m. Provisions, Contingent Liabilities & Contingent Assets:
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources embodying economic benefits in respect of which a reliable estimate can be made.
Provisions are discounted if the effect of the time value of money is material, using pre-tax rates that reflects the risks specific to the liability. When discounting is used, an increase in the provisions due to the passage of time is recognized as finance cost. These provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
Insurance claims are accounted on the basis of claims admitted or expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection. Any subsequent change in the recoverability is provided for. Contingent Assets are not recognized.
Contingent liability is a possible obligation that may arise from past events and its existence will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the same are not recognized but disclosed in the financial statements.
37 Subsidiary Company in Singapore
Company had incorporated a wholly owned subsidiary company - Radaan Media Ventures Pte Limited in Singapore to engage in media & entertainment activities. The Company’s investment of Rs.9,35,000 is shown at cost under head ‘Investments’. During the year, subsidiary company had not entered into any major commercial transaction. As on 31 -03-2024, unsecured loans and reimbursement due extended during earlier years to meet urgent working capital requirement and remain payable by subsidiary to the holding company was Rs.18,46,338. The details are provided under note no:44 of this report. Pursuant to provisions of section 129(3) of the Companies Act, unaudited statement containing salient features of the financial statements of
the subsidiary company as required in the prescribed Form AOC-1 is provided here below:
38 Investments:
a) The Company investment of Rs.9,35,000/- (20,000 shares of Sing $ 1 each) in the subsidiary company - Radaan Media Ventures Pte Ltd., is shown at cost. The Company had entered into a share subscription agreement with Celebrity Cricket League Private Limited (‘CCL’) during the year 2010-11 and 2011-12 and had invested Rs.75 Lacs consists of 7,50,000 equity shares of Rs.10/- each and the fair value has been determined on the date of transition to Ind AS through fair value through other comprehensive income (FVTOCI) and carrying stood at Rs.72,25,231/- pending fair value measurement halted on account of Covid-19 pandemic. However, during the current financial year, the said investment was liquidated for Rs.1.25 Crores and excess realised over carrying cost of Rs.52,74,769 was accounted under Other Comprehensive Income.
b) Andhra Bank was amalgamated with Union Bank of India. As per scheme of amalgamation, the share allotment exchange ratio was 325 equity shares of the face value of Rs.10/- each fully paid up shares in Union Bank of India for every 1000 shares of the face value of Rs.10/- each fully paid up shares in Andhra Bank. Accordingly, investments of 600 no’s of shares in Andhra Bank resulted with 195 no’s of equity shares in Union Bank of India. The share price as per NSE closing rate as at 28th March, 2024 was stood at Rs.153.50 per share and accordingly, the closing value was at Rs.29,932/-
39. The lease understanding entered on 11 months renewal on mutual consent basis. Hence, the compliance requirement in terms of Ind AS 116 - Leases shall not arise. The lease security deposits of Rs.20 Lakhs has been disclosed under schedule 10 - ‘Financial Assets - Non Current Assets - Loan and Advances’ and rental payments are charged to P & L account under the head ‘Rent, Rates & Taxes’.
40. The company formed a trust named ‘Radaan Mediaworks India Limited Employees Group Gratuity Assurance Scheme’ with intent to enter into an approved scheme of group gratuity with Life Insurance Corporation of India and to administer for the benefit of the employees. The gratuity report provided by LIC of India as at 31st March 2024 in respect of gratuity of employees of the Company is given below:
I. R Sarathkumar is spouse of Managing Director & CEO II. Radikaa Rayane is daughter of Managing Director & CEO III. Resigned w.e.f.1st August, 2021. IV. Resigned w.e.f. 4th August, 2022. V. Joined w.e.f.14th Feb, 2022. VI. Joined w.e.f.1st Sep, 2022. VII. Joined w.e.r.1st Sep, 2022 & resigned on 30th March,2024. VII. Resigned w.e.f.10th May 2018. IX. Expenses towards gratuity and leave encashment provisions are determined actuarially on an overall company basis at the end of each year and contribution to the fund shall be made at the end of the financial year.
II.
46. Segment Reporting
The company operates in the area of producing content for tele-serials/films, digital content, web series, events, game shows, etc., apart from producing films, undertaking distribution activities, theatrical plays and setting up of training course comprise of acting, dance, martial arts, yoga etc., Management believes that it is not practical to provide segment disclosures relating to those costs and expenses as operational activities are intertwined and therefore, it has been decided by the management to report its functional operations under one segment - ‘Media & Entertainment”
47. The ‘Current Liabilities - Other Financial Liabilities’ note no: 26, the undisputed TDS dues of Rs.2,92,94,125, (including interest of Rs.44,66,375) remain unpaid as at 31/03/2024.
48. Disclosures as required under MSME Development Act, 2006:
The categorization of supplier as MSME registered under the Act under the new definition has been determined based on the information available with the Company as at the reporting date. The Company has also considered suppliers as MSME who possess the erstwhile MSME certificate for the period upto the reporting date, for the purpose of categorization and disclosures. However, there are no over dues to small and micro enterprises during the year ended March 2023 & March 2024.
49. Additional regulatory information as required under Companies Act 2013 / Indian Accounting Standards
A. Capital Work-In-Progress:
Company had entered into building construction agreement for 3rd floor of the Commercial property at T.Nagar, Chennai with Mrs.R.Radikaa Sarathkumar, owner and promoter of the flats and Company’s Managing Director and also registered 1/3rd proportionate UDS land in the name of the Company during the F.Y.2018-19. Completion schedule is delayed and overdue as per original plan due to pandemic caused by Covid-19. The financial details of Capital Work-In-Progress including the borrowing cost capitalized are as follows:
Reasons for Variation if more than 25%:
(1) Debt Service Coverage Ratio: There was substantial improvement in the earnings (as per DSCR workings methodology) for the year current year to Rs.194.47 lakhs from Rs.4.89 lakhs of the previous year. Further, for the current year, principal repayment interest stood at Rs.1010.33 lakhs as against Rs.618.17 lakhs of the previous year, resulting ratio as 0.192 for 31-3-2024 and 0.008 for 31-03.2023. Increase in earnings comparing to previous year and increase in repayment of principal interest amount during the current year is the main cause for huge variation.
(2) Return on Equity Ratio: The resultant profit for the current year at Rs.9.54 lakhs from the previous year loss of (Rs.169.76 lakhs) and decrease in the negative equity funds to the same extent (Rs.1141.78 lakhs) from (Rs.1151.32 lakhs) is the main cause for huge variation.
(3) Receivables Turnover Ratio: Both net revenue and average receivables for the current was increased to Rs.2,133.17 lakhs and Rs.193.31 lakhs respectively as compared to Rs.1,243.37 lakhs and Rs.152.99 lakhs of the previous year, resulting the average collection days to 33 days as compared to the previous year at 45 days.
(4) Trade payable Turnover Ratio: There was improvement in revenue resulting, thereby causing the decrease in the payment cycle from 161 days of previous year to 127 days for the current year.
(5) Net Capital Turnover Ratio: As there was improvement in receivables and payables with increase in inventory holding, resulting to 62 days for the current year as compared to 14 days of the previous year and hence, there is a variance.
(6) Net Profit Ratio: The current year performance resulted in net profit of Rs.9.54 lakhs as compared to the loss of Rs. 169.76 lakhs for the previous year with increase in net revenue, resulting -2.03% for the current year as against - 13.66% of the previous year.
(7) Return on Capital Employed: The Comprehensive income interest for the current year resulted as Rs.315.90 lakhs as against Rs.73.04 lakhs of the previous year, with avg. of total equity total debt stood at Rs.1,123.56 lakhs for the current year as against Rs1,127.13 lakhs, resulting to 28.12% for the current year as against 6.48% for the previous year.
(8) Return on Investment: The average total assets for the year ended 31-3-2024 stood at Rs.3,646.71 lakhs and for 31-3-2023 it stood at Rs. 3,046.73 lakhs and earnings stood at Rs.9.54 lakhs as compared to the loss of Rs. 169.76 lakhs for the previous year. This is main cause for the current year to result as 0.003% from - 0.06% of the previous year.
F. Undisclosed Income: During the year, the Company did not have any transactions, which were not recorded in the books of account that has been surrendered or disclosed as Income in the tax assessments under the Income Tax Act, 1961.
G. Struck off of Companies:
H. Immovable properties:
Immovable properties are held in the name of Company.
I. Benami Property:
The Company did not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
J. The Company has neither advanced or loaned or invested, nor received any fund, to or from, any other persons or entities 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 Company or
ii. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
K. The Company has registered charges with Registrar of Companies for credit facilities availed from bank and quarterly statements submitted with bank for working capital financial assistance are in agreement with books of account. No bank / financial institution have declared the Company as willful defaulter.
L. Provisions of CSR and compliance with layers of Companies are not applicable and the Company did not have any arrangements / schemes of amalgamations during the year.
M. Details of Crypto Currency or Virtual Currency
The Company did not trade or invest in Crypto Currency or virtual currency during the financial year. Hence disclosure relating thereto are not applicable.
A. Service Tax:
i) Service tax demand of Rs.19,30,27,340 was contested before CESTAT, Chennai for the period October 2004 to September 2007 and a stay was granted without any pre-deposit condition vide stay order 743/09 dt 21/07/2009 and final order 40341/2018 dt 06-02-2018 was passed allowing Company’s appeal with reference to the department to verify the records for discharge of tax on profit sharing revenue for the period 01-05-2006 to 30-09-2007. No tax demand exists as on date.
ii) In respect of service tax demand of Rs.4,68,55,299 (excluding penalty) for the period October 2007 to September 2010 vide
CESTAT Order 41705 - 41707 dt 01/06/2018 had concluded that the disallowance of input service credit is unjustified and requires to be set aside and passed the order accordingly and allowed the appeal in favour of the Company.
iii) Service tax demand of Rs.3,60,84,169 (including penalty of Rs.10 Lakhs) for the period October 2010 to September 2012 was set aside vide CESTAT Order no 40110-40111/2024 dated 01/02/2024 in the matter of Service Tax appeal No’s 41312 & 41313 arising out of Order-in-Original No’s 55 & 56 - 13-14 allowed the input service credit claimed and passed the Order in favour of the Company.
iv) Appeals have been filed before CESTAT for the period October 2012 to December 2015 against demands of similar nature and tax deposit of Rs.39,93,280 was made. The hearing is pending before CESTAT.
B. Sales Tax:
Hon’ble High Court of Madras granted interim stay order against sales tax demand for the period 2001 - 02 to 2004 - 05 and partially for the year 2005 - 06 as prayed by the Company. Hon’ble High Court of Madras has made interim stay granted earlier for the period 2001-02 to 2004-05 amounting to Rs.46,11,57,433 as absolute stay; vide order dated 19-11-2014.
Company has filed an appeal before Appellate Deputy Commissioner (CT) III, Chennai for the part of the disputed demand for the year 2005 - 06 amounting to Rs.2,28,60,665/- not covered under the stay order of Hon’ble High Court and as a condition have deposited a sum of Rs.50,10,401/-and also furnished personal bond by Managing Director & CEO for Rs. 1,78,50,265/- for stay of collection of tax. The Appellate Depute Commissioner (CT) III, has remanded the disputed demand to Asst. Commissioner of Sales Tax. The hearing was completed and order is awaited from Asst. Commissioner of Sales Tax.
C. Income Tax:
The Claim of Depreciation on Non-compete Fee and Brand Equity:
The claim of depreciation on Non-compete Rights of Rs.75 lacs and Brand equity of Rs.75 lacs had been successfully upheld by Honorable ITAT for the Asst. Years 2001-02, 2004-05, 2005-06, 2006-07, 2008-09.
The claim of depreciation was allowed for the A.Y.2002-03 and 2003-04 by CIT, Appeals - VI and the department had not appealed against the decision of CIT, Appeals.
The claim was allowed by CIT, Appeals 14 with respect to the A.Y. 2009-10, 2010-11 & 2011-12 and CIT, Appeals 12 with respect to the A.Y. 2012-13 & 2014-15.
With respect to the A.Y.2001-02 and 2005-06, department has appealed before the Hon’ble High Court of Madras against Hon’ble ITAT order for the A.Y.2001-02 and 2005-06. Hon’ble High Court of Madras vide T.C.(A)177 of 2010 dt 29/06/2018 granted depreciation and decided in favour of the Company.
Other matters:
A.Y.2009-10: CIT, Appeals -14 vide order dated 26/02/2019, deleted the addition made for tele-serial production expenses of Rs.2,33,58,021 and Income Tax Appellate Tribunal, upheld the findings of CIT, Appeals vide order dated 23/02/2022 based on appeal filed by Department in this regard. Against the said Order, Department has filed the appeal before Hon’ble High Court of Madras. The case filed by the department was dismissed and the substantial question of law as framed is answered in favour of the Company vide Order dated 22/07/2022.
A.Y.2010-11: The dis-allowance of Rs.7,12,10,430 on film production expenditure was confirmed by the Appeals - 12 vide order dt 28/9/2018 and Company has not filed against the said order as the entire film production expenditure of Rs.7,12,10,430 was allowed as deduction under Rule 9A in the A.Y. 2011-12 refer ACIT, Central Circle 2(1), Chennai dt 20/12/2018.
A.Y.2011-12: Assessment was re-opened and subsequently notice was issued u/s 142(1) and 143(2) and addition of Rs.30,28,120/- was made as excess cost claim of Free Commercial Time (FCT) vide ACIT, Central Circle 2(1), Chennai dt 20/12/2018. Company has filed appeal in the matter and pending before appropriate authority.
A.Y.2013-14: With respect to addition on account of interest of Rs.2,89,387 on IT refund issued to the Company for the A.Y.2011-12, CIT Appeal - 14 vide order dated 26/02/2019 had deleted the addition as no evidence was provided. In this regard, Assessing Officer has to verify the facts and decide the matters accordingly.
Based on survey u/s 133A, notice u/s153C and subsequent notice u/s 142(1) and 143(2) served for the assessment years 2012-13 to A.Y.2018-19, the return of the income and details were furnished for all 7 asst.years. The return of income and information furnished were accepted and assessment orders were passed for the A.Y.2012-13, A.Y.2013-14, A.Y.2014-15 and A.Y.2018-19 without any disallowance and additional tax liability. The disputed assessments are as follows:
A.Y.2015-16: Based on survey u/s 133A, notice u/s 153C and subsequent notice u/s 142(1) and 143(2) was served by Deputy Commissioner of Income tax, Central Circle 2(1). In response to the same the return of income was filed and details were furnished. The assessment was completed with addition of Rs.2,07,55,873 and order u/s 143(3) r.w.s.153C dated 31/12/2019 was passed with tax liability of Rs.1,34,68,486 after adjusting tax credit of Rs.89,77,229, the net tax liability stood at Rs.44,91,257.
Aggrieved by the above assessment order, appeal was filed on 13/01/2020 before CIT(A), Chennai 19 against disallowing the trade advances made in the course of business which was duly recorded in the books of account and reflected in the return of
A.Y.2016-17: Based on survey u/s 133A, notice u/s 153C and subsequent notice u/s 142(1) and 143(2) was served by Deputy Commissioner of Income tax, Central Circle 2(1). In response to the same the return of income was filed and details were furnished. The assessment was completed with addition of Rs.1,79,21,775 and order u/s 143(3) r.w.s.153C dated 31/12/2019 was passed with tax liability of Rs.1,28,75,451 after adjusting tax credit of Rs.65,94,998, the net tax liability stood at Rs.62,80,453.
Aggrieved by the above assessment order, appeal was filed on 13/01/2020 before CIT(A), Chennai 19 against disallowing the trade advances made in the course of business which was duly recorded in the books of account and reflected in the return of income filed before the date of survey and levy of tax, as undisclosed income.
A.Y.2017-18: Based on survey u/s 133A, notice u/s 153C and subsequent notice u/s 142(1) and 143(2) was served by Deputy Commissioner of Income tax, Central Circle 2(1). In response to the same the return of income was filed and details were furnished. The assessment was completed with addition of Rs.84,99,600 and order u/s 143(3) r.w.s.153C dated 31/12/2019 was passed with tax liability of Rs.73,35,469 after adjusting tax credit of Rs.58,66,054, the net tax liability stood at Rs.14,69,415.
Aggrieved by the above assessment order, appeal was filed on 14/01/2020 before CIT(A), Chennai 19 against disallowing the trade advances made in the course of business which was duly recorded in the books of account and reflected in the return of income filed before the date of survey and levy of tax, as undisclosed income.
54. Company has implemented the edit log feature in the accounting package in the month of May’24 to comply with audit trail requirements.
55. Figures of Previous year have been re-grouped and re-classified, wherever necessary to conform to those of the current year.
For M/s.SRSV & Associates
On behalf of the Board of Directors Chartered Accountants
Firm No.:015041S
Sd/- Sd/- Sd/-
R.Radikaa Sarathkumar Narayanan Iyer V.Rajeswaran
Managing Director & CEO Director Partner
(DIN: 00238371) (DIN : 03470438) Membership No: 020881
Sd/- Sd/-
M.Kavirimani Balaji Gandla
Chief Financial Officer Company Secretary
Place: Chennai Date : 25.05.2024.
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