Company Information Entertainment Network (India) Limited (the 'Company') is a public limited company domiciled in India and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The Company was incorporated on June 24, 1999. As on March 31, 2016, the Company operated FM radio broadcasting stations in 37 Indian cities under the brand name 'Radio Mirchi'. The Company's principal revenue stream is advertising. Advertising revenues are generated through the sale of air time in the Company's FM radio broadcasting stations, activations and monetization of Company's media properties. 1. Significant Accounting Policies i. Basis of Accounting The financial statements have been brpared in accordance with the generally accepted accounting principles in India under the historical cost convention on an accrual basis. The financial statements comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014.The accounting policies have been consistently applied by the Company and are consistent with those followed in the brvious year. ii. Use of Estimates The brparation of financial statements in accordance with the generally accepted accounting principles requires Management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to such accounting estimates is recognised prospectively in the accounting period in which such revision takes place except where otherwise noted. iii. Revenue Recognition a. Revenue from Operations i. Revenue from radio broadcasting is recognised on an accrual basis on the airing of client's commercials. The revenue that is recognised is net of service tax. ii. Revenue from other services is recognized, as and when services are rendered and where applicable, the percentage completed method is applied. b. Other Income i. Dividend income on mutual fund units is accounted for when the right to receive the dividend is established by the balance sheet date. ii. Interest income is recognised on a time proportionate basis taking into account the amount outstanding and the rate applicable. iii. Profit on sale of units of mutual funds is recognised at the time of redemption and is determined as the difference between the redemption price and the carrying value. iv. Fixed Assets and Debrciation a. Tangible Fixed Assets Tangible fixed assets are stated at acquisition cost less accumulated debrciation and impairment losses, if any. Cost of tangible fixed assets comprises purchase price, duties, levies and any directly attributable cost of bringing the asset to its working condition and location for the intended use. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. Cost incurred on assets not ready for their intended use is disclosed as Capital Work-in-Progress. Debrciation on tangible fixed assets is provided on written down value method as per the useful life and in the manner specified in Schedule II to the Act b. Intangible Assets (other than Software) Non Refundable One Time Migration Fees paid by the Company for existing licenses upon migration to Phase III of the Licensing policy and Non Refundable One Time Entry Fees paid by the Company for acquiring new licenses have been capitalised as an asset. d. Borrowing Cost Borrowing cost directly attributable to qualifying assets, which take substantial period to get ready for its intended use, are capitalized to the extent they relate to the period until such assets are ready to be put to use. Other borrowing costs are recognized as an expense in the period in which they are incurred. v. Foreign Currency Transactions Foreign currency transactions are recorded at the exchange rates brvailing on the date of the transaction. Gains and losses arising out of subsequent fluctuations are accounted for on actual payment or realisation. Monetary items denominated in foreign currency as at the balance sheet date are converted at the exchange rates brvailing on that day. Exchange differences are recognised in the statement of profit and loss. vi. Investments Investments that are intended to be held for not more than a year from the date of investment are classified as current investments. All other investments are termed as long term investments. The portion of long term investments which is expected to be realized within twelve months from the balance sheet date are classified as current investments. Investment in buildings that are not intended to be occupied substantially for use by, or in the operations of the Company, have been classified as investment property. The same has been classified as long term investments. Current investments are carried at cost or fair value, whichever is lower. Long term investments are stated at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the long term investments. vii. Employee Benefits a. Defined Contribution Plans : The Company has Defined Contribution Plans for post-employment benefits such as Provident Fund, National Pension Scheme and Employee's Pension Scheme, 1995. Under the Provident Fund Plan, the Company contributes to a Government administered Provident Fund on behalf of its employees and has no further obligation beyond making its contribution. The Company contributes to a State Plan namely Employee's Pension Scheme, 1995 and has no further obligation beyond making its contribution. The Company contributes to a Government administered National Pension Scheme on behalf of its employees and has no further oblilgation behond making its contribution. The Company's contributions to the above funds are recognized in the statement of profit and loss every year. b. Defined Benefit Plans : The Company has Defined Benefit Plans namely gratuity and compensated absences for all its employees. The liabilities in respect of compensated absences which are expected to be encashed/ utilised before twelve months from the balance sheet date are considered short term. Other such liabilities are considered long term. Liability for Defined Benefit Plans is provided on the basis of valuations, as at the balance sheet date, carried out by an independent actuary. The actuarial valuation method used by the independent actuary for measuring the liability is the Projected Unit Credit Method. Actuarial losses / gains are recognised in the statement of profit and loss in the year in which they arise. c. Termination benefits are recognised as an expense as and when incurred. viii. Operating Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the statement of profit and loss on a straight-line basis over the period of the lease. ix. Cash and Cash Equivalents Cash and cash equivalents include cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less. x. Earnings Per Share Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company's earnings per share is the net profit for the period after deducting brference dividends and any attributable tax thereto for the period. The weighted average number of equity shares outstanding during the period and for all periods brsented is adjusted for events (such as bonus shares) other than the conversion of potential equity shares that have changed the number of equity shares outstanding without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. xi. Income Taxes Tax expense comprises current and deferred tax. Current income tax and deferred tax are measured based on the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Current tax assets and liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis. Minimum Alternate Tax (MAT) paid in accordance with tax laws which give rise to future economic benefits in the form of adjustment to future income tax liability is considered as an asset, if there is convincing evidence that the Company will pay normal tax in future. Accordingly, MAT is recognised as an asset in the balance sheet when it is probable that the future economic benefit associated with it will flow to the Company and the asset can be measured reliably. The Company reviews the 'Minimum Alternate Tax (MAT) Credit Entitlement' asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period i.e. the period for which MAT credit is allowed to be carried forward. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the 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 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. Deferred tax assets and liabilities are measured using the tax rates that have been enacted or substantively enacted by the balance sheet date. xii. Impairment of Assets The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date there is an indication that a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of debrciated historical cost. xiii. Provisions and Contingent Liabilities The Company recognises a provision when there is a brsent obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to its brsent date value and are determined based on best estimates of the amount required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. 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 embodying economic benefit. Where there is a possible obligation or a brsent obligation but the likelihood of outflow of resources is remote, no provision or disclosure is made. xiv. License Fees As per the applicable Frequency Module (FM) broadcasting policy, license fees is charged to revenue at the rate of 4% of gross revenue for the financial year or minimum fixed fee for the concerned city, whichever is higher. Minimum fixed fee is 2.5% of the Non-Refundable One Time Entry Fee (NOTEF). During the brvious year, minimum fixed fee was 10% of the Reserve One Time Entry Fee (ROTEF). Gross Revenue for this purpose shall mean revenue on the basis of billing rates inclusive of any taxes. Barter advertising contracts are also included in the gross revenue on the basis of relevant billing rates. NOTEF means the successful bid amount arrived at through an ascending e-auction process for first batch of private FM Radio Phase-III Channels conducted by the Ministry of Information & Broadcasting ('MIB'). ROTEF means 25% of highest valid bid in the city. 2. Segment Information In accordance with Accounting Standard-17, 'Segment Reporting', the Company's business segment is Media and Entertainment and it has no other primary reportable segments. Accordingly, the segment revenue, segment results, total carrying amount of segment assets and segment liabilities, total cost incurred to acquire segment assets and total amount of charge for debrciation during the year, is as reflected in the Financial Statements as at and for the year ended March 31, 2016. The Company primarily caters to the domestic market and hence there are no reportable geographical segments. 3. Gross amount required to be spent by the Company during the year for Corporate Social Responsibility (CSR) activities was Rs. 20,072,852 (Previous year: Rs. 16,007,525). Amount spent during the year by the Company was Rs.20,084,000 (Previous year: Rs. 7,143,200). 4. The Scheme of Amalgamation and Arrangement ('Scheme') of TIML (the holding company of the Company) with BCCL (the holding company of TIML) was filed under the Companies Act, 1956. The Scheme was approved by the Hon'ble Bombay High Court vide Order dated July 3, 2015 ('Order'), which was subject to the approval of the Ministry of Information & Broadcasting, Government of India ('MIB'). The MIB, vide its letter dated April 25, 2016 (received by the Company on April 26, 2016), accorded its approval to the change in ownership pattern of the Company under the Scheme. Consequently, TIML's entire shareholding in the Company transferred to BCCL, and BCCL is the sole promoter shareholder of the Company. The appointed date of the Scheme was April 1, 2013. 5. In February 2015, the Company had entered into a non-binding memorandum of understanding with TV Today Network Limited ('TVTN') for purchase of seven radio stations from TVTN. On July 22, 2015 the Company received the approval from the MIB to purchase TVTN's four radio stations in Amritsar, Jodhpur, Patiala and Shimla. The Company acquired these four stations for a consideration of Rs. 40,000,000. The Company allocated Rs. 15,377,157 towards fixed assets received from TVTN and the balance consideration was allocated towards the FM Radio License cost i.e. NOTMF for the four stations acquired through the Business Transfer Agreement ('BTA'). The Company completed the acquisition on September 19, 2015. The Company also paid the migration fees to the MIB for these four stations in order to migrate from Phase II to Phase III. As regards the remaining three stations viz. Mumbai, Delhi and Kolkata, the MIB declined to grant its approval. The Company and TVTN have appealed against the MIB decision before the Hon'ble Delhi High Court. The next court hearing in respect of the appeal is scheduled for July 13, 2016. 6. Pending litigations and claims a. The Company is involved in various litigations the outcome of which are considered probable and in respect of which the Company has aggregate provisions of Rs. 103,137,851 (Previous year t 85,333,139) as at March 31, 2016. b. Contingent liability - taxation The Company is contesting certain disallowances to the taxable income and demands raised by the Income tax authorities, the estimated tax liability on account of these disallowances and demands is Rs. 11,873,445 (Previous year: Rs.11,873,445). The management does not expect the liability from these claims to crystallize and accordingly, no provision has been recognized in the financial statements for the same. 7. Previous year's figures have been reclassified to conform to this year's classification. For S.R. Batliboi & Associates LLP ICAI Firm Registration No. 101049W/E300004 Chartered Accountants Govind Ahuja Partner Membership No. 48966 For and on behalf of the Board of Directors Vineet Jain Chairman[DIN: 00003962] N. Kumar Director [DIN: 00007848] Prashant Panday Managing Director & CEO [DIN: 02747925] N. Subramanian Group CFO Mehul Shah SVP - Compliance & Company Secretary [Membership No. FCS: 5839] Place : Mumbai Dated: May 19, 2016 |