1 Corporate information
J ust Dial Limited (the “Company”) was incorporated in India under the provision of Companies Act, 1956 on December 20, 1993. The registered office of the Company is located at Palm Court Building M, 501/B, 5th Floor, New Link Road, Beside Goregaon Sports Complex, Malad West, Mumbai 400064. The Company provides local search, search related services and software services to users in India through multiple platforms such as the internet, mobile internet, over the telephone (voice), text (SMS).
During the year ended March 31, 2017, the Company commenced provision of cloud based and application software services on outright sale or subscription basis.
(i) Dividend (including dividend tax)
Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognised as a liability. Under Ind-AS, such dividends are recognised when the same is approved by the shareholders in the general meeting.
(ii) Deferral of Revenue
As per Ind-AS 18 - Revenue, certain items of non-refundable fees received are now being recognized as revenue over the tenure of contracts as it reflects the substance of the transaction, which were earlier recognized upfront, based on performance of specific acts.
(iii) Security Deposits
Under the previous GAAP, interest free lease security deposits are recorded at their transaction value. Under Ind-AS, all financial assets are required to be recognised at fair value. Accordingly, the Company has fair valued these security deposits under Ind-AS 109 using effective interest rate method. Accordingly, adjustments mainly consists of amortization of deferred lease income / expense on security deposits given and accepted.
(iv) Fair value through Profit & Loss (FVTPL) Under Ind-AS, financial assets and financial liabilities designated at fair value through profit and loss (FVTPL) are fair valued at each reporting date with changes in fair value recognized in the statement of profit and loss. Under previous GAAP, they are measured at lower of cost with provision for diminution in value other than temporary.
(v) Re-measurement of Employee Benefits Under Ind-AS, the actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, such remeasurements were forming part of the consolidated statement of profit or loss for the year.
(vi) Deferred Tax
Tax adjustments include deferred tax impact on account of differences between Ind-AS and Previous GAAP.
(vii) Statement of Cash Flows
The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.
Pursuant to the disclosure requirements as per Ind-AS, the Company has re-classified certain assets and liabilities as at March 31, 2016 and April 1, 2015.
Significant reclasses includes, reclassification between Deferred tax assets and Income tax assets, Noncurrent investment and, Security deposits and prepayments, other current liabilities and financial liabilities.
The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority
2: Equity Share capital
(i) Terms/ rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of the equity share is entitled to one vote per share. The Company declares and pays dividends in ‘.The dividend proposed by the board of directors is subject to approval of the shareholders in the ensuing Annual General Meeting. 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. The distribution will be in proportion to the number of equity shares held by the shareholders.
(ii) Reconciliation of number of the equity shares outstanding at the beginning and at the end of the year
(iii) Details of shareholders holding more than 5% shares in the company
As per records of the company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.
(iv) Aggregate number of equity shares issued as bonus, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date
In addition the company has issued total 1,017,348 shares (March 31, 2016: 952,507) during the period of five years immediately preceding the reporting date on exercise of option granted under the employee stock option plan (ESOP) wherein part consideration was received in the form of employee services.
(v) Distribution made and proposed
Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognised as a liability (including Dividend distribution tax thereon) as at March 31.
(vi) Shares reserved for issue under options
For details of shares reserved for issue under the ESOP of the company, refer note 29.
Terms and conditions of the above financial liabilities:
- Trade payables are non-interest bearing and are normally settled as and when demanded/ due basis For explanations on the Company’s credit risk management processes, refer to note 34.
3: Expenditure on Corporate Social Responsibilty (CSR)
The particulars of CSR expenditure are as follows:
a) Gross amount required to be spent by the Company during the year is Rs.369 lacs (March 31, 2016: Rs.303 lacs)
b) Amount spent during the year on:
4: Earnings per share
The following reflects the income and share data used in the basic and diluted EPS computations:
5: Related Party Disclosures
Name of Related Parties with relationship during the year
Related Party where control exists Subsidiary Company
Just Dial Inc, Delaware, United States of America JD International Pte Ltd, Singapore
Related Parties under Ind AS 24 with whom transactions have taken place during the year Key Management Personnel
Mr. V.S.S Mani - Managing Director and Chief Executive Officer1
Mr. V. Krishnan - Whole-time Director Mr. Ramani Iyer - Whole-time Director Mrs. Anita Mani - Director
Mr. B. Anand - Chairman Independent and Non-Executive Director Mr. Sanjay Bahadur - Independent and Non-Executive Director Mr. Malcom Monterio - Independent and Non-Executive Director Mr. Pulak Chandan Prasad - Independent and Non-Executive Director Mr. Ramkumar Krishnamachari - Chief Financial Officer Mr. Sachin Jain - Company Secretary
Enterprises owned or significantly influenced by key Management Personnel or their relatives
Just Dial Global Private Limited
Persons having significant influence on the company
The transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates. Outstanding balances at the year-end are unsecured and settlement occurs in cash.
