1. SIGNIFICANT ACCOUNTING POLICIES A. Method of Accounting The financial statements are brpared on the historical cost convention and in accordance with generally accepted accounting principles ('GAAP') a) The Company follows accrual system of accounting in the brparation of accounts unless otherwise stated. b) The brparation of the financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported accounts of income and expenses of the period, reported values of assets and liabilities as of date of the financial statements. Examples of such estimates include provisions for doubtful debts, provisions for doubtful loans and advances, provisions for diminution in value of investments, estimated period of utility of software package, provisions for value of obsolete/non-moving inventories etc. Actual results may differ from these estimates. B. Revenue Recognition a) Revenue is recognized on accrual basis. b) Revenue from Services rendered is recognized as and when the services are performed. c) Sale of goods is recognized on dispatch to the customer. d) Insurance claims are accounted for as and when admitted by the concerned authority. e) Interest income is recognized as and when accrued. C. Securities Premium Account Securities issue expenses and redemption brmium payable on optionally or compulsorily convertible brference share or debentures has been adjusted against Securities Premium Account. D. Fixed Assets a) Owned Assets Fixed Assets are stated at cost, which includes freight, installation cost, duties, taxes and other incidental expenses but net of CENVAT. b) Capital Work-in-progress All expenses incurred for acquiring, erecting and commissioning of fixed assets including interest on long term loans utilized for meeting capital expenditure and incidental expenditure incurred during construction of projects are shown under capital work-in-progress and are allocated to the fixed assets on the completion of the respective projects. c) Intangible Assets Cost of software and expenses on development of new products are accounted for as intangible assets. E. Lease a) Fixed assets acquired on lease / hire purchase for an agreed period has been recognized as an asset and liability. Such recognition is at an amount equal to the fair value of leased asset at the inception of lease or brsent value of minimum lease payment, whichever is less. b) Lease payment is apportioned between finance charge and reductions of the outstanding liability. c) Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases. Operating leases payments are recognized as an expense in the statement of profit & loss or on a basis, which reflect the time pattern of such payments appropriately. F. Debrciation and Amortization a) Debrciation is provided for all the assets on straight line method, at the rates brscribed in the Schedule II of the Companies Act, 2013. b) Debrciation due to increase or decrease in the liability on account of exchange fluctuation or on account of rollover charges on forward exchange contract is provided prospectively over the residual life of the assets. c) Intangible assets are amortized over a period of five years or life of product considered at the end of each financial year whichever is earlier. Amortization commences when the asset is available for use. G. Impairment of Assets The fixed assets or group of assets (cash generating unit) are reviewed for impairment at each Balance Sheet date. In case of such any indication, the recoverable amount of these assets or group of assets is determined and if such recoverable amount of the assets or cash generating unit to which the assets belong is less than its carrying amount, the impairment loss is recognized by writing down such assets to their recoverable amount. An impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased. H. Investments a) The cost of an investment includes incidental expenses like brokerage, fees and duties incurred prior to acquisition. b) Non-current investments are carried at cost. Provision for diminution in value is made to recognize a decline other than temporary. c) Investments which are intended to be held for less than one year are classified as current investments and are carried at lower of cost and fair value determined on an individual investment basis. d) Advance against share application money are classified under the head "Investments". I. Inventories • Inventories are valued at lower of cost or net realizable value. J. Foreign Currency Transactions • Transactions denominated in foreign currency are normally recorded at the exchange rate brvailing at the time of the transaction. • Monetary items denominated in foreign currency at the year end and not covered under forward exchange contracts are translated at the yearend rates. • Any income or expense on account of exchange difference between the date of transactions and on settlement or on translation is recognized in the statement of