FUTURE SUN TV Notes to Accounts

1. Corporate information


Sun TV Network Limited (‘Sun TV’ or ‘the Company’) was incorporated on December 18, 1985 as Sumangali Publications Private Limited. The Company is engaged in producing and broadcasting satellite television and radio software programming in the regional languages of South India. The Company is listed on the Bombay Stock Exchange (‘BSE’) and the National Stock Exchange (‘NSE’) in India. The Company has its registered office at Murasoli Maran Towers, 73, MRC Nagar Main Road, MRC Nagar, Chennai - 600 028.


The Company currently operates television channels in four South Indian languages predominantly to viewers in India, and also to viewers in Sri Lanka, Singapore, Malaysia, United Kingdom, Europe, Middle East, United States, Australia, South Africa and Canada. The Company’s flagship channel is Sun TV. The other major satellite channels of the Company are Surya TV, Gemini TV and Udaya TV. The Company is also into the business of FM Radio broadcasting at Chennai, Coimbatore and Tirunelveli. The Company also has the license to operate an Indian Premier League (‘IPL’) franchise “Sun Risers Hyderabad”.


The financial statements are approved for issue by the Company’s Board of Directors on May 26, 2017.


Note 2. Investment Properties


As at March 31, 2017, March 31, 2016 and April 01, 2015 the fair values of the properties are Rs.75.75 crores Rs. 67.41 crores and Rs.58.18 crores respectively.


These valuations are based on valuations performed by an accredited independent valuer. The valuer is a specialist in valuing these types of investment properties. The valuation model used is in accordance with a method recommended by the International Valuation Standards.


The Company has no restrictions on the disposal of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements Fair value hierarchy disclosures for investment properties have been provided in Note 37.


Description of valuation techniques used and key inputs to valuation on investment properties:


The Company has fair valued the office premises property let out on lease using Market approach method.


Significant unobservable Inputs


The independent valuer has made detailed study of prevailing market rate for the commercial buildings in the areas wherein the office premises property is being let out by the Company. This has been adjusted for amenities, depriciation and other lease hold improvement made by the Company to the respective properties.


The valuations for tax free bonds are based on valuations performed by an accredited independent valuer. The valuer is a specialist in valuing these types of Bonds. The valuation model used is in accordance with a method recommended by the International Valuation Standards.


The Company has no restrictions on the disposal of its tax free bonds


Fair value hierarchy disclosures for investments in tax free bonds have been provided in Note 37.


Description of valuation techniques used and key inputs to valuation on investment in tax free bonds:


The Company has fair valued the tax free bonds using IMaCS standard methodology which captures the market condition has on the given day of valuation on T 1 basis.


Significant unobservable Inputs


The independent valuer has made detailed study based on standard methodology for scrip level valuation and have considered the available secondary market and primary market trades for valuation of bonds on reporting date. Outlier trades if any are identified and excluded. Widespread Polling is also conducted with market participant to understand the movement in levels. In the case of illiquid instruments, the valuation is arrived at based on the value bonds with similar maturity issued by similar issuers or securities are linked to a benchmark and a spread over benchmark is arrived at and the same is carried forward.


(i) Term/Rights attached to Equity Shares


The Company has one class of equity shares having a face value of Rs.5.00 each. Each shareholder is eligible for one vote per share held. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.


During the year ended March 31, 2017, the amount of per share dividend recognized as distributions to equity shareholders was Rs. 10.00 /- share (March 31, 2016: Rs.15.50 /- share)


In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. However, no such preferential amounts exists currently.


The distribution will be in proportion to the number of equity shares held by the shareholders.


3. Trade payables


There is no overdue amount payable to Micro and Small Enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006. Further, the company has not paid any interest to any Micro and Small Enterprises during the current and previous year.


Terms and conditions of the above financial liabilities:


Trade payables are non interest bearing and are normally settled within due dates For terms and conditions with related parties, refer to Note 34


Government grants have been received for import of Property, plant & equipment ( PP&E ) in the nature of export promotion scheme. There are no unfulfilled conditions or contingencies attached to these grants. The company is in the process of making necessary applications to obtain related redemption letters from the DGFT.


Government grants have been received for import of Property, plant & equipment ( PP&E ) in the nature of export promotion scheme. There are no unfulfilled conditions or contingencies attached to these grants. The company is in the process of making necessary applications to obtain related redemption letters from the DGFT.


