General information Background

Jagran Prakashan Limited (“the Company” or “JPL”) is a company limited by shares, incorporated and domiciled in India. The Company is engaged primarily in printing and publication of Newspaper and Magazines in India. The other activities of the company comprise outdoor advertising business, event management and activation services and digital business. The Company is a public limited company and its equity shares are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The Company is having its registered office at Jagran Building, 2, Sarvodaya Nagar, Kanpur 208005. The parent of the Company is Jagran Media Network Investment Private Limited.

Note 1.1 Standards issued but not yet effective Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:

On 28 March, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset or liability, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from 1 April, 2018. The Company is evaluating the requirements of Ind AS 21 and its effect of the financial statements.

Ind AS 115- Revenue from contract with customers: Ministry of Corporate affairs has notified Ind AS 115 ‘Revenue from contracts with customers’, which is effective from 1 April, 2018. The new standard outlines a single comprehensive control-based model for revenue recognition and supersedes current revenue recognition guidance based on risks on rewards. The Company is evaluating the requirements of Ind AS 115 and its effect of the financial statements.

Amendments to Ind AS 12 - Recognition of deferred tax assets for unrealised Losses The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount. Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact. These amendments are effective for annual periods beginning on or after 1 April, 2018. These amendments are not expected to have material effect on Company’s financial statements.

Amendments to Ind AS 40 - Transfers of investment property

The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in management’s intentions for the use of a property does not provide evidence of a change in use.

Entities should apply the amendments prospectively to changes in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. An entity should reassess the classification of property held at that date and, if applicable, reclassify property to reflect the conditions that exist at that date. Retrospective application in accordance with Ind AS 8 is only permitted if it is possible without the use of hindsight.

The amendments are effective for annual periods beginning on or after 1 April 2018. The Company is evaluating the requirements of Ind AS 40 and its effect of the financial statements.

Amendments to Ind 112 - Disclosure of interests in other entities: Clarification of the scope of disclosure requirements in Ind AS 112

The amendments clarify that the disclosure requirements in Ind AS 112, other than those in paragraphs B10-B16, apply to an entity’s interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified (or included in a disposal group that is classified) as held for sale. These amendments are not applicable to the Company.

Ind AS 28 Investments in Associates and Joint Ventures - Clarification that measuring investees at fair value through profit or loss is an investment-by-investment choice The amendments clarify that:

An entity that is a venture capital organisation, or other qualifying entity, may elect, at initial recognition on an investment-by-investment basis, to measure its investments in associates and joint ventures at fair value through profit or loss.

I f an entity, that is not itself an investment entity, has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, elect to retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate’s or joint venture’s interests in subsidiaries. This election is made separately for each investment entity associate or joint venture, at the later of the date on which: (a) the investment entity associate or joint venture is initially recognised; (b) the associate or joint venture becomes an investment entity; and (c) the investment entity associate or joint venture first becomes a parent.

The amendments should be applied retrospectively and are effective from 1 April 2018. These amendments are not applicable to the Company.

Note 2: Critical estimates and judgements

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company’s accounting policies.

This note provides an overview of the areas that involved a higher degree ofjudgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.

Critical estimates and judgements

The areas involving critical estimates or judgements are:

(a) Estimated fair value of investment in private equity fund - refer note 30

(b) Estimated goodwill impairment - refer note 3(c)

(c) Estimated useful life of intangible asset - refer note 3(c)

(d) Estimation of defined benefit obligations - refer note 12

(e) Contingencies

Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies / claim / litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy - refer note 24.

(f) I mpairment of trade receivables - refer note 5(b) and 31

(g) Estimation of current tax payable and current tax expense - refer note 23

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

(iii) Estimation of fair value

The fair value of the Company’s investment properties have been arrived at on the basis of valuation carried out by valuer having appropriate qualifications and experience in the valuation of properties. For the residential units and lands, the fair value was derived using the market comparable approach based on recent market prices without any significant adjustments being made to the market observable data (Fair value hierarchy is Level 2). For other investment properties, the fair value was determined based on the capitalisation of net income method, where the market rentals of all lettable units of the properties are assessed by reference to the rentals achieved in the lettable units as well as other lettings of similar properties in the neighbourhood. The capitalisation rate adopted is made by reference to the yield rates observed by the valuers for similar properties in the locality and adjusted based on the valuers’ knowledge of the factors specific to the respective properties. Thus, the significant unobservable inputs are as follows:

Monthly market rent, taking into account the differences in locations, and individual factors, such as frontage and size, between the comparable and the property; and

Capitalisation rate, taking into account the capitalisation of rental income potential, nature of the property, and prevailing market condition.