profit and loss as income or expense. K. Employees Retirement Benefits The relevant policies for 'Employee Benefits' in accordance with Revised Accounting Standard - 15 are as under: Short Term Employee Benefits Short term employee benefits are recognized in the period during which the services have been rendered. Long Term Employee Benefits a) Defined Contribution plan Provident Fund and employees' state insurance schemes • All employees of the Company are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both the employee and the employer make monthly contributions to the plan at a brdetermined rate (brsently 12%) of the employees' basic salary. • The Company's contributions to both these schemes are expensed in the statement of Profit and Loss. b) Defined Benefit Plan (i) Gratuity • The Company provides for gratuity obligations through a defined benefit retirement plan (the 'Gratuity Plan') covering all employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement or termination of employment based on the respective employee salary and years of employment with the Company. The Company provides for the Gratuity Plan based on actuarial valuations in accordance with Accounting Standard 15 (revised), "Employee Benefits'. The brsent value of obligation under gratuity is determined based on actuarial valuation using Project Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. (ii) Leave Encashment • The Company has provided for the liability at period end on account of unavailed earned leave as per the actuarial valuation as per the Projected Unit Credit Method (iii) Actuarial gains and losses are recognized as and when incurred. L. CENVAT Credit The CENVAT Credit available on raw materials, other eligible inputs/services and capital goods is adjusted against excise duty payable on clearance of goods produced and services tax payable on services rendered. The unadjusted CENVAT credit is shown as "Short Term Loans and Advances". M. Borrowing Costs Borrowing costs that are directly attributable to the acquisition, construction or production of the qualifying assets, if any, are capitalized as a part of cost of such asset. Other borrowing costs are recognized as an expense in the period in which they are incurred. N. Income Tax Tax expense comprises both current and deferred taxes. Current tax is provided for on the taxable profits of the year at applicable tax rates. Deferred income taxes reflect the impact of timing differences between taxable income and accounting income for the year and reversal of timing difference of earlier years. Deferred Tax is measured based on the tax rates and tax laws enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that sufficient future taxable income will be available against which deferred tax assets can be realized. Unrecognized deferred tax assets of the earlier years are re-assessed and recognized to the extent it has become reasonably certain that future taxable income will be available against which such deferred tax assets can be realized. O. Earning Per Share In determining earning per share, the company considers the net profits after tax and includes the post tax effects of any extraordinary items. The number of shares used in computing basic earning per share is the weighted average number of shares outstanding during the period. P. Segment Reporting Segments are identified in line with the Accounting Standard on Segment Reporting (AS-17) taking into account the organization structure as well as the differential risk and returns of the segments. The un-allocable items include income and expenses items which are not directly identifiable to any segment and therefore not allocated to any business segment. Q. Provision, Contingent Liabilities& Contingent Assets Provisions involving substantial degree of estimation in measurement are recognized when there is a brsent obligation as a result of past events and it is provable that there will be an out flow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the Financial Statements. 2. A. Media Matrix Worldwide Limited ('MMWL' or 'the Company'), a public limited company, was incorporated on June 07, 1985 in the State of Maharashtra. MMWL made its maiden public issue of Equity Shares in the year 1985 and got its Equity Shares listed at the Bombay Stock Exchange Ltd, Mumbai (BSE). As of March 31st, 2015, Company has been doing business of digital media content and dealing in related activities in media and entertainment industry. B. The Company was incorporated as Rahul Trading and Finance Limited on 07th June, 1985 and was originally engaged in trading activities and later on, it changed its name to Giltfin Lease Limited. It obtained registration from Reserve Bank of India for carrying out Non-Banking Finance Company (NBFC) activities in the year 1999 vide certificate of Registration No. 13.01287 dated 13th August 1999. However, the Company didn't carry out any activities