Methods and assumptions used in preparing sensitivity and their limitations: The liability was projected by changing certain assumptions and the total liability post the change in such assumptions have been captured in the table above. This sensitivities are based on change in one single assumption, other assumptions being constant. In practice, scenario may involve change in several assumptions where the stressed defined benefit obligation may be significantly impacted.
6: Employee stock options plan (ESOP)
The Company has provided various equity settled share-based payment schemes to its employees. The details of the ESOP schemes are as follows:
Exercise period for all the above schemes is seven years from the date of vesting of the options.
The carrying amount of Employee stock options reserve as at March 31, 2017 is Rs.3,773 lacs ( March 31, 2016 -Rs.3,103 Lacs, April 01, 2015 - Rs.1,540 lacs)
The expense recognised for employee services received during the year is Rs.1,594 lacs ( March 31, 2016 - Rs.2,171 lacs)
Weighted average share price at the date of exercise for stock options exercised during the year was Rs.431(March 31, 2016 Rs.900)
7: Commitment and Contingencies
Operating lease commitments — Company as lessee
Office premises are obtained on operating lease. The lease rent is payable as per the terms of the lease agreements. The lease terms are different for each of the leases ranging from 1 year to 9 years.
The company has paid Rs.3,043 lacs (March 31, 2016: Rs.2,261 lacs) during the year towards minimum lease payment.
Future minimum rentals payable under operating leases are as follows:
1) There are certain cases against the company in the consumer court. The management believes that based on some legal/ technical advice from experts and that the ultimate outcome of these cases will not have a material/ adverse impact on the company’s financial position and results of operations.
2) The Company is contesting the income tax demands and the management believe that its position will likely be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the company’s financial position and results of operations.
Provision for other statutory liability
i) At March 2015, the Company had a provision of ESIC liability of Rs.303 lacs (pertaining to period April 2007 to September 2010) based on estimates and as per the provisions of the ESIC Act. Pursuant to the legal opinion obtained during the year March 31, 2016, the liability is time barred as per ESIC provision. Therefore the liability of Rs.282 lacs has been written back during the year ended March 31, 2017 and based on the opinion a provision of Rs.21 lacs on account of disputed liability has been retained. This provision will be adjusted/settled on completion of the assessment.
ii) The company has received various demand intimations under section 154 of the Income Tax Act, 1961, pertaining to financial year 2007-08 to 2012-13. The net outstanding liability of Rs.1 lac (March 31, 2016: Rs.1 lac) was recorded as provision against such demand notices.
iii) In respect of ongoing tax assessments, the outcome of which is considered probable, the Company has made aggregate provision of Rs.45 lacs (March 31, 2016: Rs.58 lacs)
8: Details of dues to Micro and Small Enterprises as per MSMED Act, 2006.
The Company does not have suppliers who are registered as micro or small enterprise under the Micro, Small and Medium Enterprises Development Act, 2006 as at March 31, 2017 and March 31, 2016.The information regarding micro or small enterprises has been determined on the basis of information available with the management, which has been relied upon by the auditors.
9: Business Combination: Scheme of arrangement with Just Dial Global Private Limited
During the year ended March 31, 2017, in order to consolidate and effectively utilise management, financial, administrative and technical resources and to derive operating and financial synergies, the Company (“Resulting Company”) has entered in to the scheme of arrangement involving demerger of Data and Information undertaking (“Demerged undertaking”) of Just Dial Global Private Limited (“JDGPL”) and vesting of the same in the Resulting Company under section 230 to 232 of the Companies Act, 2013 (the “scheme”).