In estimating the fair value of the properties, the highest and best use of the properties is their current use.

Details of the Company’s investment properties located in India and information about the fair value hierarchy as at March, 31 2018, are as follows:

(a) Impairment tests for goodwill:

Goodwill acquired during the previous years represents the difference between the cost of investment in certain Companies, acquired pursuant to Composite Scheme of Arrangement [refer note 33(a)] approved by Hon’ble High Courts of Mumbai and Allahabad and the net assets and liabilities acquired by the Company.

The Company tests the goodwill for impairment on an annual basis. Goodwill is monitored by the management at the level of investment made by the Company into its subsidiary, Music Broadcast Limited (MBL). MBL operates the business of FM Radio Broadcasting and is considered a separate cash generating unit (CGU). The recoverable amount of the CGU is determined based on the quoted market price, which is a level-1 category input, of equity shares (fair value less cost to sell) of MBL. As at March 31, 2018, total market capitalisation of MBL is Rs.226,593 Lakhs (As at March 31, 2017 Rs.204,398 Lakhs), and the Company’s share of its investment in MBL is significantly higher than the carrying value of goodwill.

(b) Title- “Dainik Jagran” was purchased in year 1996-97 from Jagran Publication at a cost of Rs.1,700 Lakhs. The Company amortises the title on a straight line basis over estimated useful life of 27 years.

(c) Computer software licences are stated at cost less accumulated amortisation. These costs are amortised using the straight-line method over their estimated useful lives of three to five years.

Terms and rights attached to equity shares

Equity shares: The Company has one class of equity shares having a par value of Rs.2 per share. Each shareholder is eligible for one vote per share held. The shares entitle the holder to participate in dividends and in the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, in proportion to their shareholding.

(iv) Shares allotted as fully paid up pursuant to contract without payment being received in cash (during 5 years immediately preceding March 31, 2018/March 31, 2017).

15,643,972 equity shares of Rs.2 each fully paid were allotted as consideration on March 16, 2013 pursuant to the scheme of arrangement entered with Naidunia Media Limited under Section 391 to 394 of Companies Act, 1956.

(v) Shares bought back (during 5 years immediately preceding March 31, 2018/March 31, 2017).

(a) 5,000,000 equity shares of Rs.2 each fully paid were bought back on January 2, 2014 through the ‘tender offer’ process at a price of Rs.95 per share for an aggregate amount of Rs.4,750 Lakhs.

(vi) Buy back of shares

(a) During the current year, the Company has completed the buyback of 15,500,000 fully paid-up equity shares of face value of Rs.2 each at a price of Rs.195 per equity share aggregating to Rs.30,225 Lakhs. The equity shares have been extinguished and the paid-up equity share capital of the Company has been reduced to that extent. Upon completion of the buyback, the Company has transferred Rs.310 Lakhs to capital redemption reserve representing face value of equity shares bought back.

(b) The Board of Directors of the Company has subsequent to the year end, approved an offer to buy back 15,000,000 fully paid equity shares of face value of Rs.2 each of the Company through tender offer subject to approval of shareholders and statutory authorities at a price of Rs.195 per equity shares for an aggregate amount of Rs.29,250 Lakhs.

(a) The Company had issued 9,500 unsecured non-convertible redeemable debentures on July 21, 2011 to the holding company which were redeemable on July 21, 2016 at a premium of 6.5% per annum payable at the time of redemption. During the year ended March 31, 2016, the Company had redeemed 6,600 debentures and extended the redemption date of the remaining debentures to July 21, 2018 with the consent of the debenture holders. The Company redeemed remaining debentures during the year ended March 31, 2017.

