the
increase in the provision due to the passage of time is recognized as a finance cost.
Contingent liabilities and contingent assets
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. Where 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.
Contingent assets are not recognized in the financial statements. However, contingent assets
are assessed continually and if it is virtually certain that an inflow of economic benefits will
arise, the asset and related income are recognized in the period in which the change occurs.
2.12 Revenue recognition:
Revenue from contracts with customers:
Revenue is recognized when the company satisfies a performance obligation by transferring a
promised good or service to its customers. The company considers the terms of the contract and
its customary business practices to determine the transaction price. Performance obligations are
satisfied at the point of time when the customer obtains controls of the asset.
Revenue is measured based on transaction price, which is the fair value of the consideration
received or receivable, stated net of discounts, returns and Goods and Sendee tax. Transaction
price is recognised based on the price specified in the contract, net of the estimated sales
incentives/ discounts. Accumulated experience is used to estimate and provide for the
discounts/ right of return, using the expected value method.
2.13 Dividend and Interest Income
Dividend income is recognised in profit or loss on the date on wdiich the Group’s right to
receive payment is established. ——
Interest Income mainly comprises of interest on Margin money deposit with banks relating to
bank guarantee and term deposits.
Interest income or expense is recognised using the effective interest method (EIR).
Interest is recognized using the time-proportion method, based on rates implicit in the
transactions
2.14 Tax Expenses
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except
to the extent that it relates to a business combination, or items recognised directly in equity or
in other comprehensive income.
The Company has determined that interest and penalties related to income taxes, including
uncertain tax treatments, do not meet the definition of income taxes, and therefore accounted
for them under Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets.
Current tax
Current income tax assets and liabilities are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted, at the reporting date. Current income tax
relating to items recognised outside the statement of profit and loss is recognised outside the
statement of profit and loss (either in OCI or in equity in correlation to the underlying
transaction). Management periodically evaluates positions taken in the tax returns with respect
to situations in which applicable tax regulations are subject to interpretation and establishes
provisions, where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes at the
reporting date.
Deferred tax liabilities and assets are recognized for all taxable temporary differences and
deductible temporary differences.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry forward of unused
tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow all
or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to
the extent that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.
Deferred tax relating to items recognised outside the statement of profit and loss is recognised
outside the statement of profit and loss (either in OCI or in equity in correlation to the
underlying transaction).
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to
set off current tax assets against current tax liabilities and the deferred taxes relate to the same
taxable entity and the same taxation authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as
current tax for the year. The deferred tax asset is recognised for MAT credit available only to
the extent that it is probable that the Company will pay normal income tax during the specified
year, i.e., the year for which MAT credit is allowed to be carried forward. In the year in which
the Company recognizes MAT credit as an asset, it is created by way of credit to the statement
of profit and loss and shown as part of deferred tax asset. The Company reviews the “MAT
credit entitlement” asset at each reporting date and writes down the asset to the extent that it is
no longer probable that it will pay normal tax during the specified period.
Goods and Service Tax (GST) paid on acquisition of assets or on incurring expenses
When the tax incurred on purchase of assets or services is not recoverable from the taxation
authority, the tax paid is recognised as part of the cost of acquisition of the asset or as part of
the expense item, as applicable. Otherwise, expenses and assets are recognized net of the
amount of taxes paid. The net amount of tax recoverable from, or payable to, the taxation
authority is included as part of receivables or payables in the balance sheet.
2.15 Earnings Per Share
Basic earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable
to equity shareholders (after deducting preference dividends and attributable taxes) by the
weighted average number of equity shares outstanding during the year.
The weighted average number of equity shares outstanding during the year is adjusted for
events such as bonus issue, bonus element in a rights issue, share split, and reverse share split
(consolidation of shares) that have changed the number of equity shares outstanding, without a
corresponding change in resources.
Diluted earnings per share
Diluted earnings per share is computed by dividing the profit (considered in determination of
basic earnings per share) after considering the effect of interest and other financing costs or
income (net of attributable taxes) associated with dilutive potential equity shares by the
weighted average number of equity shares considered for deriving basic earnings per share
adjusted for the weighted average number of equity shares that would have been issued upon
conversion of all dilutive potential equity shares.
2.16 Segment reporting
The Company is engaged in the in “Advertising and media agencies” and the same constitutes a
single reportable business segment as per Tnd AS 108.
2.17 Share capital
Incremental costs directly attributable to the issue of equity shares are recognised as a
deduction from equity. Income tax relating to transaction costs of an equity transaction is
accounted for in accordance with Ind AS 12.