related to NBFC since 13th August, 1999, the date on which it got the NBFC certificate, but only continues to be registered with Reserve Bank of India (RBI) as a Non-deposit accepting Non-Banking Finance Company. In the Year 2000, the Company started media and content business and further changed its name to Media Matrix Worldwide Limited. Considering that the Company had neither carried out any NBFC business in the past, nor it has any intention to carry the business of NBFC in future, the Company, on September 13, 2011, submitted an application to RBI for de-registration as an NBFC. RBI has vide its letter dated December 26, 2012 has asked the Company to lower its financials assets (rebrsenting investment in subsidiaries) as percentage of total assets to enable it to deregister as NBFC. Since the Company brsently does not meet the criteria of principal business as specified by the RBI in its Press Release 1998-99/1269 dated April 8, 1999 and instead qualifies the criteria of Core Investment Company (CIC) based on its current investment structure, the Company has notified the same to RBI vide letter dated April 20, 2013. The Company qualifies for exemption from registration as CIC and has applied for the same to RBI. The same is under due consideration of RBI. 3. During FY2012-2013, the Company came out with issue of 90,77,85,000 equity shares with a face value of Re.1/- each at a brmium of Rs. 0.20 per equity share for an amount aggregating Rs. 108,93,42,000 on a rights basis to the equity shareholders of the Company in the ratio of 9 equity shares for every 1 fully paid-up equity share held by the equity shareholders on the record date, that is, on March 19, 2013. The right issue was opened on March 30, 2013 and closed on April 27, 2013. As on March 31st, 2015, the Company has utilized the amount of Rs. 8928.93 Lacs for the objects of the issue as stated in the Letter of Offer. 4. Investment a) The Company had made an investment of Rs. 16,50,00,000 and Rs. 700,00,000 by way of Optionally Fully Convertible Debentures(OFCDs) into DigiVive Services Private Limited (DSPL) and DigiCall Teleservices Private Limited (DTPL) respectively, on March 31, 2012. During FY2012-13, considering the request received by the Company from DTPL and DSPL for extension of the time period for repayment of the amount of OFCDs, the Board of Directors of the Company had accepted to convert the investment made by way of OFCDs in DTPL and DSPL into Compulsorily Convertible Debentures (CCDs) with the following terms and conditions: i. Face Value:Rs.1000/-per Debenture ii. Coupon rate : 0% iii. Conversion: The said CCDs will be compulsorily converted into equity shares after 9 years from the date of allotment at Book Value or Face Value of Equity Shares at the time of conversion, whichever is higher. iv. Security: The CCDs shall remain unsecured throughout and shall not carry any rights of a lender against the Company. During the year, investment by way of CCD amounting to Rs. 7,00,00,000 in DigiCall Teleservices Private Limited has been converted into Equity shares at Face Value of Rs. 10 each. b) During FY2014-15, the Company had made an investment of Rs. 2,65,00,000 by way of Compulsorily Convertible Debentures (CCDs) into DigiVive Services Private Limited (DSPL) with the following terms and conditions: i. Face Value:Rs.1000/-per Debenture ii. Coupon rate : 0% iii. Tenure: The tenure of the CCDs will be 9 years from the date of allotment with an option with the issuing Company to extend it up to one year. iv. Conversion: The every issued CCD will be convertible into 100 equity shares of the Company after 9 years from the date of allotment. v. Security: The CCDs will be unsecured and will carry no voting rights till such time as they are converted into Equity Shares. 5. Employee Benefits The Company has adopted Accounting Standard 15 (Revised) "Employees Benefits brscribed by the Companies (Accounting Standard) Rules, 2006. During the Year, Company has recognized the following amounts in the financial statements. a) Defined Contribution Plans During the year ended March 31st, 2015, Rs. 15,00,769 (Previous Year Rs. 12,91,545) is recognized as an expense and shown under the "Employee Benefit Expenses" (Note 18). b) Defined Benefits Plans The Present value of Obligation is determined based on actuarial valuation using Project Unit Credit Method, which recognizes each period of services as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity. 6. Figures of brvious year have been re-grouped/reclassified wherever necessary to confirm current year classification. As per our report of even date For and on Behalf of the Board of Directors For Khandelwal Jain & Co. Chartered Accountants Firm regn No.105049W (Naveen Jain) (Partner) Membership No. 511596 (B.B. Chugh) Director (Finance) (C.K. Goushal) Director (Shitij Wadhwa) Company Secretary (Vineet Mittal) CFO Place : Gurgaon Date : 29th May, 2015 |