The above debentures had carried a premium @ 6.5% per annum which was lower than the prevailing interest rate for a comparable financial instrument. Accordingly, NCD’s had been fair valued by discounting all the future cash flows to the present value based on prevailing market interest rate for a comparable instrument, the difference being equity contribution by the ultimate holding company.

(a) At the time of purchase of its own shares out of the securities premium reserve, a sum equal to the nominal value of the shares is to be transferred to the capital redemption reserve in accordance with the provisions of section 69 of the Companies Act, 2013. The capital redemption reserve can be utilised by the Company in accordance with the provisions of the Companies Act, 2013.

(b) The Company bought back 5,000,000 equity shares (face value of Rs.2 each) @ Rs.95 per share during the year ended March 31, 2014 utilising the balance in Securities premium reserve and transferred the nominal value of such equity shares to the capital redemption reserve in accordance with the provisions of Section 77AA of the Companies Act, 1956 and other relevant provisions of the Companies Act 2013.

(c) The Company bought back 15,500,000 equity shares (face value of Rs.2 each) @ Rs.195 per share during the year ended March 31, 2018 utilising the balance in Securities premium reserve and transferred the nominal value of such equity shares to the capital redemption reserve in accordance with the provisions of Section 68, 69 and 70 of the Companies Act, 2013 and other relevant provisions of the Companies Act, 2013.

The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.

During the year ended March 31, 2018, Rs.3,000 Lakhs (March 31, 2017: ‘Nil) has been transferred from debenture redemption reserve to general reserve upon redemption of debentures.

The Company is required to create a debenture redemption reserve out of profit which is available for payment of dividend.

The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income as these are strategic in nature and are not held for trading. These changes are accumulated within the FVTOCI equity investments reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

(a) Nature of security: Secured by:

(i) First charge on the identified immovable properties and first pari-passu charge on certain plant and machinery.

(ii) Second charge by way of hypothecation on the current assets viz. book debts, inventories, other receivables both present and future along with first charge being held by Central Bank of India.

(b) During the current year, the Company has redeemed its redeemable non-convertible debentures amounting to Rs.7,500 Lakhs along with interest on due date of redemption i.e. December 17, 2017.

^Repayable on demand

(a) Cash credit facility taken by the Company is secured by first charge by way of hypothecation on current assets, books debts, inventories and other receivables both present and future. Further secured by first charge on specified immovable properties and moveable assets including plant and machinery.

(b) Interest on cash credit facility ranges from 8.40% p.a. to 9.70% p.a.

The normal credit period for these trade payables is generally from 30 to 90 days. No interest is charged by the vendors on overdue payables, if any.

(i) Leave obligations

The leave obligations cover the Company’s liability for earned leave.

The amount of the provision of Rs.140.46 Lakhs (March 31, 2017: Rs.129.54 Lakhs) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.

(ii) Post-employment obligations

(a) Gratuity:

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service subject to a maximum limit of Rs.20 Lakhs (previous year Rs.10 Lakhs). The gratuity plan is a funded plan and the Company makes contributions to recognised fund in India. The Company funds the liability fully, although there may arise certain shortfall upon acturial valuation which is funded subsequently.

(iii) Defined contribution plans:

The Company also has certain defined contribution plans. Contributions are made to provident fund in India for employees at a certain percentage of basic salary as per regulations. The contributions are made to registered provident fund adminstered by the Government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation.

(a) Provident fund

During the year, the Company has recognised the following amounts in the Statement of Profit and Loss

(b) State Plans

During the year, the Company has recognised the following amounts in the Statement of Profit and Loss

(a) Estimates of future salary increases are considered in actuarial valuation taking into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

(b) The rate of return on plan assets is based on the average long-term rate of return expected to prevail over the next 15 to 20 years on the investments made by the LIC. This is based on the historical returns suitably adjusted for movements in long-term government bond interest rates. The discount rate is based on approximate average yield on government bonds of tenure of nearly 20 years.

(v) Sensitivity analysis

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied while calculating the defined benefit liability recognised in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

(vii)Risk exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are defined below:

Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to Government Bonds Yield. If plan liability is funded and return on plan assets is below this rate, it will create a plan deficit.