During the previous year, Company’s aircraft sustained damage due to floods in Chennai. The determination of the financial effects thereof was pending as of March 31, 2016 in view of highly technical nature of the assessment involved. Subsequently in the current year, upon completion of such technical assessment, this aircraft has been assessed as being beyond economic repair and declared a total loss. Accordingly, the carrying value of the aircraft as at the date of the incident of Rs. 242.03 crores has been recorded as impairment loss in the previous year. The Company has recognised insurance claim of Rs. 260 crores received from the insurers.The impairment loss on account ofthe damage to the aircraft and related proceeds receivable from the insurance company, as discussed above, have been recorded and disclosed as exceptional item.


The major components of income tax expense for the years ended March 31, 2017 and March 31, 2016 are:


Reconciliation of tax expense and the accounting profit multiplied by India’s domestic tax rate for March 31, 2016 and March 31, 2017 :


The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the standard rate of corporation tax in India (34.608%) as follows:


Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year.


Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.


Note 4. Significant accounting judgements, estimates and assumptions


The preparation of the Company’s Standalone Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.


Judgements


In the process of applying the Company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the Standalone Financial Statements:


Amortisation of intangibles


Acquired Satellite Rights for the broadcast of feature films and other long-form programming such as multi-episode television serials are stated at cost. Future revenues cannot be estimated with any reasonable accuracy as these are susceptible to a variety of factors, such as the level of market acceptance of television products, programming viewership, advertising rates etc., and accordingly cost related to film is fully expensed on the date of first telecast of the film and the cost related to program broadcasting rights / multi episodes series are amortized based on the telecasted episodes.


Estimates and assumptions


The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the Standalone Financial Statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.


Provision for taxes


The Company’s tax expense for the year is the sum of the total current and deferred tax charges. The calculation of the total tax expense necessarily involves a degree of estimation and judgement in respect of certain items. A deferred tax asset is recognised when it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.


Defined benefit plans (gratuity benefits)


The cost of the defined benefit gratuity plan and other post-employment leave encashment benefit and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.


Further details about defined benefit obligations are given in note 32.


Note 5. Employee benefit plans - Gratuity


The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The fund has the form of a trust and it is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.


The scheme is funded with an insurance company in the form of a qualifying insurance policy.


The following tables summarize the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the Gratuity plan.


The overall expected rate of return on assets is determined based on market prices prevailing on that date, applicable to the period over which the obligation is to be settled. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.


The Company contributes all ascertained liabilities towards gratuity to the Sun TV Network Limited Employees Group Gratuity Trust. Trustees administer contributions made to the trust. As of March 31, 2017, March 31, 2016 and April 1, 2015, the plan assets have been primarily invested in insurer managed funds.


A quantitative sensitivity analysis for significant assumption as at March 31, 2017 is as shown below:


The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.


Note 6. Commitments and Contingencies


a) Leases


Operating lease commitments — Company as lessee


The Company has entered into operating leases on KU band Satellite transponder on non cancellable operating lease, with lease terms between 1 and 10 years renewable on periodic basis.


The Company has paid Rs.23.14 crores (March 31, 2016: Rs.21.63 crores) during the year towards minimum lease payment


The operating lease arrangements, are renewable on a periodic basis and can be extended upto a maximum of 5 years from their respective dates of inception. There are no price escalation clause in the agreement.


Future minimum rentals payable under non-cancellable operating leases as at March 31, 2017 are, as follows:


b) Contingent Liabilities


i) Matters wherein management has concluded the Company’s liability to be probable and have accordingly provided for in the books. Refer Note 45.


ii) Matters wherein management has concluded the Company’s liability to be possible and have accordingly disclosed below


iii) Matters wherein management is confident of succeeding in these litigations and have concluded the liability to the Company to be remote. This is based on the relevant facts of judicial precedents and as advised by legal counsel which involves various legal proceeding and claims, in different stages of process, in relation to civil and criminal matters.


* The Company received demands of income tax disallowing the manner of allowance claimed by the Company for certain expenses. The Company’s appeal in respect of various years has been allowed by both the first and the second appellate authorities in the previous years. Accordingly, management believes that based on the favourable judgment as well as relying on judicial pronouncements and other arguments, its position is likely to be accepted by the revenue authorities.


