NOTE 1 SIGNIFICANT ACCOUNTING POLICIES 1.1 Basis of brparation of financial statements ? The financial statements of the Company have been brpared under the historical cost convention in accordance with the Accounting Standards specified by Companies (Accounts) Rules, 2014 issued by the Central Government and the relevant provisions of the Companies Act, 2013, to the extent applicable. ? All financial transactions have been recognized on accrual basis. The brparation of financial statements in conformity with the GAAP requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. The Management believes that the estimates used in the brparation of the financial statements are prudent and reasonable. Future results could differ from those estimates. 1.2 Revenue Recognition Income from movie and related rights are recognised in accordance with the terms of the agreements on accrual basis. Interest income is recognized on time proportionate basis. Income earned on licensing the copyrights is recognized on time proportionate basis. 1.3 Use of Estimates In brparation of financial statements conforming to GAAP requirements certain estimates and assumptions are essentially required to be made with respect to items such as provision for doubtful debts, future obligations under employee retirement benefit plans, income taxes and the useful life period of Fixed Assets. Due care and diligence have been exercised by the Management in arriving at such estimates and assumptions since they may directly affect the reported amounts of income and expenses during the year as well as the balances of Assets and Liabilities including those which are contingent in nature as at the date of reporting of the financial statements. To comply with GAAP requirements relating to impairment of assets, if any, the Management periodically determines such impairment using external and internal resources for such assessment. Loss, if any, arising out of such impairment is expensed as stipulated under the GAAP requirements. Contingencies are recorded when a liability is likely to be incurred and the amount can be reasonably estimated. To this extent the results may differ from such estimates 1.4 Fixed Assets and Debrciation Fixed Assets are stated at acquisition cost. Debrciation is charged on a pro-rata basis on a straight-line method as per the rates and in the manner brscribed under the Schedule II to the Companies Act, 2013, as amended. 1.5 Benefits to employees Gratuity The liability as at the Balance Sheet date is provided for based on the actuarial valuation carried out in accordance with Accounting Standard 15 (Revised 2005) on "Employee Benefits" as at the end of the period. Actuarial Gains/Losses are recognized immediately in Statement of Profit and Loss. b Leave Encashment Leave encashment is paid for in accordance with the rules of the Company and provided based on an actuarial valuation as at the balance sheet date. Actuarial Gains/Losses are recognized immediately in Statement of Profit and Loss. ? Other Benefit Plans Contributions paid under defined contribution plans are recognized in the Statement of Profit and Loss in each year. Contribution plans primarily consist of Provident Fund administered and managed by the Government of India. The company makes monthly contributions and has no further obligations under the plan beyond its contributions. 1.6 Investments Long-term investments are stated at cost less diminution, other than temporary, in the value of such investments, if any. Current investments are valued at cost or market value whichever is lower. 1.7 Inventory Inventory at the yearend consists of film under production Work in progress (WIP). The inventory WIP are valued at cost or net realizable value whichever is less. Cost includes direct and indirect cost relating to film production activities. 1.8 Foreign Currency Transactions All foreign currency transactions are accounted for at the rates brvailing on the dates of the transaction. Foreign currency assets and liabilities are converted at the yearend rates as applicable. The exchange difference on settlement / conversion is adjusted to Statement of Profit and Loss. 1.9 Taxes on Income Tax expense comprises current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the relevant tax laws. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed debrciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realised against future taxable profits. 1.10 Leases The assets purchased under hire purchase agreements are included in the Fixed Assets block. The value of the asset purchased is capitalized in the books. A liability for the same amount is created at the time of entering into the agreement. The payments are made to the HP vendors as per the EMI's given in the hire purchase agreements. The finance charges are debited to the statement of profit and loss and the principal amount is adjusted against the liability created for the vendor. Lease rentals in respect of operating lease arrangements are charged to expense on a straight-line basis over the term of the related lease agreement. 