Interest risk (discount rate risk): A decrease in the bond interest rate (discount rate) will increase the plan liability.

Mortality risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants. Indian Assured Lives Mortality (2006-08) ultimate table has been used for estimation of mortality rate. A change in mortality rate will have a bearing on the plan’s liability.

Salary risk: The present value of the defined benefit plan liability is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.

(viii) Defined benefit liability and employer contributions

The Company has agreed that it will aim to eliminate the deficit in defined benefit gratuity plan. Funding levels are monitored on an annual basis and the current agreed contribution is Rs.400 Lakhs. The Company considers that the contribution set at the last valuation date is sufficient to eliminate the deficit over the agreed period and that regular contributions, which are based on service costs, will not increase significantly.

Expected contributions to post-employment benefit plans for the year ending March 31, 2019 are Rs.400.00 Lakhs

The weighted average duration of the defined benefit obligation is 13.88 years (March 31, 2017: 14.28 years). The expected maturity analysis of gratuity is as follows:

Note 3: Income tax expense

This note provides an analysis of the Company’s income tax expense and shows amounts that are recognised directly in equity and how the tax expense is affected by non-assessable and non-deductible items. It also explains significant estimates made in relation to Company’s tax positions.

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the complexities of contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustment to tax income and expense already recorded.

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. Refer note 13(a) for further details.

(ii) Future minimum sublease payments expected to be received under non-cancellable subleases is not disclosed, as revenue from subleasing of leased properties cannot be reliably estimated.

(iii) Total lease payments recognised in the Statement of Profit and Loss Rs.9,140.81 Lakhs (Previous Year Rs.7,771.61 Lakhs).

(iv) Sub-lease payments received (or receivable) recognised in the of Statement of Profit and Loss for Rs.9,191.46 Lakhs (Previous Year Rs.7,283.28 Lakhs).

(Figures in brackets denote previous year figures)

ii) No guarantees have been given during the year (Previous year: Nil).

iii) Details of investment made during the financial year ended March 31, 2018:

(b) Pending final disposal of various litigations initiated since June 2007 by a common group of shareholders hereinafter referred to as “Other Group” against the Company in case of Jagran Publications Private Limited and Jagran Prakashan (MPC) Private Limited and the Company’s petition filed in case of former against the Other Group (which is in management) alleging mismanagement and oppression and seeking the directive against them to sell their shareholding to the Company at fair price or alternatively to vest the management rights with it, the management, on the basis of legal advice received and on evaluation of various developments considers its entire outstanding exposure, in both the companies as fully realisable. However, the Company, being extremely conservative, recognises interest on the loans granted to these companies as income only when interest is realised. Accordingly no interest income has been recognised for the period from October 1, 2007 to March 31, 2018.

(c) The shares held in Jagran Publications Private Limited and Jagran Prakashan (MPC) Private Limited are not transferable to a third party (i.e. persons and body corporate not belonging to U.P. group, defined to be lineal descendants of late Mr. P.C. Gupta and Company in which not less than 51% shareholding is owned and controlled by their family members) without complying with certain conditions as contained in the Articles of Association of these two companies.

(d) Pending ongoing disputes and lack of control, these associates are not considered in the consolidated financial statements of JPL and the investments made in Jagran Publications Private Limited and Jagran Prakashan (MPC) Private Limited are recorded as investments in these financial statements. Refer note 5(a).

(e) Details as required under Regulation 53(f) read with Para A of Schedule VI of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 of loans, advances and investments:

f) The Company has created certain provision, without prejudice to its legal rights, on the receivables under litigation though it is confident of realising its dues.

