Summary of the significant accounting policies and other explanatory information for the year ended 31 March 2015 1. Basis of brparation The financial statements have been brpared under historical cost convention, on accrual basis, in accordance with the generally accepted accounting principles in India and to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013(the 'Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended). The accounting policies have been consistently applied by Network18 Media & Investments Limited the ('Company'). 1.1 Summary of significant accounting policies a. Use of estimates The brparation of financial statements in conformity with Indian GAAP requires judgements, estimates and assumptions to be made that effect the reported amount of assets and liabilities, disclosure of contingent liabilities and the reported amount of income and expenses during the year. Difference between the actual results and estimates are recognized in the period in which the results are known / materialise. b. Revenue recognition i. Advertising and sponsorship revenue from websites is recognized proportionately over the contractual period of advertisement, commencing when the advertisement is placed on the website, unless the Company has to meet performance conditions in which case revenue is recognized using the proportionate completion method. Advertising revenue from magazines is recognized in the period in which the magazines are delivered and are accounted net of commission and discounts. Revenue from sponsorships of event is recognized after the completion of event. ii. Revenue from mobile short messaging and other related services are recognized based on usage of services by the mobile subscribers and share of revenue agreed with the mobile network operators. iii. Sale of magazines includes revenue from circulation of magazines and subscription of magazines. Revenue from circulation of magazines includes sales to retail outlets/ newsstands, which are subject to returns. The Company records these retail sales upon delivery, net of estimated returns. These estimated returns are based on historical return rates and are revised as necessary based on actual returns. Revenue from subscription of magazines is recognized on delivery of magazines to subscribers. iv. Transactions that involve the exchange of goods or services for other goods or services in respect of web operations are accounted for in accordance with Guidance Note on Accounting for Dot-com Companies issued by the Institute of Chartered Accountants of India (ICAI). Barter transactions are recorded at fair value, being the value at which similar transactions are executed with other parties. v. Revenue from travel and tour services is recognized after rendering of services as per the terms of the contract. vi. Revenue from sale of stalls at exhibitions organized by the Company is recognized after completion of exhibition. vii. Business support service income is recognized after rendering of services. viii. Dividend income is accounted for when the right to receive dividend is established. ix. Profit / loss on sale of investments are computed on the basis of weighted average cost on date of disposal of investments. x. Interest income is recognized on time proportionate basis, taking into account the amount outstanding and the rate applicable. c. Fixed assets Tangible assets Tangible assets are stated at their original cost of acquisition and installation less accumulated debrciation. All direct expenses attributable to acquisition and installation of assets are capitalised. Intangible assets Acquired brands/domain names and computer software are capitalised at cost of acquisition and disclosed as intangible assets. Website development costs that provide additional functions or features to the Company's website are capitalised. Maintenance expenses or costs that do not result in new features or functions are expensed as incurred. d. Debrciation / Amortisation Debrciation on fixed assets is provided on straight line basis as per Schedule II of the 2013 Act. e. Inventory Inventory is valued as follows: Raw materials: Lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on a weighted average basis. Work-in-progress and finished goods: Lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost is determined on weighted average basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. f. Impairment of tangible and intangible assets An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is revered if there has been a change in the estimate of recoverable amount. g. Investments Current investments are carried at lower of cost and quoted / fair value. Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary. h. Leases Operating lease Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis, over the lease term. i. Employee benefits Provident Fund The Company's Employees Provident Fund scheme is a defined contribution plan. The Company's contribution to the Employees' Provident Fund is charged to the Statement of Profit and Loss during the period in which the employee renders the related service. Gratuity The Company provides for gratuity, a post employment defined benefit plan covering eligible employees. The brsent value of the obligation under such defined benefit plan is determined based on actuarial valuation using the projected unit credit method performed by an independent, which recognises 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. The obligation is measured at the brsent value of