NOTE 1

Significant ACCOUNTING Policies

1.1 General

a. The financial statements have been brpared as per historical cost convention and in accordance with generally accepted accounting principles in India.

b. Expenses and revenue are generally accounted for on accrual basis, except those associated with significant uncertainties and exgratia which are accounted on cash basis.

1.2 Revenue recognition

a. In respect of commissioned content/ content produced/ acquired, income is recognised as on date of delivery of Digi Betas.

b. In respect of sponsored content/ content produced/ acquired, income is recognised as and when the relevant content is telecast.

c. In respect of cinematic content produced/ acquired, income is recognised on the following basis:

i. In respect of cinematic content, which is not complete i.e. under production, no income is recognised.

ii. In respect of cinematic content, which is complete but not released, income is recognised as - so much of the estimated income on release as bears to the whole of the estimated income the same proportion as the actual recoveries/ realisations/ confirmed contracts bears to the total expected realisations.

iii. In respect of cinematic content completed and released during the year income is recognised on release/ delivery of release prints except income, if any, already recognised as per clause c (ii)

iv. In respect of cinematic content, which is complete but not released, income from streams other than theatrical release is recognised on the basis of contracts/ deal memo and delivery of Digi Betas.

v. In respect of music rights, income is recognised on its release or exploitation contract.

d. In respect of consultancy services, income is recognised as and when services are actually rendered resulting in enforceable claim.

e. Dividend on investments is accounted as and when received. Interest income is recognised on accrual basis.

1.3 Cinematic content

The cinematic content has been valued on the following basis:

a. Incomplete cinematic content : at lower of allocated/ identified cost or net realisable value.

b. Abandoned/ shelved cinematic content : at lower of cost or net realisable value.

c. Completed cinematic content : at lower of unamortised allocated cost as estimated by the management depending on the genre, nature and contents of the cinematic content net realizable value.

The Company allocates cost of production amongst music rights, exhibition rights, other rights and residual rights on an equitable basis.

Basis of amortisation of allocated costs

a. Music rights are amortised at 100% on the basis of release of music/ exploitation contract.

b. All rights other than music and residual rights are amortised as under:

Third release 20%

first release 50%

second release 30%

c. Residual rights are amortised on an equitable basis. The Company estimates useful life of the cinematic content at 20 years.

Notes

i. The production/ acquiring costs are amortised on the above basis by the Company. The production costs are revenue costs and are treated as such for the purposes of taxation.

ii. No unamortised costs are retained once the entire rights in respect of the cinematic content are sold out on an outright basis.

1.4 Television content

The television content has been valued on the following basis

Unexploited television content : at lower of average of allocated cost or net realizable value.

U nfinished television content : at lower of average of allocated cost or net realizable value.

Production property : at lower of allocated cost or net realisable value.

Exploited television content is amortised as under

Exploited television content : at lower of unamortised cost as estimated by the management on the following basis or net realizable value:

No unamortised costs shall be carried forward beyond a period of 10 years.

Notes

i. The Company amortises production costs in respect of television content once telecast and further retelecastable on the basis of the nature and contents of the television content and the expected number of telecasts as per the chart depicted above.

ii. The production costs are amortised as per the above referred policy followed by the Company. The production costs are revenue costs and are treated as such for the purposes of taxation.

1.5 fixed assets

Fixed assets are stated at cost less accumulated debrciation. Cost comprises purchase price including any attributable cost of bringing the asset to its working condition for its intended use and any other identifiable direct expenses.

All expenditure incurred prior to commencement of project is carried forward as br-operative expenditure which would be capitalised/ written off on commencement of business.

1.6 Debrciation

a. Debrciation on tangible fixed assets is provided on the straight line method over the useful life of assets as brscribed under paret C of/ schedule II of the Companies Act, 2013.

b. In case of assets whose useful life is already exchausted as on April 1, 2014, the carrying value, net of residual value and deferred tax has been adjusted in retained earning in accrodance with the requirements of schedule II of the Companies Act, 2013.

c. No debrciation has been charged on the assets, which have not been put to use during the period.

d. Debrciation on addition/ deletion to assets is calculated on a pro-rata basis from the month of addition and till month of deletion.

e. Debrciation on improvement to leave and licence brmises is calculated over the period of leave and licence.

1.7 Taxation

Current tax: Provision for current tax for the year has been made after considering deduction/ allowances/ claims admissible to the Company under the Income Tax Act, 1961.

Deferred tax: Deferred tax is recognised, on timing differences, being difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets arising from temporary timing differences are recognised to the extent there is reasonable certainty that the assets can be realised in future.

Deferred tax assets in respect of unabsorbed debrciation and carry forward of losses are recognised if there is virtual certainty that there will be sufficient future taxable income available to realise such losses.

1.8 Investments

Long term investments are stated at cost. Provision for diminution in the value of long term investment is made only if such a decline is other than temporary. Current investments are stated at lower of cost or market value.

1.9 Contingent liabilities

No provision has been made for liabilities, which are contingent in nature.