(e) Entities incorporated in India over which Key Management Personnel exercises significant influence

Jagmini Micro Knit Private Limited

Lakshmi Consultants Private Limited Shri Puran Multimedia Limited Jagran Subscriptions Private Limited Om Multimedia Private Limited Rave@Moti Entertainment Private Limited Rave Real Estate Private Limited MMI Online Limited

(f) Key Management Personnel (KMP), relatives and other related entities

(i) Key Management Personnel (KMP)

Mahendra Mohan Gupta (Chairman and Managing Director)

Sanjay Gupta (Whole time Director and Chief Executive Officer)

Dhirendra Mohan Gupta (Whole time Director)

Sunil Gupta (Whole time Director)

Shailesh Gupta (Whole time Director)

Satish Chandra Mishra (Whole time Director)

Devendra Mohan Gupta (Non Executive Director)

Shailendra Mohan Gupta (Non Executive Director)

Rajendra Kumar Jhunjhunwala (Independent/Non Executive Director)

Anuj Puri (Independent/Non Executive Director)

Shashidhar Narain Sinha (Independent/Non Executive Director)

Vijay Tandon (Independent/Non Executive Director)

Anita Nayyar (Independent/Non Executive Director)

Dilip Cherian (Independent/Non Executive Director)

Jayant Davar (Independent/Non Executive Director)

Ravi Sardana (Independent/Non Executive Director)

Amit Dixit (Non Executive Director)

Vikram Sakhuja (Independent/Non Executive Director)

Apurva Purohit (President w.e.f. July 1, 2016)

Rajendra Kumar Agarwal (Chief Financial Officer)

Amit Jaiswal (Company Secretary)

(ii) Relatives of Key Management Personnel and their related entities

Sandeep Gupta (Brother of Whole time Director and Chief Executive Officer)

Yogendra Mohan Gupta (Brother of Chairman and Managing Director)

Sameer Gupta (Brother of Whole time Director)

Devesh Gupta (Son of Whole time Director)

Tarun Gupta (Son of Whole time Director)

Saroja Gupta (Mother of Whole time Director and Chief Executive Officer)

Vijaya Gupta (Mother of Whole time Director)

Pramila Gupta Estates (Estate of Late Wife of Chairman and Managing Director) Madhu Gupta (Wife of Whole time Director)

Pragati Gupta (Wife of Whole time Director and Chief Executive Officer)

Ruchi Gupta (Wife of Whole time Director)

Bharat Gupta (Son of Non Executive Director)

Rajni Gupta (Wife of Non Executive Director)

Raj Gupta (Wife of Non Executive Director)

Narendra Mohan Gupta HUF Sanjay Gupta HUF Sandeep Gupta HUF Mahendra Mohan Gupta HUF Shailesh Gupta HUF Yogendra Mohan Gupta HUF Sunil Gupta HUF Sameer Gupta HUF Shailendra Mohan Gupta HUF Devendra Mohan Gupta HUF Dhirendra Mohan Gupta HUF Devesh Gupta HUF Tarun Gupta HUF Bharat Gupta HUF Rahul Gupta HUF Siddhartha Gupta HUF

Notes:

1) The sales to, purchases and other related party transactions from related parties are at 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, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2017: ‘ Nil). This assessment is undertaken for each financial year through examining the financial position of the related party and the market in which the related party operates.

2) Commitments

The Company has given letter of comfort to Music Broadcast Limited (MBL) and IDBI Trusteeship Services Limited (Debenture Trustee), in respect of the 2,000 numbers of listed secured redeemable debentures of Rs.10 Lakhs each aggregating to Rs.20,000 Lakhs (“NCDs”) as issued by the MBL. The Company will not dilute its stake below 51% till the time that any amounts are outstanding in respect of the NCDs. The total outstanding in respect of NCDs (including interest thereon) as at March 31, 2018 is Rs.5,027.00 Lakhs (previous year Rs.15,089.50 Lakhs).

3) The remuneration to key managerial personnel and their relatives does not include the provision made for gratuity and leave benefits, as they are determined on an actuarial basis for the Company as a whole.

4) The figures exclude sales tax / GST, as applicable.

Note 4: Fair value measurements

The financial instruments are classified in the following categories and are summarised in the table below:

i) Fair value through profit or loss (FVTPL)

ii) Fair value through other comprehensive income (FVTOCI)

iii) Amortised cost

(i) Fair value hierarchy

The following table summarises the financial instruments at fair value by valuation methods. The different levels have been defined as follows:

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and mutual funds that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for investment in certain debentures, unlisted equity instruments and private equity fund.

The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There are no transfers between levels 1 and 3 during the year.