the estimated future cash flows. The discount rate used for determining the brsent value of the obligation is based on the market yields on government securities as at the balance sheet date. Actuarial gains/losses are recognized immediately in the Statement of profit and loss. Gain and loss on curtailment or settlement are recognized when the curtailment or settlement occurs. Compensated absences Benefits comprising long term compensated absences constitute other long term employee benefits. The liability for compensated absences is determined using the Projected Unit Credit Method, on the basis of an actuarial valuation performed by an independent valuer at the period end. Actuarial gains and losses are recognised immediately in the Statement of profit and loss. Gain and loss on curtailment or settlement are recognized when the curtailment or settlement occurs. Short term employee benefits Short term employee benefits expected to be paid or payable in exchange for the services rendered is recognised on undiscounted basis. j. Foreign currency transactions Transactions in foreign currencies are recorded at the exchange rate brvailing on the date of the transaction. Exchange differences on foreign exchange transactions settled during the period are recognized in the Statement of Profit and Loss. Monetary items denominated in foreign currency and outstanding at the balance sheet date are translated at the exchange rate brvailing on that date and resulting exchange differences are recognized in the Statement of profit and loss. k. Income tax Income tax expense comprises current tax and deferred tax. Current tax is determined in accordance with the provisions of Income Tax Act, 1961. 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 recognized 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 realized. In situation, where the Company has unabsorbed debrciation or carry forward of losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. l. Employee stock options plan Accounting value of stock options is determined on the basis of "Intrinsic Value" rebrsenting the excess of the market price on the date of grant over the exercise price of the options granted under the "Employees Stock Option Scheme" of the Company, and is being amortised as "Deferred employee compensation" on a straight-line basis over the vesting period in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines and Guidance Note 18 "Share Based Payments" issued by the Institute of Chartered Accountants of India. m. Provisions and contingencies Provision recognised 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 and a reliable estimate can be made. Provisions are not discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed unless the possibility of outflow of resources is remote. Contingent assets are neither recognised nor disclosed in the financial statements. n. Borrowing costs Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset when it is probable that they will result in future economic benefits to the Company and the costs can be measured reliably. Other borrowing costs are recognized as an expense in the period in which they are incurred. 1. Barter transactions The Company enters into barter transactions, which are recorded at the fair value of consideration receivable or payable. The statement of profit and loss for the year 31 March 2015 reflects revenue from barter transactions of Rs. 43.80 lakhs (for the year ended 31 March 2014 Rs. 167.82 lakhs) and expenditure of Rs. 43.80 lakhs (for the year ended 31 March 2014 Rs. 167.82 lakhs) being the fair value of barter transactions provided and received 2. The Company has foreign currency receivables aggregating to Rs. 523.82 lakhs (brvious year Rs.546.90 lakhs which are outstanding for more than nine months and foreign currency payables aggregating to Rs.33.05 lakhs (brvious year Rs. 20.48 lakhs) which are outstanding for more than six months. The Company is in the process of dealing with the statutory implications of these delays. As the aforementioned is currently not ascertainable, the same shall be provided at the earliest practicable. 3. Continuing and discontinuing operations Pursuant to the business transfer agreement dated 27 February 2013 the Yellow Pages and AskMe business undertakings, forming part of the ‘Publishing’ segment of the Company, have been disposed off to GetitInfoservices Private Limited. The following statement shows the revenue and expenses of continuing and discontinuing operations: 4. The Company is in the process of addressing the matters specified in Circular No. CIR/CFD/DIL/E/2013 dated 17 January, 2013 read together with Circular No. CIR/CFD/DIL/7/2013 dated May 13, 2013 and Circular No. CIR/CFD/POLICYCELL/14/ 2013 dated November 29, 2013 issued by the Securities and Exchange Board of India in respect of certain shares held by Network18 Group Senior Professional Welfare Trust. 5. As per Accounting Standard (AS) 17 on “Segment Reporting”, segment information has been provided under the Notes to Consolidated Financial Statements. 6. Previous year figures have been regrouped, wherever necessary, to confirm to current year brsentation. For Walker Chandiok & Co. LLP For and on behalf of Board of Directors of (Formerly Walker, Chandiok & Co) Network18 Media & Investments Limited Chartered Accountants per B P Singh Partner Adil Zainulbhai Chairman of the Board Rohit Bansal Director Hariharan Mahadevan Group Chief Financial Officer Yug Samrat Company Secretary Place : Noida Date : 15 April 2015 |