The National Company Law Tribunal (NCLT) vide its order dated March 22, 2017 have approved the scheme,. The acquisition date of the Demerged Undertaking is March 22, 2017.
Pursuant to the scheme, all assets, liabilities, rights, business operations and activities forming part of the Demerged undertaking have been transferred to the Resulting Company at their respective Fair values as follows.
There are no contingent liabilities acquired in the scheme.
As a consideration for the value of net assets transferred, the Company shall issue 1 (One) 6% fully paid up Redeemable Preference Shares of Rs.1 each in resulting Company for every 1 (One) Equity share of Rs.10 each held in the demerged undertaking to the existing shareholders of the demerged undertaking as on the record date, aggregating to 1,125,068 shares of Rs.1 each. Pending completion of formalities, the redeemable preference share has been disclosed as share suspense account under other equity. There is no contingent consideration payable on this acquisition.
The difference between fair value of consideration paid of Rs.11 lacs and the fair value of net assets taken over of Rs.2,714 lacs amounting to Rs.2,701 lacs is recognised in OCI and accumulated in equity as Capital Reserve.
From the date of acquisition, Demerged undertaking has contributed Rs.Nil of revenue and Rs.Nil to the profit before tax of the Company. If the combination had taken place at the beginning of the year, revenue from operations would have been Rs.71,865 lacs and the profit before tax for the Company would have been Rs.15,626 lacs.
Pursuant to the merger, the Company has net cash flow of Rs.71 lacs on account of acquisition of cash and cash equivalents of demerged company pursuant to the Scheme.
Pursuant to the scheme on April 25, 2017, the authorised preference share capital of the Company got altered from Rs.120 lacs (1,200,000 Preference Shares of Rs.10 each) to Rs.120 lacs (12,000,000 Preference Shares of Rs.1 each) as per the provisions of Sections 13, 61 and 64 of the Act or any other applicable provisions of the Act.
10: Financial Instruments - Accounting classification and fair value measurements
The fair values of the financial assets and liabilities are 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 following table provides the fair value measurement hierarchy of the Group’s financial assets and liabilities.
The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
There have been no transfers between Level 1 and Level 2 during the year ended March 31, 2017 and March 31, 2016.
11: Financial risk management objectives and policies
The Company’s financial risk management is an intergral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set by the Board of directors.
Market risk is the risk of loss of future earnings, fair value or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market sensitive financial instruments including investments and deposits, receivables and payables.
The key risks include credit risk, interest rate risk and liquidity risk. The Board of directors reviews and agrees policies and procedures for management of these risks.
a) Credit risk
Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed, leading to a financial loss. The company is exposed to credit risk from its operating activities and from its security deposits to landlords.To manage this, the company periodically assesses the financial reliability of customers/landlords, taking into account the financial condition, current economic trends.
None of the financial instruments of the group result in material concentrations of credit risk. The company’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure.
Balances with banks is subject to low credit risks due to good credit ratings assigned to these banks. Regarding other financial assets that are neither past due nor impaired, there were no indications as at March 31, 2017 (March 31, 2016 : no indications) that defaults in payment obligations will occur.
b) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. In order to optimize the Company’s position with regards to finance income and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by continuous review of investment portfolio and portfolio exposure to instruments having lower credit rating, balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.
The Company is not exposed to significant interest rate risk as at the respective reporting dates.
c) Liquidity risk
Liquidity risk is the risk that the Company will not be able to settle or meet its obligations as they fall due. The company’s policy on liquidity risk is to maintain sufficient liquidity in the form of cash and investment in liquid mutual funds to meet the Company’s operating requirements with an appropriate level of headroom. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows.
Maturity profile of financial liabilities
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.
12: Capital management
For the purpose of the Company’s capital management, capital includes issued capital and all other equity reserves. The primary objective of the Company’s capital management is to ensure the going concern operation and to maintain an efficient capital structure to support the corporate strategy and maximise shareholder value.
The capital structure is governed by policies approved by the Board of Directors and is monitored by various metrics. The Company maintains focus on capital efficiency without incurring material indebtedness and have negative working capital and positive free cash flows. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2017 and March 31, 2016.
13: Details of Specified Bank Notes (SBN) held and transacted
The details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016 pursuant to the requirement of Notification G.S.R 308 dated March 30, 2017 as mentioned below: