Note 1 Corporate information

Balaji Telefilms Limited was incorporated on November 10, 1994 under the Companies Act, 1956. The Company has established itself  as a leader in television content in India particularly for Hindi language content and has also successfully ventured in the regional  television content market and event business.

Note 2 Significant accounting policies

Basis of accounting and brparation of financial statements

‘The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in

India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with  Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 / Companies Act, 1956 as  applicable.

Use of Estimates

The brparation of financials statements, in conformity with generally accepted accounting principles, requires estimates and  assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the  reported amounts of the revenue and expenses during the reported year. Differences between the actual results and the estimates  are recognized in the year in which the results are known / materialize.

Fixed assets

Fixed assets are stated at cost of acquisition or construction. They are stated at historical cost less accumulated debrciation /  amortisation and impairment loss, if any.

Debrciation / Amortisation

Debrciation on tangible fixed assets has been provided on the straight-line method as per the useful life brscribed in Schedule II  to the Companies Act, 2013 except for studios and sets which are debrciated as per managements’ estimate of their useful life of  3 years.

Leasehold improvements are debrciated over the period of lease on a straight line basis.

Impairment loss

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by  considering the indications that an impairment loss may have occurred in accordance with Accounting Standard 28 on ‘Impairment  of Assets’. An impairment loss is charged to Statement of Profit and Loss in the year in which, an asset is identified as impaired, when  the carrying value of the asset exceeds its recoverable value. The impairment loss recognised in prior accounting periods is reversed  if there has been a change in the estimate of recoverable amount.

Investments

Current investments are carried at lower of cost and fair value. Long-term investments are carried at cost. However, when there is a  decline, other than temporary, the carrying amount is reduced to recognise the decline.

Inventories

Inventory comprise of television serials which are at lower of cost and net realisable value. Cost is determined on the basis of average cost.

Revenue recognition

Revenue is recognised as and when the relevant episodes of the programmes (television serials) are telecast on broadcasting

channels.

Revenue (income) is recognised when no significant uncertainty as to its determination or realisation exists.

Employee benefits

a) Post employment benefits and other long-term benefits

i) Defined Contribution Plans:

The Company contributes towards Provident Fund and Family Pension Fund. Liability in respect thereof is determined on  the basis of contribution as required under the Statute / Rules.

ii) Defined Benefit Plans:

The trustees of Balaji Telefilms Limited Employees Group Gratuity Scheme have taken a Group Gratuity cum Life Assurance  Policy from the Life Insurance Corporation of India (LIC).

Contributions are made to LIC in respect of gratuity based upon actuarial valuation done at the end of every financial year  using ‘Projected Unit Credit Method’. Major drivers in actuarial assumptions, typically, are years of service and employee  compensation. Gains and losses on changes in actuarial assumptions are accounted in the statement of profit and loss.

b) Short-term Employee Benefits:

Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss  of the year in which the related service is rendered.

Foreign currency transactions

Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are effected. At the  year-end, monetary items denominated in foreign currency are reported using the closing rates of exchange. Exchange differences  arising thereon and on realisation / payment of foreign exchange are accounted in the relevant year as income or expense.

Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the  cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All  other borrowing costs are charged to revenue.

Operating leases

Assets taken on lease under which, all the risks and rewards of the ownership are effectively retained by the lessor are classified  as operating lease. Lease payments under operating leases are recognized as expenses in accordance with the respective lease  agreements.

Taxes on income

Tax expense comprises of current tax and deferred tax.

Current tax is measured at the amount expected to be paid to / recovered from the tax authorities, using the applicable tax rates.

Deferred income tax reflect the current period timing differences between taxable income and accounting income for the period and  reversal of timing differences of earlier years / period. Deferred tax assets are recognized only to the extent that there is reasonable  certainty that sufficient future income will be available except that the deferred tax assets, in case there are unabsorbed debrciation  and losses, are recognized if there is a virtual certainty that sufficient future taxable income will be available to realize the same.

Minimum Alternate Tax (MAT) credit entitlement is recognized in accordance with the Guidance Note on “Accounting for credit  available in respect of Minimum Alternate Tax under the Income-tax Act, 1961” issued by the Institute of Chartered Accountants of  India (ICAI).

Provisions and Contingencies

Provision is recognized in the accounts when there is a brsent obligation as a result of past event/s and it is probable that an  outflow of resources will be required to settle the obligation. Contingent liabilities, if any, are disclosed in the notes to the financial statements.

Note:

The corresponding figures of the brvious year has not been given as section 186 of the Companies Act, 2013 is applicable with effect from April 1, 2014. 23.20 During the year, pursuant to the notification of Schedule II to the Companies Act, 2013 with effect from April 1, 2014, the Company revised the estimated useful life of relevant assets to align the useful life with those specified in Schedule II. Pursuant to the transitional provisions brscribed in Schedule II to the Companies Act, 2013, the Company has fully debrciated the carrying value of the assets, net of residual value, where the remaining useful life of the asset was determined to be nil as on

April 1, 2014, and adjusted an amount of Rs. 177.33 lacs (net of deferred tax credit of Rs. 85.17 lacs) against the opening balance in the Statement of Profit and Loss under Reserves and Surplus. The debrciation expense in the Statement of Profit and Loss for the year is higher by Rs. 157.60 lacs and profit after tax for the year is lower by Rs. 106.47 consequent to the change in the useful life of the assets.

23.21 The Company has investments in Optionally Convertible Debentures in Aristo Learning Private Limited and Second School  Learning Private Limited aggregating Rs. 465.81 lacs. These investments are strategic and non-current (long-term) in nature.

However, considering the current financial position of the respective investee companies, the Company, out of abundant  caution, has,during the current year provided for these investments considering the diminution in their respective values.

23.22 The Company during the year, pursuant to a memorandum of understanding (MOU) with Chhayabani Private Limited (CPL), on  Feb 16, 2015 has formed Chhayabani Balaji Entertainment Private Limited (CBEPL). Subsequent to the year end, the Company  has completed other formalities related to commencement of business.

23.23 The figures of the brvious year have been regrouped wherever necessary to correspond with those of the current year.

In terms of our report attached

For Deloitte Haskins & Sells LLP

For and on behalf of the Board of Directors

Chartered Accountants

A. B. Jani (Partner)

Jeetendra Kapoor  (Chairman)

Shobha Kapoor Managing Director)

E kta Kapoor  ( (Director)

For Snehal & Associates  

Chartered Accountants

Sameer Nair

D .G.Rajan

 (Group Chief Executive Officer) (Director)

Snehal Shah (Proprietor)

Simmi Singh  (Company Secretary)

Bisht Sanjay Dwivedi  (Group Chief Financial Officer)

Place : Mumbai

Date : May 20, 2015