1.11 Borrowing Cost Expenditure on borrowing cost on the loans obtained specifically for acquisition, construction or production of qualifying assets are capitalized as part of the cost of that asset. Other borrowing costs are charged to revenue over the tenure of the loan. 1.12 Impairment of Assets The Company reviews the carrying values of tangible and intangible assets for any possible impairment at each Balance Sheet date. Impairment loss, if any, is recognized in the year in which the impairment takes place. 1.13 Cash Flow Statement The Cash flow statement is brpared under the indirect method as per Accounting Standard 3 "Cash Flow Statements". 1.14 Segment Reporting The Company operates in only one segment viz. movie and related activities. Hence segment reporting is not applicable. 1.15 Earnings per Share The earnings considered for ascertaining the Company's Earnings Per Share comprises the net profit after tax. The number of shares used in computing Basic EPS is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted EPS comprises the weighted average shares considered for deriving basic EPS, and also the weighted average number of equity shares that would be issued on the conversion of all dilutive potential equity shares. 1.16 Provisions, Contingent Liabilities and Contingent Assets Provisions are recognized when the Company has an obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Obligations are assessed on an ongoing basis and only those having a largely probable outflow of resources are provided for. Contingent Liabilities are recognized only when there is a possible obligation arising from past events due to occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or where any brsent obligation cannot be measured in terms of future outflow of resources or where a reliable estimate of the obligation cannot be made. 1 On a conservative basis, the Company has, provided for the entire amount of investments and advances to its subsidiary company M/s PVP Cinema (P) Ltd and the management does not expect any further provision on these investments and advances. 2. Long Term and Short Term Secured Loans are borrowed for the purpose of advancing film production/film finance. Bank loans are secured by charge on the film production rights undertaken by the company and collateral security of land given by group companies. Borrowings from banks and others are secured by way of charge on some of the advance to film production/finance and also personally guaranteed by Mr.Prasad V Potluri, Managing Director. 3. Advance made for film finance are on the security of hypothecation of assets , mortgage of property, personal guarantee, assignment of rights, lien on film negative , undertaking to create security, etc. 4. Related party disclosures List of related parties where control exists and related parties with whom transactions have taken place and relationships are as follows: 5. Expenditure in Foreign Exchange During the year the Company has incurred expenditure in foreign exchange of Rs.22,61,633/- towards Film Production Expenses and Travel expenditure. (2014- Rs.69,90,298) 6. The Company has not received any intimation from Suppliers, regarding their status under the Micro, Small Enterprises Development Act, 2006 and hence required disclosures such as amounts unpaid as at the year-end together with interest paid/payable have not been given. 7. The Company has not entered into any Derivative transactions during the year. There are no outstanding foreign currency exposures. 8. Contingent liabilities Company has given a corporate guarantee of Rs.100.00 Cr for its subsidiary compay ie PVP Capital Limited as security for availing working capital limits from the Bank. The subsidiary company has outstanding loan with bank of Rs. 99.41 Crs as of 31st March 2015. (Rs.61.67 Crs as of 31st March 2014) 9. Corporate Social Responsibility(CSR) As per section 135 of companies act 2013, the company should have spent Rs. 20.11 lakhs, towards CSR activities during the year 2014-15. Management have formed the Committee and formulated the policy,but could not effect payment before 31st March 2015 and the same will be expensed during the current financial year 2015-16. 10. The brvious year's figures have been regrouped/rearranged wherever necessary to make it comparable with the current year figures. As Per Our Report Of Even Date For M/S CNGSN & Associates LLP Chartered Accountants Firm. Reg.No. 004915S For And On Behalf Of The Board Of Directors R. Thirumalmarugan Partner Membership No. 200102 Prasad V. Potluri Managing Director R. Nagarajan Director Sd/- B. Bhargava Company Secretary Sd/- A. Praveen Kumar GM - Finance and Accounts Date : May 29, 2015 Place : Hyderabad |