** The Company has received demand for differential customs duty aggregating to Rs. 0.50 crores on account of incorrect classification of certain assets imported during FY 2007-08. The Company has gone on appeal against the said demand, and based on its arguments at such appellate proceedings, management believes that the Company’s claim is likely to be accepted by the authorities.


@ Further to enquiries by the customs authorities on customs duty exemptions availed by the Company in the earlier year, the Company has received a formal show cause notice containing a provisional demand of Rs. 63.13 crores. Then the Company has filed its responses to this notice and has also deposited a sum of Rs. 60.18 crores under protest pending final resolution of the matter. The Management has been advised by senior counsels that appropriate legal remedies are available to the Company in this matter and is accordingly confident of recovering the duty paid.


***The Company received show cause notice from the Service tax department seeking service tax on certain services and disallowances of input credit availed on certain services. The Company has filed appeals for all such show cause notices /orders received with various authorities. The Company based on the judicial pronouncements and other arguments believes its position is likely to be accepted by the authorities.


b) Royalty Payable to Ministry of Information and Broadcasting (‘MIB’)


The Company has obtained licenses to permit them to carry FM operations in Chennai, Coimbatore and Tirunelveli. The Company is required to pay royalty of 4% of gross revenue earned from these FM Operations during the financial year or 2.5 % of One Time Entry Fees paid, whichever is higher to Ministry of Information and Broadcasting.


c) Franchise rights commitments


As per the terms of the franchise agreement entered into by the Company with the BCCI, the Company has a commitment to pay BCCI, Rs. 85.05 crores per annum from 2014 season to 2017 season. From the 2018 IPL season, the Company is required to pay license fees at 20% on the Franchise Income earned during the relevant year from the operation of the IPL franchise to BCCI. In the current year the Company has paid an amount aggregating to Rs. 25.52 crores as franchise license fee for the 2017 IPL season.


d) Financial guarantees


The Company during the year has extended Financial Guarantee to South Asia FM Limited (Joint Venture) for their bank borrowing of Rs.29.50 crores ( March 31, 2016: Nil, April 1, 2015: Nil). The Company has offered its Fixed Deposit of Rs.32.00 crores as a collateral security against such borrowings of the investee. The carrying amounts of the related financial guarantee contracts were Rs.2.91 crores at March 31, 2017 (Also refer note 13 and note 16.)


Note 7 Related party transactions Names of related parties


Individual owning an interest in voting power of the Company that gives them control


Mr. Kalanithi Maran


Enterprises in which Key Management personnel or their relatives have significant influence


Kal Comm Private Limited


Kal Cables Private Limited


Sun Direct TV Private Limited


Udaya FM Private Limited


Sun Distribution Services Private Limited


Sun Business Solutions Private Limited


Kal Publications Private Limited


D.K. Enterprises Private Limited


Sun Foundation


Murasoli Maran Family Trust


Kal Media Services Private Limited


Kal Airways Private Limited


Subsidiary Companies


Kal Radio Limited


Joint Venture


South Asia FM Limited


Asia Radio Broadcast Private Limited


Digital Radio (Kolkata) Broadcasting Limited


Optimum Media Services Private Limited


Digital Radio (Mumbai) Broadcasting Limited


Pioneer Radio Training Services Private Limited


Digital Radio (Delhi) Broadcasting Limited


South Asia Multimedia Private Limited


Associates


Deccan Digital Networks (Hyderabad) Private Limited


Metro Digital Networks (Hyderabad) Private Limited


AV Digital Networks (Hyderabad) Private Limited


Key Management personnel


Mr. Kalanithi Maran - Executive Chairman


Mr. K Vijaykumar - Managing Director and Chief Executive Officer


Mr. R Mahesh Kumar - President


Mrs. Kavery Kalanithi - Executive Director


Mr.V C Unnikrishnan - Chief Financial Officer


Mr. R. Ravi - Company Secretary


Mr. S. Selvam - Non Executive Director


Mr. J. Ravindran - Independent Director


Mr. M.K. Harinarayanan - Independent Director


Mr. Nicholas Martin Paul - Independent Director


Mr. R.Ravivenkatesh - Independent Director


Relatives of Key Management personnel


Mrs. Mallika Maran


Ms. Kaviya Kalanithi Maran


Terms & Conditions of Transactions with Related Party


The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. For the year ended March 31, 2017, the company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2016: Nil, April 1, 2015: Nil).