(ii) Valuation technique used to determine fair value

Financial assets in level 1 category includes investment in listed equity instruments and investment in mutual funds, where the fair values have been determined based on quoted market price.

Financial assets in level 3 category includes investment in unlisted equity instruments and investment in private equity fund, where the fair values have been determined based on present values, the discount rates and net asset values.

The carrying amount of financial assets and liabilities carried at amortised cost are considered to be approximate to their fair values due to their short-term nature.

(iii) Valuation processes

The finance department of the Company includes Senior Vice President (Finance) who performs the valuation of financial assets and liabilities required for financial reporting purposes, including level 3 values. Senior Vice President (Finance) reports directly to the Chief Financial Officer (CFO).

In case of investment in private equity fund stated in Note 5(a), the fair value has been determined based on third party valuation report obtained from private equity fund as at March 31, 2018.

Note 5: Financial risk management

The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk, and price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial performance.

Risk management is carried out under policies approved by the Board of Directors which provides principles for overall risk management.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

(A) Credit risk

The credit risk arises from cash and cash equivalents, investments and deposits with banks and financial institutions, trade receivables and other financial assets, as well as credit exposures to customers including outstanding receivables.

The Company considers factors such as track record, size of the institution, market reputation and service standards to select the banks/ institutions with which balances are maintained. The Company does not maintain significant cash and deposit balances other than those required for its day to day operations.

The Company extends credit to customers in the normal course of business. The Company considers factors such as credit track record in the market and past dealings with the Company for extension of credit to customers. The Company monitors the payment track record of the customers. The Company has also accepted security deposits from certain customers, which further mitigate the credit risk in these cases.

The Company considers the probability of default upon initial recognition of assets and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information.

A default on a financial asset is when the counterparty fails to make contractual payments when they fall due or when the extended credit period expires. This definition of default is determined by considering the business environment in which the entity operates and other macro-economic factors.

The Company provides for expected credit loss when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the Company. Where loans or receivables have been impaired, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.

Provision for expected credit losses

(i) Movement in credit loss allowance - Loans

The Company had a loss allowance as at March 31, 2017, post which there were no changes in such loss allowance made. Consequently, loss allowance on loans remains same as on March 31, 2018.

(ii) Movement in credit loss allowance - Trade receivables

The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

(B) Liquidity risk

The Company relies on a mix of excess operating cash flows, investments in marketable securities, borrowings and capital infusion to meet its needs for funds. The current committed lines of credit are sufficient to meet its short to medium term expansion needs. The Company monitors rolling forecasts of the liquidity position (comprising the undrawn borrowing facilities), cash and cash equivalents on the basis of expected cash flows to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times.

The table below analyses the Company’s financing arrangements and non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. There are no derivative financial instruments in respect of reporting periods disclosed under these financial statements.

The bank overdraft facilities may be drawn and terminated at any time by the Company.

(ii) Maturities of financial liabilities

The tables below analyse the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities. There are no derivative financial instruments in respect of reporting periods disclosed under these financial statements.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

(C) Market risk

(i) Foreign currency risk

The Company operates in India and is not materially exposed to foreign exchange risk arising from foreign currency transactions. The Company generally deals in USD for news print purchases from outside India. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency (INR). The risk is monitored and measured in a volatile currency environment through dependable forecasts by the external resources and is addressed by exiting from the exposure.

(a) Foreign currency risk exposure:

The Company’s exposure to foreign currency risk at the end of the reporting period expressed in INR, is as follows

Note: The exposure is not considered to be significant and hence sensitivity disclosure has not been made.

(ii) Cash flow and fair value interest rate risk

The Company’s main interest rate risk arises from borrowings with variable rates, which exposes the Company to cash flow interest rate risk. During March 31, 2018 and March 31, 2017, the Company’s borrowings at variable rate were mainly denominated in INR.

The Company’s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107 (Financial Instruments: Disclosures), since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

(a) Interest rate risk exposure

The exposure of the Company’s borrowing to interest rate changes at the end of the reporting period are as follows:

Weighted average rate of borrowings as at March 31, 2018 ranges from 8.40% p.a. to 9.70% p.a.