1.10 Foreign currency transactions

a. Transactions in foreign currency are recorded at the rate brvailing on the date when the amount is received or remitted.

b. Foreign currency assets and liabilities are converted into rupee at the exchange rate brvailing on the balance sheet date; gains/ losses are reflected in the statement of profit and loss.

c. Exchange difference on account of acquisition of fixed assets is adjusted to carrying cost of fixed assets.

1.11 Retirement benefits

a. Contributions are made to Provident Fund and charged to revenue wherever applicable.

b. The Company contributes to Employees Group saving Linked Insurance scheme with Life Insurance Corporation of India to cover its liability towards employee gratuity. The expense is recognised at the brsent value of the amount payable determined using actuarial gratuity report.

c. The Company does not have any policy for leave encashment.

1.12 Borrowing costs

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

1.13 Impairment of assets

At Balance sheet date, the Company assesses whether there is any indication that any asset may be impaired. If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the assets exceeds the recoverable amount, an impairment loss is recognised in the accounts to the extent the carrying amount exceeds the recoverable amount.

1.14 Provisions and contingencies

The Company recognises a provision when there is a brsent obligation as a result of past events, that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a brsent obligation that may, but probably will not require an outflow of resources. Where there is a possible obligation or a brsent obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent assets are not recognised in the financial statements.

NOTE 2

The Company is engaged in the production/ making of cinematic and television content, which requires various types, qualities and quantities of raw materials and inputs in different denominations. Due to the multiplicity and complexity of the items it is not practicable to maintain the quantitative record/ continuous stock register, as the process of making content is not amenable to the same. Hence quantitative details are not maintained. physical stock of finished content is taken at the end of year.

NOTE 3

Arbitration proceedings initiated by the Company against prasar Bharati on account of wrongful encashment of bank guarantees of R 75,050,000 were ongoing before former Chief Justice YV Chandrachud. The parties completed the pleadings before the Arbitrator but unfortunately he passed away in July 2008 while the cross examinations were on. The Company had filed a petition before the Hon. High Court at Bombay for appointment of a sole Arbitrator in place and stead of Justice Chandrachud in January 2009. The Bombay High Court appointed Justice BN Srikrishna, former Judge of Subrme Court of India as Sole Arbitrator vide order dated November 27, 2009 and the arbitration proceedings are ongoing. Opinion obtained by the Company from Justice AM Ahmadi, former Chief Justice of the Subrme Court of India, supports the Company's stand that the amount is fully recoverable. In view of this, the management of the Company does not consider it necessary to make a provision there against in the accounts. The Company is showing amount withheld by prasar Bharti as "Long Term Loans and Advances".

Note 4

As per Accounting Standard (AS) 28 on “Impairment of Assets”, the Company has assessed whether there is any indications that any assets has impaired. Since the carrying amount is less than the recoverable amount, there is no necessity for making any provision for impairment.

Note 5

Segm ent informati on

During the year, the Company operated in only one business segment viz content segment

NOTE 6

The company has an investment of R 29,100,000 (L Y R 29,100,000) in equity shares of wholly owned subsidiary viz PNC Wellness Limited and of R 7,019,700 (L Y R 7,019,700) in equity shares of subsidiary viz PNC Digital Limited as at March 31, 2015. Further temporary advances of R 21,843,002 given to wholly owned subsidiary viz PNC Wellness Limited towards operating expenses were waived and written off during the year to support the revival of the subsidiary.

NOTE 7

Loans and Advances of R 46,753,181 includes: i) Rs.  15,000,000 advanced against the Music, Asian and Indian satellite rights of a film, where the Company has lien over the exploitation of the said rights and ii) Rs. 31,753,181 being balance amount advanced towards joint production of a film where the Company has joint re-exploitation rights. The Company has initiated recovery proceedings in respect of the aforesaid advances. i) The Company has filed a summary suit with the Hon. High Court at Bombay which is pending hearing and disposal and ii) The Company has initiated arbitration proceedings which are ongoing before Justice smt KK Baam (Retired). The management considers the same are good and fully recoverable. Legal opinion obtained by the Company from sF Rego, Judge (Retired), City Civil and sessions Court, Mumbai, supports this and consequently no provision has been made in the accounts at this stage. The Company is showing these amounts as "Long Term Loans and Advances".

NOTE 8

In the opinion of the management investments, current assets and loans and advances are of the value stated in the financial statements are realisable in the ordinary course of business. The provisions for all known liabilities and debrciation are adequate and are not in excess of the amounts considered, reasonably necessary.

NOTE 9

There are no dues payable to the Investor Education and Protection Fund as at March 31, 2015.

Note 10

All known liabilities have been provided in the books of accounts.

 NOTE 11

The brvious year figures have been regrouped/ reclassified, wherever necessary to bring conformity to the current year's brsentation.

As per our attached report of even date

For KR Khare & Co Chartered Accountants

Firm Registration Number 105104W

Kishor R Khare

Proprietor

Membership Number 032993

Authenticated by us

For Pritish Nandy Communications Ltd

Pallab Bhattacharya Wholetime Director and CEO

Vishnu Kanhere Director

Yatender Verma VP, Finance, Compliances and Legal Affairs

Vikas shaw Company secretary

Mumbai, May 25, 2015