2.18 Significant accounting judgements, estimates, and assumption
The preparation of the financial statements in conformity with Ind AS requires management
to make judgments, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses. These estimates
and associated assumptions are based on historical experiences and various other factors that
are believed to be reasonable under the circumstances. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimates are revised and in any
future periods affected. In particular, the areas involving critical estimates or Judgment are:
Determining the lease term of contracts with renewal and termination options
The Company determines the lease term as the noncancellable term of the lease,, together with
any periods covered by an option to extend the lease if it is reasonably certain to be exercised,
or any periods covered by an option to terminate the lease, if it is reasonably certain not to be
exercised. The Company has several lease contracts that include extension and tennination
options. The Company applies judgement in evaluating whether it is reasonably certain to
exercise the option to renew or terminate the lease. That is, it considers all relevant factors that
create an economic incentive for it to exercise either the renewal or termination. After the
commencement date, the Company reassesses the lease term if there is a significant event or
change in circumstances that is within its control and affects its ability to exercise or not to
exercise the option to renew or to terminate. Furthermore, the periods covered by termination
options are included as part of the lease term only when they are reasonably certain not to be
exercised.
Significant management judgement is required to determine the amounts of impairment loss on
the financial and nonfmancial assets. The calculations of impairment loss are sensitive to
underlying assumptions.
Tax provisions and contingencies
Significant management judgement is required to determine the amounts of tax provisions and
contingencies. Deferred tax assets are recognised for unused tax losses and MAT credit
entitlements to the extent it is probable that taxable profit will be available against which these
losses and credit entitlements can be utilized. Significant management judgement is required to
determine the amount of deferred tax assets that can be recognized, based upon the likely
timing and the level of future taxable profits together with future tax planning strategies.
Defined benefit plans
The cost of the defined benefit plan and the present value of the obligation are determined
using actuarial valuation. An actuarial valuation involves various assumptions that may differ
from actual developments in the future. These include the determination of the discount rate,
future salary increases and mortality rates. Due to the complexities involved in the valuation
and its long-term nature, a defined benefit obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate
discount rate for plans operated in India, the management considers the interest rates of
government bonds where remaining maturity of such bond correspond to expected term of
defined benefit obligation.
The mortality rate is based on publicly available mortality tables. Those mortality tables tend to
change only at interval in response to demographic changes. Future salary increases and
gratuity increases are based on expected future inflation rates.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet
cannot be measured based on quoted prices in active markets, their fair value is measured using
internal valuation techniques. The inputs to these models are taken from observable markets
where possible, but where this is not feasible, a degree of judgement is required in establishing
fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and
volatility. Changes in assumptions about these factors could affect the reported fair value of
financial instruments.
costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of
other costs that relate directly to fulfilling contracts.
This amendment is essentially clarification and had there is no significant impact on the
standalone financial statements.
Amendments to Ind AS 16- Property, Plant and Equipment: Proceeds before Intended Use
The amendments modified paragraph 17(e) of Ind AS 16 to clarify that excess of net sale
proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit
or loss but deducted from the directly attributable costs considered as part of cost of an item of
property, plant, and equipment.
The amendments are effective for annual reporting periods beginning on or after 1 April 2022.
These amendments had no impact on the standalone financial statements.
Amendments to Ind AS 103, Business Combinations: Reference to the Conceptual Framework
This amendment added an exception to the recognition principle of Ind AS 103 Business
Combinations to avoid the issue of potential ‘day T gains or losses arising for liabilities and
contingent liabilities that would be within the scope of Ind AS 37 Provisions, Contingent
Liabilities and Contingent Assets or Appendix C, Levies, of Ind AS 37, if incurred separately.
The exception requires entities to apply the criteria in Ind AS 37 or Appendix C, Levies, of Ind
AS 37, respectively, instead of the Conceptual Framework, to determine whether a present
obligation exists at the acquisition date.
The amendments also add a new paragraph to IFRS 3 to clarify that contingent assets do not
qualify for recognition at the acquisition date.
In accordance with the transitional provisions, the company applies the amendments
prospectively, i.e., to business combinations occurring after the beginning of the annual
reporting period in which it first applies the amendments (the date of initial application).
These amendments had no impact on the consolidated financial statements of the company as
there were no transactions within the scope of these amendments that arose during the period.
2.20 New Accounting pronouncements
Ministry of Corporate Affairs (“MCA”) notifies new standard or amendments to the existing
standards under Companies (Indian Accounting Standards) Rules as issued from time to time.
On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015
by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable
from April 01, 2023, as below:
The amendments require companies to disclose their material accounting policies rather than
their significant accounting policies. Accounting policy information, together with other
information, is material when it can reasonably be expected to influence decisions of primary
users of general purpose financial statements. The group does not expect this amendment to
have any significant impact in its standalone financial statements.
Ind AS 12 — Income Taxes
The amendments clarify how companies account for deferred tax on transactions such as leases
and decommissioning obligations. The amendments narrowed the scope of the recognition
exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer
applies to transactions that, on initial recognition, give rise to equal taxable and deductible
temporary differences. The company does not expect this amendment to have any significant
impact in its standalone financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
The amendments will help entities to distinguish between accounting policies and accounting
estimates. The definition of a change in accounting estimates has been replaced with a
definition of accounting estimates. Under the new definition, accounting estimates are
“monetary amounts in financial statements that are subject to measurement uncertainty”.
Entities develop accounting estimates if accounting policies require items in financial
statements to be measured in a way that involves measurement uncertainty. The company does
not expect this amendment to have any significant impact in its standalone financial statements.
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