Based on internal reporting provided to the chief operating decision maker, Media and Entertainment is the only operating segment for the company.


Non-current assets for this purpose consist of property, plant and equipment, investment properties, intangible assets, capital work in progress and other non current assets (other than financial instruments).


Note 8. Fair values


Set out below, is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:


The management assessed that the fair value of cash and cash equivalents, trade receivables, trade payables, Financial guarantee and other current and non current financial liabilities and financial assets approximate their carrying amounts largely due to the short-term maturities of these instruments.


The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The method and assumptions used to estimate the fair values is the fair values of financial instruments traded in active markets are based on quoted market prices at the balance sheet date.


The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities:


Note 9. Financial risk management objectives and policies


The Company’s principal financial liabilities, include trade and other payables. The Company has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations.


The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. The Company’s senior management ensures that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.


Market Risk


Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency risk and other price risk, such as equity price risk. The Value of financial instrument may change as a result of changes in the foreign currency exchange rates, equity price fluctuation, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy .Financial instrument affected by market risk includes invesment in equity instruments etc.


Foreign currency risk


Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities.As per the Forex policy, the Company, takes forward contract for transactions where the foreign currency risk on account of movement in exchange rate expected to be high and which is material to the Company. The impact of foreign exchange rate fluctuations is evaluated by assessing its exposure to exchange rates risks. Major exposure to foreign exchange fluctuation risks is with Monetary receivables / payables denominated in USD.


Foreign currency sensitivity


The following tables demonstrate the sensitivity to a reasonably possible change in foreign exchange rates, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities.The sensitivity analysis in the following sections relate to the position as at March 31, 2017, March 31, 2016 and April 1, 2015.


Credit risk


Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk is equal to the carrying amount of financial assets as of March 31, 2017, March 31, 2016 & April 1, 2015 respectively.


Liquidity risk


The Company’s prime source of liquidity is cash and cash equivalents and the cash flow generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.


As of March 31, 2017, the Company had a working capital of Rs.1,890.53 crores (March 31, 2016 - Rs. 1,915.21 crores ; April 1, 2015 - Rs. 1,562.52 crores) including cash and cash equivalents of Rs. 655.16 crores (March 31, 2016 - Rs. 552.93 crores ; April 1, 2015 - Rs. 393.21 crores) and current investment of Rs. 545.48 crores (March 31, 2016 -Rs. 230.59 crores ; April 1, 2015 - Rs. 244.92 crores).


As of March 31, 2017, March 31, 2016 & April 1, 2015, there are no material liability which is outstanding. Accordingly, no liquidity risk is perceived.


Collateral


A collateral on the Fixed Deposit of the Company (amounting to Rs.32.50 crores ) has been made against the loan of Rs. 29.50 crores taken by the Company’s investee (Joint Venture). Refer note 33 (d).


Note 10. Capital management


For the purpose of the Company’s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Company’s capital management is to maximise the shareholder value.


The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company’s policy for capital management aims to enhance capital efficiency by the long-term improvement of its value through business growth, while maintaining a sound financial structure. Indicators for monitoring the capital management include total equity attributable to owners of the parent and ROE (ratio of net profit to total equity attributable to owners of the parent). The Company’s policy is to keep the ROE between 35% to 38%. The Company has achieved the same over past 2 years.


Note 11. Provisional Attachment order from Enforcement Directorate


During the year, the Hon’ble Special Court hearing the related proceedings in connection with an investigation not involving the Company, passed an order, as a result of which, the provisional attachment stands released. During the previous year, certain Freehold Land and Buildings of the Company aggregating Rs. 266 crores had been provisionally attached vide an order of the Enforcement Directorate, Ministry of Finance, Government of India, (“Enforcement Directorate”), under the prevention of Money Laundering Act, 2002 (“PMLA”). Whilst the appeal process in this matter is pending, Company continues to be in possession of the said properties / deposits / mutual fund investments, the management is confident of a successful outcome from the same and accordingly is of the view that no accounting adjustments are considered necessary in this standalone financial statements in this regard.


Note 12. First-time adoption of Ind AS


These financial statements, for the year ended 31 March 2017, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP) and Companies Account (Amendment) rules, 2016, as amended.


Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31 March 2017, together with the comparative period data as at and for the year ended 31March 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at 1 April 2015, the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1 April 2015 and the financial statements as at and for the year ended 31 March 2016.


Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions :


1 Ind AS 16 - Property, plant and equitment are opted to be carried as recognised in its previous GAAP financials as deemed cost at the transition date. The Company has elected to continue with the carrying value as at 1st April, 2015 for all of its investment properties, Intangible assets and property plant & equipment as recognised in its Previous GAAP financial as deemed cost at the transition date.


2 Ind AS 103 - Business Combinations has not been applied to amalgamation / merger, which are are considered businesses under Ind AS that occurred before date of transition i.e April 1, 2015.


The Company has used this exemption for the merger of Gemini TV Private Limited and the Satellite Television Business of Udaya TV Private Limited in earlier years.


Estimates


The estimates at April 1, 2015 and at March 31, 2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from Impairment of financial assets based on expected credit loss model where application of Indian GAAP did not require estimation.


The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2015 (i.e. the date of transition to Ind-AS) and as of March 31, 2016.


Effect of the Transition to Ind AS


Reconciliations of the Company’s balance sheets prepared under Indian GAAP and Ind AS as of April 1, 2015 and March 31, 2016 are also presented in Note 42. Reconciliations of the Company’s income statements for the year ended March 31, 2016 prepared in accordance with Indian GAAP and Ind AS in Note 43.


Notes: (a) Deferred credit terms with customers


Under Indian GAAP, the Company accounted for revenue from operations at its transaction value. Under Ind AS, where the inflow of cash is deferred, revenue is determined at its fair value by discounting all future receipts using an imputed rate of interest. The difference between the transaction value and discounted value is recognized as interest income on EIR basis.


(b) Multiple arrangements


Under Indian GAAP, the Company has accounted for various components of a multiple-element arrangement as a single contract at its transaction value. However, under Ind AS, the Group has identified separately each components of a combined transaction and recognized revenue on each component at its fair value.


(c) Investments carried at FVTPL


Under Indian GAAP, the Company accounted for investments in unquoted mutual funds as investment measured at the lower of cost and market value. Under Ind AS, the Group has measured such investments at fair value. The difference between fair value and Indian GAAP carrying amount has been recognized in statement of profit and loss account as fair value gain/loss.


(d) Actuarial gain/loss on defined benefit plans


Under Indian GAAP, the Company recognized actuarial gains/losses and expected rate of return on defined benefit plans in the income statement. Under Ind AS, the Company has recognized the actuarial gains/losses and the return on assets (excluding interest) relating to retirement benefit plans in other comprehensive income. However, this has no impact on total comprehensive income and total equity.


(e) Impairment of financial assets


Under Indian GAAP, provisioning on trade receivables was made on incurred loss model. Under Ind AS, the provision has been created based on the expected credit loss model.


(f) Government Grants


Under Indian GAAP, the Company has accounted for fixed assets net of the import duty exemption provided. Under Ind AS, the Government grant is to be separately identified and recognised as deferred revenue and fixed assets is to be accounted at the gross value including the duty saved portion. The income is to be recognised over the life of the respective assets and depreciation is to be charged on the grossed value of fixed assets.


(g) Other financial assets


Under Indian GAAP, the Company measures the rental deposits paid to the lessor and rental deposits received from customers at transaction value. Under Ind AS, the deposits have been measured at fair value and the difference between the fair value and the transaction cost has been recorded as prepaid lease rent / deferred revenue.


(h) Deferred tax


Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.


On transitional adjustments, the corresponding deferred taxes have been recognized.


(i) Other comprehensive income


Under Indian GAAP, the Company has not presented other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit or loss to profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.


(j) Investment Properties


Under Indian GAAP, investment properties were presented as part Property, plant and equipment. Under Ind AS, investment properties are required to be separately presented on the face of the Balance Sheet.


(k) Statement of cash flows


The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.


Note 13. Disclsoure On Specified Bank Notes (SBNs)


During the year, the Company had specified bank notes(SBNs) and other denomination note as defined in the MCA notification G.S.R. 308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBNs) held and transacted during the period from November 8, 2016 to December 30, 2016, the denomination wise SBNs and other notes as per the notification is given below:


For the purposes of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.


Note 14. As required by Accounting Standard (Ind - AS-37) “Provisions, Contingent Liabilities and Contingent Assets” the details of Provisions are set out as under.

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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