(iii) Price risk

The Company does not have significant equity investments that are publicly traded and investments in non-listed securities are of strategic importance.

Note 6(a): Capital management (i) Risk management

The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern in order to provide returns for the shareholders and benefits for the stakeholders. The Company strives to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust any dividend payments, return capital to shareholders or issue new shares.

Consistent with the principle of prudence the Company also monitors capital on the basis of debt to equity ratio where debt comprises of borrowings including current maturities thereof and equity comprises the shareholders funds outstanding at each reporting date.

The debt to equity position at each reporting date is summarised below:

(ii) Dividend

The Board of Directors proposed as dividend of Rs.3 per share (on equity share of par value of Rs.2 each), at their board meeting held on May 25, 2018. The payment is subject to approval of the shareholders at their ensuing annual general meeting.

Note 6(b): Reconciliation of liabilities arising from financing activities

The table below details the changes in Company’s liabilities arising from financing activities, including both cash and non-cash changes:

Effective April 1, 2017, the Company adopted the amendment to Ind AS 7 - Statement of Cash Flows, which require the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising from financing activities, to meet the disclosure requirement. The adoption of amendment did not have any impact on the financial statements.

Note 7: Business combinations

(a) The Composite Scheme of Arrangement (the Scheme) involving amalgamation of Spectrum Broadcast Holdings Private Limited (“SBHPL”) and Crystal Sound and Music Private Limited (“CSMPL”) into Jagran Prakashan Limited (JPL or the Company) and demerger of FM radio business (“Radio Mantra”) of Shri Puran Multimedia Limied (“SPML”), a promoter Company into Music Broadcast Limited (“MBL”), became effective upon filing of the court orders with the respective Registrars of Companies (RoC’s) of Uttar Pradesh on November 18, 2016 and Mumbai on November 17, 2016. Pursuant to the Scheme, w.e.f. January 1, 2016, being the appointed date:

i) The Company gave effect to the merger from the appointed date in accordance with the Court order in the previous financial year.

ii) The Company has followed Court approved “Purchase method” as per the then prevailing Accounting Standard (AS-14) (Accounting for Amalgamation) referred to in the Scheme which resulted in recognition of goodwill amounting to Rs.22,937.29 Lakhs, computation of which is given in note (iii) below.

iii) The Company had taken over following assets and liabilities of the CSMPL and SBHPL as at January 1, 2016:

(b) The Hon’ble High Court of Allahabad and Hon’ble High Court of Mumbai approved on March 16, 2016 and December 2, 2016 respectively, the Scheme of Arrangement (the Scheme) by way of amalgamation of its erstwhile subsidiary Suvi Info Management (Indore) Private Limited (Suvi) into Jagran Prakashan Limited (JPL or the Company). The Scheme became effective upon filing of the aforesaid orders with the respective Registrars of Companies (RoC’s) of Uttar Pradesh and Mumbai on December 27, 2016 w.e.f. January 1, 2016, being the appointed date. Pursuant to the Scheme,

i) The Company gave effect to the merger from January 1, 2016 (appointed date) in accordance with the Court order in the previous financial year.

ii) The Company has followed Court approved “Pooling of interest method” as per the then prevailing Accounting Standard (AS-14) (Accounting for Amalgamation) referred in the Scheme which requires line by line addition with JPL.

iii) Consequently, the Company had taken over following assets and liabilities of Suvi as at January 1, 2016:

Note 8: The Company is engaged mainly in the business of printing and publication of Newspaper and Magazines in India. The other activities of the company comprise outdoor advertising business, event management and activation business and digital businesses. The Board of Directors of the Company, which has been identified as being the chief operating decision maker (CODM), evaluates the Company’s performance, allocates resources based on the analysis of the various performance indicators of the Company as a single unit. Therefore there is no reportable segment for the Company, in accordance with the requirements of Ind AS 108- ‘Operating Segment Reporting’, notified under the Companies (Indian Accounting Standard) Rules, 2015. The Company does not have transactions of more than 10% of total revenue with any single external customer.

Note 9: The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

Note 10: There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Note 11: The financial statements were approved for issue by the Board of Directors on May 25, 2018.